OnDemand WTP Pricing Research

Data-based Digital Media Product Pricing | Piano Media

Further pricing has a direct impact on subscribers’ decisions to renew, as our analysis shows that higher prices tend to have lower retention rates, although not in all cases and not for all price rises. A price increase could well have no impact upon retention and yield positive revenue. Therefore, we strongly recommend A/B testing price increases and examining retention again prior to making any permanent changes.

A note of caution: subscriber volume drops precipitously over time if retention rates fall, therefore retention rates matter significantly when adjusting pricing. As an example, a persistent 5% retention decrease for monthly subscriptions results in four times fewer subscribers after 24 months. Again, A/B testing your price increases and monitoring subsequent changes in retention will help answer these critical questions.

Another important question is what the pricing relationship should be between annual and monthly subscriptions? Most publishers offer a discount for

an annual subscription relative to the annualized price of a monthly subscription because the average tenure of an annual subscriber is greater than the average tenure of a monthly subscriber. A goal, then, should be to define how much of a discount an annual price could have compared to the annualized monthly price in order to entice consumers to select the annual subscription while generating the same or great ARPU.

Pricing is always a trade-off between the number of subscribers you have, near-term revenue and longer-term revenue. A/B testing can help to determine the sweet spot between conversions, retention and pricing so you can maximize your revenue stream. If you want to raise your prices, it’s important to carefully manage the trade-off between higher prices and the impact on conversion and retention because it could mean a significant difference in overall revenue.

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Data-based Digital Media Product Pricing | Piano Media.

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