We have been having a lot of discussions with users regarding the new subscription and the pricing with which we launched Informant 5. The feedback we have received has been very helpful, even though not all of its positive. Pricing is one of those things that is incredibly difficult to get exactly right: charge too little and you go out of business; charge too much and you can’t grow. So, this blog post is intended to address a few questions, present a few ideas, lay out a few of the pricing challenges that we face and to gather some feedback about user personas that might help us make better pricing decisions. As always, our goal is to be as open as possible about our thoughts, but we’re not making any commitments so please take that into consideration.
We have been receiving a lot of feedback about pricing and it really has been across the board. Many people think that Informant is a great value at $25/yr and are happy to pay a subscription and others think we have lost our minds and will soon be out of business because we have made a terrible mistake.
How can the same pricing structure be perceived so differently by different people?
After a lot of thought I believe we have so many different types of users that we have a larger number of market segments than we might have realized previously. I’ve tried to simplify that to four as of right now just for the sake of clarity. For the purposes of this discussion (and through some help from blog comments) we are going to call these 4 segments: Power Productivity Users, Casual Users, Curious Users, and the Anti-Subscription users.
In the comments, please tell me if you agree with these personas, and or what other insights you might be able to add to this discussion.
Persona #1: Curious Users
These are people who downloaded Pocket Informant almost exclusively “because it was free”. This user segment is not likely to pay for an app if a similar one is available for free. They might have simple calendar needs, or they may have more complex calendar needs but have another app that is currently viewed as satisfactory. There are a lot of these users because of the low entry point. These can be very satisfied and loyal users. Our objective with this segment is to impress them with the app and motivate them to turn into a Casual User.
Ideal Price Point for this Persona: Free
Persona #2: Casual User
These are users who are willing to pay for an app at a reasonable price. They may have been with Pocket Informant for a long time and paid for multiple versions of the software, or they may have started more recently as a Curious User and have grown to like a particular feature enough to pay for it. Most people who are heavy users of Informant but are not using it for work, or work related purposes would likely be in this category. This group is probably using the Calendar regularly from 1 to 5 times per week. They might also like using one of the additional features such as Tasks or Notes, but their usage is centered on either; mainly Calendar, Mainly Calendar and some Tasks, Mainly Tasks and some Calendar, or Mainly Calendar and Notes. These users most likely require or at least appreciate the native sync functionality. The main differentiation for this user group is their casual nature of their usage. They might “like” the weather feature, but they probably wouldn’t pay extra for it. They might “like” the color coding of events, or the icons, but they probably wouldn’t pay extra for it.
Ideal Price Point for this segment: $4-$25
Persona #3: Power Productivity Users
Power Productivity Users are serious about their organization and are the users who are using the app more frequently than the other groups. They probably use the app at least 2-5 times (days) per week. These users may NOT be using every feature of the app. They are generally either very heavy users of Calendar, or using Calendar plus Tasks, or Calendar plus notes.
If a user has more than 1-2 of the following they are most likely a power productivity user:
- Use advanced features like: Smart Filters or Triggers/Templates
- Frequently travel between 2 or more time zones.
- Relies on a connection to a 3rd party sync such as toodledo or evernote Informant Sync. They might be paying for one of these 3rd party apps. (3rd party apps, non-native)
- Has more than 2-3 yrs of important history data. (Would be seriously upset if their data was lost, or if the calendar app they chose were to go out of business — think Sunrise.)
- Uses Informant on multiple devices, or iOS & Mac, and wants the Informant specific data to be synchronized between them.
- Is using the app for a business or work related purpose.
- (Note: We are not saying that a Power User is someone who uses ALL the features, or must use it for work. We are just saying that if they use certain features, or use it for work, that because of that, they are likely in this user group.)
Ideal Price Point for this Persona:
Persona #4 – Anti- Subscription / I want to Own-it
This group of users is defined less by the features that they use and more by the fact that they have a serious aversion to paying a subscription. This group has said things like, “I’d pay $100 to buy it outright.” and “ I have been using informant since the start but, I will drop it if it becomes subscription based”. This group of users would probably pay more for an app to “own” it than to rent it, even if just out of principle.
Ideal Price Point for this Persona:
As you can see from these 4 market personas and our comments about ideal pricing, there is not a single right answer to serving all of them. In virtually every scenario, there is a customer segment that is either left unserved, or is not served at the perceived fair price.
Here are some questions that we are asking ourselves about pricing:
- How do we price the product for 4 different markets with 4 different perceptions of value? (We really want to avoid trying to support multiple versions of the app.)
- If we dropped the price, would we make up for it in volume? (Historically, we have not seen a direct correlation to price and volume over $5. )
- If the price were dropped to $19/yr or $14/yr would we alleviate the anger about price? (Historically we have always had some price frustration anytime we are above $5. Our current belief is that these complaints are coming from Casual Users at the $4-$14 price point, so a drop to even $14, may not resolve the issue. )
- How best to serve the “anti-subscription” market while still working within the confines of what the App Store allows and being able to cover ongoing costs associated with the “connect bundle”? Does our current “Own It” option not properly satisfy their needs or are we not communicating that option properly/clearly?
- Should we separate the Connection Bundle/Sync Services from the app purchase price? (This option might allow us to capture more of the Casual Users and also capture the Power Users. It would introduce some development complexity that we are not quite ready to bite off. Our previous experience with a’ la carte pricing was mixed. It created duplicate purchases, confusion and many people missed out on features that they would have otherwise liked to use.)
- What is the best way to encourage viral growth driven by current users? If we can better enable and encourage users to share the app with others, it would be a win-win. How do we turn that into a real option that is scalable and operationally efficient?
Despite all the questions and uncertainty we still have about pricing, we do have some ideas and we are working on some things:
Possible Solutions: Here are some things we are working on, planning to work on, or might consider working on it the first few solutions don’t work out as we hope. We may not do all of the items on this list but these are some things under consideration, and the list may change at any time.
- Make it easier for anyone to “try” a full featured version of the app. Currently, only Monthly subscriptions can get a trial and the messaging is not very clear.
- Make it easier, or communicate it more effectively that Anti-Subscription users can Own the app and have access to via the “own it” option.
- Periodic Coupons that drop the price so that some “coupon shopper” customers will jump in. (Issue is the price changes or coupons introduce some uncertainty and complexity in the billing of existing customers.)
- Create ways that customers can extend their Free – Trial or get a discount by sharing the app with others.
- Consider Separating the Connection Bundle/Sync Services from the app purchase price. (This option might allow us to capture more of the Casual Users and also capture the Power Users. It would introduce some development complexity that we are not quite ready to bite off. This option might allow us to get an app purchase price down to $15-ish). We are divided internally on this one, so don’t hold your breath for this option.
- Sell the “Own-It / Anti-Subscription” app as a separate app in the app store. This would necessitate starting over with all of the marketing, promotions, and links that point to this app. ( A 2nd app is a bad idea from a marketing perspective and adds complexity to development, etc. We really don’t want to do this)
- Re-evaluate the subscription prices, or consider a’ la carte pricing.
So as you can see, we have put a lot of thought into “pricing”. We would be very interested to hear your thoughts, opinions on this content. We are still 100% committed to “get it right”. We greatly appreciate your willingness to help us get there.
A few Questions to lead the comments / discussion:
Q1: Do you agree with these 4 personas? (If not, what would you change?)
Q2: Which segment are you in?
Q3: How well do you think we are serving the needs of a particular segment?