User-Generated Pricing
blog.servus.io
blog.servus.io
Here's my issue:
You say you value a $0.99 app as throw-away, and that the more you spend, the less throw-away it feels. Sure, if you priced your app at $20.00, I agree that it would feel less throw-away (if a customer decided to buy it, they value it at >= $20).
But you're not pricing it at $20.00. You're pricing it at $2.50-$20.00. Really, anything I pay above $2.50 is a donation to you, for your work. But in my head, it's still a $2.50 app, isn't it? Because other people are paying that amount even if I'm not.
I think what you're talking about is setting my expectation of the value it will add for me. For a $0.99 app, the creator thought it would typically only add $0.99 of value. For a $5.00 app, they thought it would add >= $5.00 of value.
It just sounds like you're not sure how much it's worth (or you have customers who it's worth $2.50 to and customers who it's worth $20.00 to, and you can't choose who to target).
One more point/question... wouldn't it be better for them to "pay-what-they-want" after they try it? Before they use it, they can only guess how much value it adds for them. Are you expecting that they've already downloaded and used your trial, and then return to the website to buy?
> But in my head, it's still a $2.50 app, isn't it?
Is it? See, that's what I am trying to figure out. Personally, I don't think of the "excess amount" as a donation, it's part of the price I've picked myself. And when you buy the app, the amount on the invoice is just one number, it's not split between "base price" and "donation".
> It just sounds like you're not sure how much it's worth (or you have customers who it's worth $2.50 to and customers who it's worth $20.00 to, and you can't choose who to target).
I know what it's worth to me, in my eyes. But even though I've sold a number of licenses, both full price and 20% off, I have no idea whether it's worth the same to my potential customers. Instead of running A/B tests and or different sales I'm trying to speed up the process and see how it pans out.
> wouldn't it be better for them to "pay-what-they-want" after they try it?
Of course everybody should try the app before plunking down money. That's why there is a 14-day trial period. :) Again, I can only judge from my personal experience, but when I run a trial of an app I like I tend to "return to the website to buy". Don't you? :)
Ironically, you won't know whether you're speeding up the process unless you'd test both approaches (A/B-testing and 'pay-what-you-want'-pricing) and see whether they always lead to same outcome. (I'm betting against it.)
Still they get less than 6$ in average... We know for a fact that people are ready to pay full price for each of these games. Yeah I know, these people probably already bought these games but I don't think the distribution of the values are that far (either you pay 20$ and more or you pay 5$).
I think it would work better if you offered multiple prices with more feature. You could have the 0,99$ one that offer the strict minimum but is a great showcase of the application (it could even be free). Then you have the 4,99$ one that has more feature, etc... Give your customer a reason to pay more.
The average purchase may be $6, but how many of those purchases are from people who wouldn't have bought the individual games at all if not for the offer? If they weren't going to buy at all, that's $6 of revenue that you wouldn't have seen at all otherwise.
Don't most ISVs/startups already have that? Just not in real-time, which would be punishing/annoying prospects needlessly.
Compare -
Pick a price between $1.95 and $19.95
Pick a price between $4.95 and $49.95
Another example. If you have an axis representing suggested prices, then if your tick marks go in $0.50 increments, people will likely to end up paying less on average compared to $5.00 increments.
And so on. Cognitive manipulation is your friend :)
A true market could be created by enabling people to buy and sell the service, or perhaps by bidding. This doesn't work unless the supply of the service is artificially restricted (otherwise the price goes to near zero immediately). Of course, some argue that the "true price" of intellectual property is very close to zero, but the app in the article can be thought of as a service.
But there's just no way, psychologically, I'm going to move that slider to the right. (If many have, I'd be interested to hear that.)
I was curious that you felt the app had $20 value personally to you, yet you don't think anyone else would value it higher than that?
I found that decision surprising.
I didn't want to appear greedy. That being said, I've increased the upper range limit a bit. :)