pricingCraft is a subscription based web service where creatives, especially in the movie industry, can learn from thousands of behind the scenes material from high-quality movies. We will launch with about 4-5 movies and plan to add more material each month and new movies about every second month. It’s currently mainly from animation movies, so it’s concept art, character design, sketches, comments from the director, script drafts etc. It’s material that we experience a great interest in.
What I would like feedback on is the price: we plan to have subscription cost 9,99$/month. Our research so far indicates that our target group finds this acceptable or even cheap.
As for web services in general, do you find this price is reasonable? This allows the platform to be sustainable and we think it strikes a balance where people are used to it from Netflix, Apple Music etc.
Pricing strategies can be a hassle. Let me try to help you out. You probably figured yours out, but other people in similar situations might benefit from this.
What is a user willing to pay? In order for you to price correctly, you need to know what a user wants to pay. This can be explored in several ways;
User/customer surveys. Describe your product and make potential users/customers bring the number to you. Do not bias the survey with asking “Would you pay 3, 5 or 10 usd/month?” Apart from this, you should make an effort to have a statistically significant result from this survey as well as a wide spread geographical territory.
If legal in your market, split-test the pricing. If you have 10000 visitors, serve 3333 of them one price, 3333 a second price and 3333 a third price. Afterwards, compare subscription rates and see which would be beneficial for your business. Remember - 10 subscriptions at 10 usd/month is better than 30 at 3 usd/month.
Another approach, when you work with large userbases is your churn rate. It’s an often overlooked thing in subscription-services, but very valuable once you go about it right. The churn rate indicates how many customers that leaves you in a given amount of time. Your target price should be the amount that is making you good money, but is still cheap enough for any subscriber to think it’s a hassle to terminate the subscription. I.e. the more expensive your solution, the larger a churn rate you will most likely have since it will ‘be worth the time’ of the customer leaving.
In order to justify your monthly fee and keep customers happy (i.e. bring down the churn rate) there are several other great things you can do - you already mentioned one of them.
You can continue to add great content, in same structure and format as the format that attracted customers from the start.
You can add other membership features such as discount/coupon codes for movie-related items, cheaper subscription rates at physical magazines, cheaper movie theater tickets - exclusive movie previews or similar.
Engage the users in the selection of the upcoming content you are about to put online (or give them the feeling that they are in control.). This can be done in a such a way, that when you have prepared 3 new types of content which you were going to put online anyway, - you can ask the userbase which you should create and put online. In the end, you can spin it and say that due to the great interest you chose to put all three online (or pick a winner and silently submit the two others).
Make sure your product is accessible where your subscribers are. If this is primarily mobile, make it mobile-optimized. If they are a lot on social media or specific forums - this is where you need to start the conversation with your users in order for you to get them to be ambassadors.
There are several good books on pricing strategies:
And a good one on churn rates and retention:
I wish you (and any other) all the best. Remember to collect data on all the progress you are making - it really helps you to improve your business model continuously.
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