Offer three subscription levels and sell extra boosts on top

Ravi Mehta… subscription, and then you can partially address the problem, but you still have this open space. You still have in between the subscriptions, there's these cracks of people that have a higher willingness to pay or a lower willingness to pay whose needs aren't met, and that's where a la carte purchases come in. And so in addition to having, you can have maybe two or three subscription tiers, going beyond that is going to be two complicated.

Ravi MehtaYou can also have microtransactions so people depending on what they need can purchase as much or as little as they want, and that allows you to get to a much more perfect price discrimination. And so this combination of a subscription set of tiers as well as Microtransaction products turns out to be one of the most optimal ways, especially within consumer to price your product. It works really well in dating. Tinder's really proven that it also works incredibly well in gaming, and we've seen now a lot of game companies have moved to this idea of having a subscription as well as having all of these things that you can purchase within the game.

Jacob EitingDo you think the benefit of having the subscription is just like it sort of recurringly fills half of that demand curve area, right? Because in theory if you didn't have those sort of recurring commitments, you could fill that all with consumables, if that's truly where the demand curve is. Do you think it just generally raises the spending under the curve or what's the interplay there?

Jacob EitingI don't know if this is on purpose or not, but interestingly, there's a little chunk on the value demand curve here where right of the cheapest subscription there is actually no IAP or no consumables,

Ravi MehtaSo I didn't do that deliberately, but it is the case that very few free users actually buy micro transactions. It tends to be that these subscriptions are kind of force multipliers for the micro transactions.

Jacob EitingObviously there's probably 10 times as many or nine times as many free users as there are subscription, but it'd be interesting to see if they still don't generate a meaningful amount of volume.

Jacob EitingI would also imagine too, if your entry level subscription product price point is pretty low, there's probably not a whole lot of people to the right of that. You know what I mean? That are like, oh, it's 4 9, 9 a month too much. I got to pay a dollar a month or whatever. There's probably not a ton of volume there,

Ravi MehtaA hundred percent. And then that cheaper tier is meant to be an on-ramp, find people that are willing to jump the penny gap, get them into a paid product that shows them that they can get a lot more from the experience, and then from there you can upgrade them to Tinder Gold or to the Microtransaction products. Do you show ads to that for users or are they otherwise monetized? They are. There are ads. It's a small part of Tinder's revenue. It's just the numbers in terms of the value of an ad impression versus the value of someone subscribing to Tinder is such a huge difference in terms of order of magnitude. It's a nice way to fill in the gap, but it's not like, I mean business driver.

Jacob EitingYeah, it's incremental. Everybody I've talked to ads is less than a quarter. I'm sure there are exceptions to that, but it's not a huge part of the revenue mix from everybody I've talked to. But it's meaningful. I mean, 10, 20, 15% part of your revenue mix is you should do it, but it's not going to be the workhorse for your business in most cases. For sure. And it helps you subsidize the free users.