Practitioner pattern · Ravi Mehta (Sells product strategy and monetization advisory services to startups.)
Start at $20-30 a month; if nobody pays, fix the product, not the price
What they did
In their words
How Tinder Captures More Value With Tiered Pricing and Consumables — Ravi Mehta
Ravi Mehta… going back to that threshold thing that we were talking about before. Get people into a subscription that's $20 a month or $30 a month, whatever the framing is for your particular space, and then you can kind of optimize from there. I think a lot of companies and founders make the mistake of monetizing their users and then they build a system where, okay, you can get your first thing for a dollar and then you can get five more of them for $3.
Ravi MehtaAnd now you're in a system where a user has to be incredibly engaged in your app in order for you to be making a reasonable ARPU on a monthly basis. So set that high water line of 20 bucks or 30 bucks, you've got a really good place to start. If nobody's willing to do that, then you've got a product market fit problem, especially if there's already framing for that price in the market. And then that suggests that you should be working on product market fit, not monetization, and if they are willing to do that, then you can optimize from there.
David BarnardAnd you mentioned a lot of founders are under monetized. Any specific examples come to mind where you think if you could go in and apply this playbook to their business, you would two or three x their revenue because they're just currently quite under monetized?
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More from this episode
- Offer three subscription levels and sell extra boosts on topFormer CPO calls it one of the best ways to price consumer apps; no revenue split given
- Keep dating free for most users so there are plenty of people to match85-90% never pay; the 10-15% who do fund the business
- Interview users spending $100-250 a month, then build a top plan for themLed to Tinder Platinum; no results shared
- Test many prices for each plan and add-on, country by countryHundreds of price SKUs live at once; no test results shared
- Sell a paid 'super like' that stands out from a normal likeSuper Likes are 3x more likely to get a match
- Let people start swiping in two minutes using Facebook login and photosOnboarding cut from ~20 minutes to under 2; brought younger people into online dating
- Replace a 3-screen checkout with a 20-question intake before paymentConversion up (host says 40%); 99%+ of people answer each next question
- Sort hotels by each traveler's past behavior without calling it 'just for you'Unlabelled version converted better; labelling it 'just for you' dropped conversion
- Show ads to free users to cover their costSmall share of revenue; ads worth far less than a subscriber
- Give a short free trial that builds a daily habit, then chargeGuest converted without hesitation; a free-tier rival he uses daily never got paid
- Sell live classes, Zoom sessions and week-long intensives to your most engaged usersRevenue almost doubled; live offers now half of revenue
- Play rain sounds the moment the app opens, and in 15-second ads
- Set quarterly goals as a short why, 3-5 commitments, and a task listGuest says teams that adopted it found it works better than OKRs; no numbers
Tags: price-anchor, willingness-to-pay, pmf-test