Practitioner pattern · Josh Peleg (Heads M&A at BlueThrone, an app acquirer he pitches as a buyer for founders during the episode)
If you charge under $10 a month, test $20 on 10-20% of users
Unknownpricingexperimentation
What they did
If charging under $10/month, A/B test higher prices even if unsure the app can command $20/month. Don't test on the whole audience: run it on 10, 15 or 20% of users. Keep raising until conversion breaks to find the ceiling. Rationale: $30M ARR takes 500K payers at $4.99/month but only 125K at $20/month, so less UA spend.
“if you're charging under 10 bucks a month, even if you're not sure your app can command a $20-a-month price, just try it. Start pushing up the price, do some AB tests, don't test it on your whole audience, section it, so you test it on 10, 15, 20% of the audience.”
“But just start pushing up that number and see where the numbers start to break. Try and find the ceiling.”
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More from this episode
- Flo: Pitch the app as #1 in women's health instead of competing in all of healthBecame the first women's health unicorn: $200M+ raised at a $1B+ valuation
- Runna: Aim the app at first-time runners doing couch to 5K, not all sportsEarned a strong valuation; Strava bought it to reach beginner runners
- Waking Up: Charge $20 a month or $150 a year for a meditation app~25K downloads a month bring in over $1M a month (Sensor Tower estimate)
- Waking Up: Build the app around a trusted podcaster, and put his voice in the first sessionTiny download numbers earn $200K-$1M+ a month; creator-dependence makes the app harder to sell
- Flo: Run over 100 experiments a monthGuest cites it as part of what made it a top health app; no direct numbers
- Strava: Buy a beginner running app so new runners later move up to your app
- MyFitnessPal: Buy a viral food-scanning app for its knack for pulling in new users
- MyFitnessPal: Sell the app again after its growth has already slowedResold for over $100M less than the $475M paid five years earlier
- BlueThrone: Buy apps that already found fans, then add a full team to grow themWorked really well, per the guest; no portfolio numbers given
- BlueThrone: Buy apps that get lots of downloads but lose users, then fix the productA couple of such deals brought outsized returns for founder and buyer, per the guest
- Use weekly plans for apps people need for a short time, like datingWorks well in dating and follower-tracking apps; fine for cash flow, weaker for an exit
- Pick a buyer type, study its last 5 deals, and start talking a year earlyGuest's favorite deals came from founders he'd messaged with for ~12 months
- Once a TikTok works, spin up 20 to 100 more videos on the same ideaBuyers value a repeatable viral machine over one-off hits; no numbers given