Product growth: Increase price of premium service [004.7]

The Ad support revenues were flowing in too, in addition to the voicemail to text premium services revenues. We had the most successful voicemail to text premium service in the marketplace but we were selling it at below market price. All our competitors were selling the service for $2.99 per month or higher whereas our pricing was at $1.99 per month. We realized that we were leaving money on the table. Now that we had a very stable service with great market share, we had to consider increasing the price since we had the best quality service in the market.

higher profitsPrice increase is a very touchy subject and requires approvals at all levels because of the risk of losing customers and declining revenues. The proposal goes through close scrutiny from marketing, finance, product, revenue and the executive room. But we had to present our findings along with some amount of A/B testing before proposing the price increase as we had more than 1M paid users for a revenue base of $25M+ per year for the customer from a single premium service.

So we segmented the user base for popular devices and conducted A/B testing for NEW 50,000 users to see the effect of price increase over 3 months period. It was not a trivial task to enable such A/B testing on a LIVE production system. But the results were astonishing. We did not see any decline in the adoption of the voicemail to text premium service with the price increase from $1.99 to $2.99 per month. Honestly, we were quite surprised. We presented this data to the Carrier customer and got the approval.

The price increase was enabled very soon and lo and behold the adoption percentage did not decline for 3 months or so till I was with the company. It was deemed as one of the most successful price increases in the Carrier network.

Next up… make voicemail cool with avatars.

Previous blog in product growth series: Product growth: Launch Ad support [004.6].

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