Annual plan cut from $69.95 to $50: +19% subs but -15% revenue
Test run byMarketingExperimentsResearch publisher
Commentary byLiftArchiveOur analysis, not theirsCutting an annual subscription from $69.95 to $50 brought in more paid subscribers (183 to 218) but lowered total revenue from $12,800.85 to $10,900, about 15% less.
MarketingExperiments (MECLABS) ran this two-week, five-way price test for an online reference book publisher.
Revenue was the main goal, so the lower price counts as a loss.
- Paid subscriptions: 183 vs 218, and conversion rose from 0.48% to 0.57%. That is a gain on volume.
- Total revenue: $12,800.85 vs $10,900.00, about 15% lower. A loss on the main metric.
- Across all five prices, $75 earned the most ($13,575) and $79.95 earned less than $75.
The change
Only the annual price, and its matching savings line, changed from $69.95 to $50.
Simplified mockup drawn by LiftArchive from the shared screenshots.
Control
The offer page sold unlimited annual access at $69.95 a year, alongside the saving versus the print edition.
Variant
The same offer page at $50.00 a year, with the savings figure updated to match. Nothing else changed.
Why it likely lost
Our reading of the result, not the practitioner's claim.
- The price cut was about 29%, but subscriptions rose only about 19%, so each lost dollar was not made up by volume.
- Demand looked fairly insensitive to price in this range, so a lower price mostly gave money away.
- Visitors arriving from a reference article likely valued the research access more than the exact price.
Caveats: The test ran for two weeks in 2008, with 20% of traffic per price and no confidence level shared. Revenue counts only first-year fees, not renewals or lifetime value.
Who ran it
MarketingExperiments ran this test for an online reference book publisher selling annual subscriptions and published the results (MarketingExperiments). The numbers are theirs; the summary and commentary on this page are ours.
Read the original case study on MarketingExperiments →
How to run this test on your site
- Hypothesis
- If we lower our annual plan price, then total revenue will rise because more visitors subscribe, provided the gain in sign-ups is larger than the price cut.
- Primary metric
- Revenue per visitor to the pricing or offer page
- Guardrails
- Paid conversion rate
- Renewal or retention rate
- Refund rate
- Who should test it
- SaaS and subscription businesses unsure whether they are priced too high. Test several price points, both up and down, at the same time; a single cut can mislead you when demand is not very sensitive to price.
Questions
Does lowering a subscription price increase revenue?
Only if sign-ups rise by more than the price drops.
Here a 29% cut brought about 19% more subscribers, so revenue fell.
How many price points should I test?
More than two if you can. This test used five, which showed that $75 earned more than the original price.
Should I judge a price test on conversion rate?
No. Use revenue or profit per visitor, and ideally lifetime value, because the cheapest price nearly always converts best.