Building the Commercial Case for Pricing Research
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A specialist music streaming app launched during the pandemic into a market that no longer existed by the time it needed to grow. Live events had returned. Cost of living had risen. The entertainment app market had become significantly more crowded. Subscribers were leaving. Price was cited as a reason. Nobody had quantified what that meant.
The organisation had a position: this was a premium product at a premium price. That position was held with conviction by leadership, the product team, and commercial stakeholders. It was also held without evidence. Nobody knew where users' actual price tolerance sat, what the acceptable range was, or whether the current pricing was inside or outside it.
Product Research and Insights was a new function. Before any pricing decision could be made, the case had to be built that research could answer the question at all, and that the answer would be acted on.
The research question was precise: not whether users found the app expensive, but where the boundaries of acceptable pricing actually sat. That required a method that could produce those boundaries in a form the organisation could act on.
I designed and led a Van Westendorp Price Sensitivity study, combined with Conjoint Analysis to test feature and price plan combinations.
The Van Westendorp established four reference points across the user base: too cheap to trust, a bargain, getting expensive but still acceptable, and too expensive to consider. Those four curves, plotted together, produced the Optimal Price Point, the Indifference Price Point, and the full Acceptable Price Range.
The Conjoint element answered the follow-on question the organisation was already asking: could tiered pricing - a basic plan and a premium plan - generate sufficient return to justify the engineering investment?
The harder work was the room. Presenting findings to a cross-functional leadership team meant the research had to be decision-ready, not just accurate. The presentation was built to guide the organisation through the findings in real time, resolving the internal debate about premium positioning by showing exactly where that position held and where it didn't.
The Van Westendorp Price Sensitivity research produced three concrete decisions:
- a lower price point for LATAM and CEE, the markets the data identified as most price sensitive;
- a Point of Churn Discount for subscribers cancelling due to price;
- and an A/B test on the subscription page across US, UK, and Eurozone markets.
The result was a significant uplift in paying subscribers.
The Conjoint data also prevented a decision. The estimated return on a tiered pricing plan did not justify the engineering investment required. That conversation was closed before resources were committed.
For the first time, pricing decisions were made from evidence rather than position. Product research had earned its seat at the leadership table.
