How To Raise Prices (the Right Way) — Reid DeRamus, Substack
Sub Club by RevenueCat
Understanding Consumer Needs and Balancing Business Priorities
This chapter discusses the importance of solving consumer problems and understanding their needs, while balancing competing factors like new features, paywall testing, and discounts. It emphasizes the need for high judgment decision making and finding product-market fit in the early stages of a business.
On the podcast: whether or not to increase your price, how to execute if you do, and why price increases often impact growth more than retention.
Top Takeaways
💳 Should you raise your app’s prices at all? It’s one of the most impactful ways of increasing lifetime value and revenue so the answer is yes: you should definitely consider raising prices. But it’s a balancing act. How do you not sacrifice long-term growth for short-term gain?
🌟 Avoid customer backlash by reaffirming the value proposition. Asking people to pay more for the thing they’re already getting is a tough sell, so reaffirm your value proposition by simultaneously launching new or teasing upcoming features ****to avoid customer backlash.
💰 Look at your retention metrics to determine whether or not to raise prices. Above-average retention metrics might indicate that you’re leaving money on the table and should consider a price increase — but if they’re not healthy, focus on product and retention first.
📈 Price increases tend to affect acquisition more than retention. Strong price increase execution means less churn from existing subscribers, with a little more pressure on new user acquisition.
🏆 Add tiers to give users options and strategically raise prices. Bundle higher tiers with extra features or introduce lower tiers for your core user base.
About Reid DeRamus
👨💻 Growth PM at Substack, a newsletter publication platform that provides writers and creators with infrastructure, payment, analytics and design to publish their work and send to email subscribers.
💪 Reid helped launch and grow Hulu, Crunchyroll, and HBO Max, taking his learnings and starting a company called Yem that helped individuals and small teams build their own media empires. Yem was then acquired by Substack, where Reid is now a Growth PM.
💡 “I need to figure out the value that my existing subscribers are getting [and] make sure I'm reinforcing that. But I also need to be mindful of how it'll slowly expand from my core audience today, too, if I want to continue driving subscribers.”
👋 LinkedIn | X, formerly known as Twitter
Links & Resources
‣ Boosting Retention with Better Onboarding
‣ Improving Retention with Audience Surveys
‣ Connect with Reid at LinkedIn
‣ Reid on X, formerly known as Twitter
‣ Substack on X, formerly known as Twitter
Episode Highlights
[1:13] Price increase: Raising prices is a great way to boost customer lifetime value and revenue but executing it well is a balancing act — with tradeoffs.
[5:40] Consumer sentiment: Asking customers to pay more for the same product is a tough sell. Take a cue from the standard set by Netflix and Spotify by teasing changes and with marginal — not double — increases.
[9:26] Subscription 101: Substack is a great analogy for consumer subscription apps. Health metrics can be “too good,” with writers significantly underpricing their work and not aggressively marketing.
[17:22] Surveys: Surveys don’t only help establish core price, but also what the most passionate fans might pay relative to core subscribers.
[19:18] Be sure to tier: Streaming platforms and a few pioneers in the subscription app space are leading the way in what is likely to become the default business model within the next five years. “Not all subscriptions are created equal,” Reid highlights.
[22:42] Hitting the ceiling: At what point are you bumping up against your total serviceable market?
[24:46] On reaching 12 million: Having a deep relationship with your audience can pay off much more than having the best video player, payment engine, website or app. It’s about persistently asking how you can deliver more value.
[27:51] Back to surveys: Figuring out where core users are finding value comes from surveys via Google Forms, or face-to-face on Zoom calls.
[31:47] Balancing act: There’s no universal right answer to drive business growth. Early on, find initial traction with a relentless focus on product-market fit.
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