Raising Prices For Your Product: Should You Do It? If So, How?
<p>Last night, when I went to open Spotify, I was greeted with the news that its <a href="https://newsroom.spotify.com/2023-07-24/adjusting-our-spotify-premium-prices/" rel="noopener ugc nofollow" target="_blank">prices in the US were increasing</a> from $9.99 to $10.99 per month. Netflix has also <a href="https://www.theverge.com/2022/3/24/22993562/netflix-price-increase-us-plans-2022" rel="noopener ugc nofollow" target="_blank">raised prices</a> multiple times, most recently in 2022.‍</p>
<p>Price is one of the most powerful levers you have in your business. So how should most companies think about pricing?‍</p>
<h1>There Are Only 2 Ways of Increasing LTV</h1>
<p>Despite <a href="https://www.subscriptionindex.com/blog/the-problem-with-ltv-in-subscription-businesses" rel="noopener ugc nofollow" target="_blank">all the complications</a> a subscription model brings to calculating LTV, it’s still one of the most important metrics you have as a company.</p>
<p>If you want to increase the value of your company in a sustainable way, you need to increase revenue. To increase revenue, you should focus on getting LTV as high as possible.</p>
<p>‍There are only 2 ways of doing this:</p>
<ol>
<li>Get users to stay around longer</li>
<li>Get users to pay you more per month/cycle‍</li>
</ol>
<p>As I’ve mentioned in <a href="https://www.subscriptionindex.com/blog/annual-plan-discounts" rel="noopener ugc nofollow" target="_blank">previous posts</a>, getting users to stay around longer can be tricky for mature products, as many products sit in a use case with a certain “natural” end to them that is only a few months long.</p>
<p>‍If your product focuses on diet, fitness, meditation, finding a job, dating (etc.), then you’re probably looking at average user lifecycles under 6 months.‍</p>
<p>Short of selling annual plans or lifetime plans, as many companies in this space have done, this isn’t a lot that you can do to scale up LTV that isn’t a price raise.‍</p>
<p>There is no definitive measure that will tell you if you are charging too much or not enough. You have to research your competitive set and test this change for yourself.‍</p>
<p>The thing that you should be trying to do is to charge the maximum price for your users, your strategy, and the growth rates that you want.</p>
<p><a href="https://entrepreneurshandbook.co/raising-prices-for-your-product-should-do-it-if-so-how-d3a50a5545d1"><strong>Learn More</strong></a></p>