Market Pricing Strategy

01

Context

Flickr was a photo and video hosting service and an online community for photographers. Flickr’s main revenue source was a subscription service called Flickr Pro. We needed to adjust the price of the service to maximize revenue.

I lead research and data analysis for the price adjustment, and created a reusable research playbook from this work that the team could use for future price adjustments.

Note: Confidential strategy from this project has been obfuscated. Charts, documentation, and product direction shown here are not the actual ones from the project.

02

Competitive Analysis

To start, we analyzed the pricing charts for a variety of competitors. We focused on products that offered similar features to our subscription service, such as unlimited, full resolution photo and video storage. We knew our target customers looked at these services when they made their purchase decision.

03

Van Westendorp Survey

Next, I ran a Van Westendorp Price Sensitivity Meter survey. The survey asked users four price-related questions which were then evaluated as a series of cumulative distributions, one distribution for each question.

The intersection of the distributions was analyzed to estimate the following price points:

  • Too Cheap
  • Best Value
  • High Side (top of budget)
  • Too Expensive
  • Optimal Price Point (OPP)

The survey was translated into French, Spanish, Italian, German, and Chinese to expand reach and data accuracy for our main users. It was also customized for five currency markets: USD, CAD, Euro, GBP, and US International.

I invited logged-in Flickr users on desktop and mobile web located in each market who use a supported survey language, and targeted at least 300 respondents per market.

04

Findings

For each market, a distribution chart and raw price list was created from the survey data.
Specific results blurred for confidentiality

We learned:

  • Which markets were underpriced, overpriced, or well-priced
  • Which plans overall were underpriced and overpriced
  • How device usage affected price perception
  • How subscription satisfaction affected price perception

05

Strategy

New cost-per-month price lists were created for each market which aligned with the following:

  • Annual plan ≈ Optimal price
  • Monthly plan ≈ High Side price
  • 2-Year plan ≈ Best Value price

We rounded the values to .49 and .99 price points to accommodate app store pricing rules.

If the product was already overpriced for a market, I recommended to keep the price as-is and offer discounts and promotions that aligned with the Optimal or Best Value prices.

We used our initial price lists to forecast potential revenue, with help from our Finance team. From there, we fine-tuned the prices so the forecasts aligned with our goals.

06

Results

Our price adjustment approach allowed us to strategically raise our prices and hit our revenue targets, while keeping churn to acceptable levels and maintaining our new subscriber rate.

Success! 🎉🎉🎉

To further improve our pricing research, we could make the following changes:

  • Translate the survey into all of our supported languages in order to capture data from a higher percentage of our user base
  • Use specific native currencies within our US International market to learn if localization in those areas will improve revenue