The demo covers the following:
Hello, I’m Brendon from Sweet Pricing. This video is an introduction to our dynamic pricing tool for freemium mobile apps.
By the end of this video, you will have a high-level view of the Sweet Pricing platform and understand how our dynamic pricing tool works. I will also show you a short 10-15 minute demo of our application to highlight the key pieces of functionality.
But the first thing I want to talk about is why dynamic pricing is important for freemium mobile apps.
So at the moment, the vast majority of mobile apps on the app stores use static pricing. That is, every user sees and pays the same price for the in-app content or subscriptions that a mobile app sells.
So if you are selling some in-game currency, say a pack of 500 coins, you might charge $1.99 for that product. And although there will be some currency differences – some users paying in pounds and others paying in euros – the price is the same for everybody.
But, there is an obvious problem with static pricing. Because no matter what price you charge for your in-app purchases, you will always divide your audience into two groups. You will have one group of price-sensitive users who think your prices are too high and will therefore not be willing to make a purchase. And you’ll have another group of users who perhaps would have been willing to pay more.
So app publishers are realizing that static pricing isn’t optimal in terms of monetization or in terms of engaging those price-sensitive users in the paid experience. And over the past few years, as the app market has become more competitive and publishers are relying more on paid marketing to drive installs, monetization has become a big concern.
App publishers have tried to solve the static pricing problem in a number of ways. Some try to manually segment their audience into groups, or manually set prices for each country, for example. And that can work well, although it requires constant fine-tuning and publishers often need to build in-house tools.
So the existing solutions to the static pricing problem aren’t great. And that’s where the concept of dynamic pricing comes in.
So, in the static pricing world, publishers think of their sales as being somehow related to the price of their in-app purchases. And since revenue is just the product of the number of products they sell and the price they sell at, they are trying to find that single optimal price point that maximizes their overall revenue.
So they choose a new price point and use an A/B test to see how their audience responds to a price increase or decrease.
In the dynamic pricing world, however, we recognize that every user is different. And the price-sensitivity that each user exhibits is different.
So what dynamic pricing tries to do is model that relationship. And factor in certain user characteristics to predict how users will respond to different price points. And once we have that, we are able to optimize prices for individual users. Or groups of users that have some characteristic.
And it’s because of this that dynamic pricing can increase revenue and engage price-sensitive users in a way that static pricing cannot. And that’s very powerful for publishers because they can stay competitive. It gives them an edge that might allow them to spend more on user acquisition, for example, which is positive for growth.
At the moment, some of the very largest freemium mobile apps are using dynamic pricing. But there has not been a general off-the-shelf solution available for everybody else. And that’s where Sweet Pricing comes in because we are that solution.
So Sweet Pricing is a platform of tools that focuses on in-app purchases.
Firstly, we provide a mobile app analytics tool that allows you to look at historical purchases. And that’s really about understanding the relationship between user characteristics and revenue. It also gives you some insight into how your audience responds to different price points for your in-app purchases.
In terms of pricing, we offer two tools. The first is segmented pricing. That is a rule-based approach where you split your users into groups and tailor the price that each group sees. So this is useful if you want to split users in a specific way based on some static data like country or app version.
The second tool is dynamic pricing, which is the focus of this video. Dynamic pricing is a machine learning based approach that automatically optimizes prices of in-app purchases in real time for every user. The benefit of dynamic pricing is that it is fully automated and improves over time as more data about your users and their purchases is collected.
Just before I jump into a demo to show you how all this works, a very high-level picture of how dynamic pricing works in practice.
So the first thing to say is that nothing changes from the user’s point of view. They open up your mobile app or click ‘Buy Coins’. And at this point, your mobile app uses Sweet Pricing’s SDK to send a request to our servers. And that requests contains various data about the user – what device they are running, what timezone they are in, etc.
Once that request hits our servers, we apply the dynamic pricing algorithm. This algorithm looks at the user’s attributes – the user’s data – and computes the optimal prices that should be displayed to the user.
So in this example, we are displaying a store of virtual currency. And for each product that we sell, we are calculating the optimal price for each product.
Finally, your mobile app receives these prices from Sweet Pricing. And continues as normal. So your mobile app will continue to interact with Google or Apple’s in-app purchase API in the way that it already does.
Once the user makes a purchase, you use our client SDK to record that event. And our dynamic pricing algorithm uses this data to automatically improve its suggestions over time.
Okay. Now I am going to jump into the demo to show you how all this works.
The first feature I want to briefly show you is the analytics tool. I’m not going to go into a huge amount of detail and show you every possible view because it’s all fairly standard stuff. It’s important to say that our analytics tool is 100% focused on the monetization aspect of your mobile app. So we don’t have reports for user retention, for example, because we are principally not an analytics solution – we are dynamic pricing solution.
So the tab I am on at the moment is the Stores tab, and this gives you are a really high-level overview of your mobile app and the in-app purchases you sell.
The first thing you will notice is you can see how many user sessions you’ve had in the past month, how many in-app products you have sold and the total amount of revenue you have brought in.
You can also see the average revenue per unique store view, and this is important because this is what the dynamic pricing algorithm is trying to maximize. So you would expect this figure to increase if you enabled dynamic pricing.
The final thing to say about this page. We have a simple timeline chart that shows you how revenue is changing over time. And you can use this to plot a variety of metrics. For example, I can go ahead and plot sales against average revenue. And I can then compare how these metrics are changing day by day.
You can also click on a specific store to break down revenue by each individual in-app purchase that you sell.
And you can also get a breakdown by specific product ID – different price points.
If you are interested how revenue varies by certain user characteristics, we have a number of reports on the Users tab.
The Users tab is really useful if you are using segmented pricing because it allows you to identify user characteristics that are predictive of revenue. And that often suggests they would be useful to target in a segmented pricing model.
If you are using dynamic pricing, you don’t really have to worry about these reports too much. Although this data might be useful to inform your marketing campaigns for example. That’s all I’ll say on Analytics.
Next, I will head over to the Prices tab.
The Prices tab is where you control the prices of your in-app purchases. It allows you to run multiple price models side-by-side so you can compare how they perform over a period of time.
What you can see on the screen is the price matrix. So, first of all, I will just explain what the first row in this table represents.
So you can see that listed vertically I have each product that I am selling in-app. 500 coins, 1,200 coins and 2,500 coins. And associated with each product is a price point or a product ID. In this case, the price points represent $1.99, $4.99 and $9.99.
So what this first row actually represents is a static pricing model, where every user sees the same prices.
The second row is a test group. So you’ll notice that in this group, for each product there is not one but two price points. And what I have done is segmented out part of my audience – specifically, users who are in India or China.
For those users in India or China, I am charging $0.99 rather than $1.99. And for the other in-app purchases, I am also charging a lower price for these users.
So what the Prices tab allows us to do is run a price experiment. So 50% of my audience sees the static pricing, 50% see the segmented pricing. And I can let these experiments run over time and see how they perform.
So in the sessions and average revenue columns, I see the two important statistics that allow me to compare the performance in terms of monetization.
In this case, I can see that under the segmented pricing I am making 33 cents per session. But under the static pricing model, I am making 26 cents. So if I wanted to roll out this pricing to my entire audience, I don’t have to update my mobile app. I can just click ‘Set as default’ and the prices will automatically update.
If, rather than segmented pricing, I want to use dynamic pricing. I can just click ‘New Price Experiment’ on this tab. And for each product that I sell, just check the ‘Dynamic’ option. I simply set a percent of my audience that should see dynamic prices and click ‘Save’.
The dynamic pricing algorithm itself is configured on the Dynamic tab, which is the final piece of functionality I will show you.
The dynamic pricing tab is a way to get some insight into the workings of the dynamic pricing algorithm, and also to configure the algorithm.
Right at the top of the page, you can a real time number of requests coming in. This is the number of pricing decisions being made by the dynamic pricing algorithm per minute or per hour.
We also have a simple timeline view, where you can see request volume per minute over the past hour, for example.
Probably the most interesting part of this page is the prices table. This gives you a high-level picture of the price decisions being made.
So if I just look at the 500 coins product, I can see that roughly 1/3rd of my audience sees the $0.99 price point, while the other 2/3rds see the $1.99 price point.
If I want, I can also see this data over a longer period of time. Simply by changing the ‘Group By’ parameter from ‘minute’ to ‘hour’. And the report refreshes with a bigger window of data.
The final thing to show you on the dynamic tab is the configuration section. So this is where you get some control over how the dynamic pricing algorithm works. You can decide what data the algorithm is allowed to use to make decisions.
One common use case of dynamic pricing is where publishers only want to differentiate their users by country. So it is quite common to unselect all the user attributes and only select the ‘country code’ option. That will ensure that prices are only different between countries, and relatively static within countries.
It is also worth mentioning that our SDK collects a wide range of user attributes by default. But you can also provide your own custom user attributes. So if you hold some data or some metrics about your users, you can pass that data to Sweet Pricing using our SDK.
So the 3 tabs I have shown you – Analytics, Prices and Dynamic Pricing – are really the core functionality of Sweet Pricing.
The only thing that remains to be said is about getting started. So, as I have mentioned, we provide SDKs for both Android and iOS mobile apps. They are really simple to implement into any existing or new mobile app – it takes approximately one developer day to get started.
Our plans are based on actual usage and we bill by the number of monthly active users that your mobile app has in any given month. You can find out more about pricing in the description of this video.
If you would like to find out more about Sweet Pricing, you can either sign up on the website or schedule a conversation with me. The easiest way to book is with Calendly, which you’ll also find linked in the description below.
So thank you for listening, I hope I have given you a good overview of Sweet Pricing. I look forward to any questions or comments you may have.