How to price an app: the coffee test
- The coffee test: decide whether your app is worth one coffee a week or one a month, then anchor there – one a month is your $4.99 a month price point, one a week roughly $19.99.
- Prices are judged in context: in the Predictably Irrational Economist experiment, deleting a $125 decoy option nobody picked shifted internet-only choices from 16 to 68 of 100 students.
- Annual pricing: start at around eight months of the monthly price (12 × $4.99 is $59.88, so about $39.99), make the saving visible, and judge it by conversion, churn, and net lifetime value.
- Price on perceived value: RevenueCat’s top advice is to price on perceived value, not effort or what rivals charge – treat price as a hypothesis that real users confirm or refute.
- The Van Westendorp survey: ask four questions (too cheap, bargain, expensive, too expensive) to plot a price band like $3–$7 a month, launch in the middle, then nudge while watching trial-to-paid and 60-day retention.
- Someone should complain: a few users grumbling about your monetization is terrific, because if nobody complains your prices are comically low – and a 99-cent price makes customers assume the app can’t be very good.