Case Study: Pricing a betting advice subscription

Topics: Pricing
For: B2C

👤 Question from

Bogdan, co-founder at a betting advice firm

❓ Question

I run a small football betting advice business. While it’s free access for now, I will soon launch a paid subscription.

I’m considering offering 3 plans:

1) €10 per month for 10 tips a month 
3) €12 for 30 tips
2) €30 for 50 tips

I have an additional idea to offer:

1) €10 per month for 10 tips 
2) with an option to add another 20 tips for only €1.

Which of these pricing tactics would work better? Maybe I should do something completely different?

🎓 Answer

Happy to help you launch the most effective subscription pricing possible!

The insights we’ll touch upon here are mostly part of the new Science-based Playbook of SaaS Optimization (on which you get 10% off for being a Pro member, just use this link) that I’ve recently launched. But we’ll take these learnings, along with some other Science Says insights, and apply them to your specific case and questions.

Offer three to five plans

Aim to offer between 3 and 5 plans. This will make it easier for your clients to understand their options and choose one [Research paper]. 

Offer a basic paid plan as a low-cost entry option (e.g. €10 for 10 tips), a standard plan as a balance between cost and functionality, and a premium plan for power users or the higher-end market segment.

Once your business is more mature, if there is demand for it, you can explore offering custom or enterprise plans.

Keep a free option if possible

Try to keep a free plan (e.g. 2 or 4 free tips per month). This plan will attract new users much more easily, because of how strongly people value ‘free’. [Science Says insight].

Giving your best tips, but limiting the number of tips free users allows people to fully sample what you offer and understand its value. This is an excellent way to show your value and convert users who are willing to pay. [Science Says Insight]

Turn one of the paid plans into a decoy

To increase conversions from free to paid, turn one of your paid plans into a decoy. [Science says Insight]

You have two options:

1) Price the middle option just below the most expensive plan. This will nudge people towards buying the most expensive plan “because it’s so much more for only a few bucks more”. For example:

• Basic plan: €10 / month for 10 tips

• Standard plan: €25 / month for 20 tips

• Full plan: €30 / month for 50 tips

2) Price the most expensive option very highly. This will make the middle option look like a better deal. For example: 

• Basic plan: €10 / month for 10 tips

• Pro plan: €25 / month for 30 tips

• Full plan: €80 / month for 50 tips

Be careful with very high discounts, they backfire 

I do not recommend using the 2nd special offer option of “Add another 20 tips for only €1”.

This would devalue your product, and make all of your tips feel lower quality. It may even make people less likely to buy any plan at all from you. 

Price is one of the key signals by which we judge a product’s quality, it becomes an even more important signal when we are unfamiliar with the brand. In general, avoid using discounts that are higher than 60%. [Science Says Insight]

📖 Research cited

• A. Choice in Context: Tradeoff Contrast and Extremeness Aversion. Journal of Marketing Research (August 1992). 

• [Science Says insight] How Consumers Assess Free E-Services: The Role of Benefit-Inflation and Cost-Deflation Effects. Journal of Service Research (January 2018)

• [Science Says insight] Digital Paywall Design: Implications for Content Demand & Subscriptions. Management Science (August 2020).

• [Science Says insight] Selling the premium in freemium. Journal of Marketing (October 2018).

• [Science Says insight] When discounts hurt sales: The case of daily-deal markets. Information Systems Research (July 2018).

Remember: Peer-reviewed, scientific evidence is the best knowledge we have - by far. But that does not mean it is guaranteed to work in your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.