Pricing a Subscription Service: How Love With Food Played With Prices

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Here’s an interesting article about subscription box pricing.  The author reveals what worked, and what didn’t for her snack box startup.

My First Pricing Experiment

As I was deep in my research phase, I noticed something very strange.

Many customers passed up deals with discounts at 50% off or more. In the snack food arena, a high original price point followed by a huge discount wasn’t effective.

I wanted to know why.

So I began my own experiments. I started with a $20 price point for 10 snacks to see if I could spark sales. Unfortunately, the price was too high compared to, say, the Oreos a customer could buy for a few dollars at the grocery store, and it didn’t work.

My next experiment was to cut prices dramatically and learn what I needed to learn to drive adoption. I started with free samples in exchange for feedback.

Suddenly everyone wanted to participate! Free food went a long way 🙂

The feedback I got was incredible. Customers said they would pay $10 for a box of 10 snacks every month. I didn’t want to cut my prices right away (because I saw how a discount can hurt a business), but I was motivated to make these customers happy.

I launched at $14 a box, then lowered my price to $10 over three months, as I could begin to predict my monthly profit. Customers pay by monthly subscription, which they like because it is like receiving a surprise gift every month. I like it because I can rely on them to keep coming back regularly.

 

Read the original article here.  There’s more interesting experiments with pricing.

And here’s the link to Love With Food.  Check it out.