A (3:43)

And that's kind of been a historical thing for lose it as well, right, is that you had depended way more on organic search. I mean, having been in the App Store 18 years, you were really highly ranked for, you know, diet, app and weight loss and like all these like really big keywords. So historically the app did rely more on this organic push. But then in the last few years you have been pushing more into user acquisition, right?

B (4:09)

That's right. Yeah. We had built up a moat since we have been in the App Store since November of 2008 and we had built up quite a moat with hundreds of thousands of five star reviews showing up in the top of the searches. And that still happens, but as competition grows, that's going to happen less and less. So we are looking to really ramp up our paid acquisition and we need the economics for that to be a little bit better. At a $40 price point it's, you know, much harder than at an $80 price point to get the ROAS that you need.

A (4:46)

Yeah, absolutely. So I know you've done some price testing in the, in the past. Explain some of the price testing that led up to this kind of the, the lessons you learned as you tried these other prices.

B (4:57)

We didn't come about keeping the price at $40 lightly. Over those years we have been testing constantly up and down the demand curve. We've tested everything from over the years from $5 a year to $120 a year. And usually what you find is that when you raise, the price, conversions go down and when you lower, the price, conversions go up, of course. But usually it doesn't net out like we felt like at $40 with the sale system that we had. We were at a pretty good equilibrium. Like, we couldn't figure out a pricing structure that could beat it consistently. However, in late 2024, we started price testing again. As you know, phones are getting more expensive, our competitors are getting a lot more expensive. And so we decided to test it again, like maybe they're onto something. And when we tested it for the. For the first time, it broke even. So I'd say, like the. The net, the net broke even. That was quite a surprise for us because that had never happened before. And so we tested it again on iOS and on Android, on different cohorts of users, new users, existing users, reactivated users. We kept getting similar results. We felt pretty confident that raising the price, we were not going to lose any money. If this is really going to unlock paid acquisition and some other things, such as the marginal cost of AI features for us, then why not do it? It gives our marketing team so much more room to operate.

A (6:41)

Since you did these experiments way back in 2024 and you didn't fully adopt that new price until 2026, I imagine you have a lot of data to be able to look at retention. One of the things about increasing price is that in revenuecat's data that we share in the report, we. We do see higher retention at lower prices. Now, that's not always gonna be the case. Sometimes higher price products do retain better, but just in general, we do see that in the data. So I do think that's something a lot of apps do face. And so have you found retention to at least break even as well?

B (7:19)

Yeah, I'd say our retention is very stable. And I think that's because even though we are getting less new premium users because of the higher price, our free product is amazing since the beginning, we actually operated from 2008 to 2012 without a paid product. So our product has always been a freemium model. And our free product has always been very useful to people. We invest a lot in it. We make sure that the free product is a great experience. The premium product is just that much better. I think, you know, if people are more. More motivated, they can get the premium features and that helps them out a lot. But you can do everything you need to do to lose weight in the free product, and we're very proud of that.

A (8:07)

You've talked about a couple things being huge unlocks for raising the price. You know, being able to tolerate higher cac. You've talked about the AI features where, you know, the incremental cost of serving these users is getting higher as you increase the cost of servicing some of these features. What other unlocks have you seen from being able to raise the price?

B (8:28)

Yeah, over the years we've built quite a life cycle sale mechanism and it's a homegrown system that we built into the app and refined over years and years. So how much of a discount a user gets at a certain point in their journey is completely built into the experience. And the higher price point allows us to offer more discounts to more users and try to get more area under the curve there. Because from 0 to 40 there's not as much room to do, you know, 50, 25%, 75% discounts. But at $80 we can do more steep discounting. And everyone knows about the sale psychology. You know, the bigger the percent, usually, the higher the conversion. Even in absolute dollars, you know, the price is higher.

A (9:22)

How did the product team react to the increase in price? Because I know there can sometimes be a tension between kind of the, the revenue and monetization optimization from like the product people maybe have a more kind of purity mindset of like, oh, you know, like we want to make it a good deal for the users and stuff.

B (9:39)

Yeah, the product team was fully on board and they were actually pushing for it. They did everything they could to en. Because I think the way they look at it is that all of our main competitors are around the $80 price point. And not to disparage any of our competitors, but we believe our product is just as good as theirs. However, our price didn't really reflect that. They felt like they were doing work that was just as valuable to users as our other competitors work. But it, but it wasn't being reflected in the price. And what, what are prices if not information about how something valuable is?

A (10:18)

Yeah, I was just talking to somebody about, about pricing and how in the app space, it's not like a shelf at a grocery store where people are looking at the like Campbell soup and then the store brand soup and doing the math and like picking based on price. You know, people are coming in from ads and so they don't necessarily have that like frame of reference anyway. And so even when you think about a lower price being a differentiator, it's not necessarily because people aren't necessarily price shopping in that same way. Especially once you're pushing deeper into paid user acquisition, you're probably getting less of that price comparison anyway.

B (10:54)

That's true. I will say that with the caveat of that our lower price points did help us, I think during the early stages of the Pandemic, Right. When people were trapped in their houses, unsure how they were going to meet their health and fitness goals, but also unsure of their financial situation. Because I know we don't like to go back and remember what it was like in March and April of 2020, but we had no idea what was going to happen. And so I think being a low cost option really benefited us then. But since I think you're absolutely right, like we haven't seen any, I don't think there's too much comparison shopping going on either, which is another reason why this is working.

A (11:40)

I'm wondering if you did consider a higher tier of price versus raising the price for everybody and why you decided against doing that.

B (11:49)

We're considering all options. Higher tier is not off the table. We've since implemented ad based monetization in the free product. We're looking to monetize in all sorts of ways. We've added in app purchases, one off in app purchases in the app, we've added partnerships in the app, you know, affiliate revenue. So nothing's off the table. I would say we have not decided against it. We're always open to new ideas to monetize.

A (12:19)

But the decision was to raise the floor, raise the main primary subscription price and that still leaves the opportunity to add tiers on top and explore other monetization.

B (12:31)

Exactly. Yeah. We have such a loyal user base. We love our users and they love us. And there is a subset of users who want the very best lucid has to offer. If we work really hard and create a product that generates a lot of value, we have a lot of great users who are totally on board with that.

A (12:56)

That's awesome. And one thing you didn't do was raise prices on existing users, which is always such a tough decision. I've heard it go both ways. I've heard some people say they doubled prices and it was just. And they didn't grandfather users and because their customer base was so loyal, they just made way more money and you know, they saw some churn but it was, you know, significantly offset by the increase of the price. Why did you choose not to?

B (13:23)

Yeah, there are a few reasons why. So the way that you have to increase the price on existing subscriptions in the App Store, I feel like the UX is confusing and cumbersome. I think you get like a notification that says when you renew, you know the price is going to go up and then they have to go to the App Store and either opt in or not opt in. I didn't feel like that was a good experience for our users. To us, it was impossible to a B test. Yeah, it was a huge risk for us that we felt like we couldn't take on. Like, what is the attrition rate when you raise the price of an existing subscription? I don't know. That might be in the state of the subscription apps report. I don't know. But to us, it's like, we couldn't risk it. Like, is it 75%? Is it 25%? It was just too, too big of an unknown for us. And also, we've always had a history of whenever we've made policy or product changes over the years to grandfather in our loyal users. When we were at the App Growth Annual in October, our growth person and one of our product managers, Danielle and Burton, presented on how we moved the barcode scanner from behind the paywall. When we actually made that change, we grandfathered in free users to that change. And that change was only for new users as well. We've always had just a tradition of doing that just because, again, we love our users and we feel like whatever bargain they entered into whenever they came to us, we try to keep as much as possible.

A (14:59)

Yeah, I mean, there is that incentive. I've talked about this on the podcast before. I got in some special deal with Headspace where it was, I think I was paying like $3 a month or something. And then at that time, the price had gone up to $12 a month or $60 a year. And I knew if I canceled when I resubscribed, I'd have to pay a lot more. And so I stuck with that subscription even though I wasn't even using the app much at the time, because there was that incentive to stick around. So I think there is a little bit of that, too. With your grandfathered user, I would assume that if they do churn and come back to the app, then they're going to see that new price and have to pay that higher price.

B (15:37)

Right, Right. So I think that's an interesting experiment we can run right off the bat. Right. Like, if someone has marked a cheaper subscription to not renew, we could have an intervention there that is like, are you sure? Because it's going to be different.

A (15:52)

You've had about a month of rolling out this new price to everyone, and it was like kind of the most important month for a health and fitness app. So what are the early signs of having rolled this across the entire user base?

B (16:06)

I would say so far, the results have been exactly our experiment results, which hardly ever happens. Right. Like Usually, usually when you release something out in the wild, it's like a little bit different. But so far it has held up to our experiment results and that is a credit to our growth marketing team and our product team. They really tested this rigorously, really analyzed the data, and so far it's been holding up very, very well. We're very excited about it.

A (16:36)

Awesome. Well, I think it's a great place to wrap up anything you wanted to share as we wrap up. I'll put a link to Lose it and your LinkedIn in the show notes, but anything else you wanted to shout out as we wrap up?

B (16:49)

Yeah, we need iOS developers. So if you are an iOS developer, please, please seek me out on LinkedIn. We're trying to grow, we're trying to do a lot of things. We need people.

A (17:02)

Yeah, it's a really cool team. I've met a lot of folks behind Lucit and really like everyone I've talked to. So, yeah, it's been great. You know, the App Growth Annual has been a really fun place to meet folks from the industry and so over. I think I've met six or eight people now from the Lose it team between appgrowth Annual and other events and stuff. So great team. If you are an iOS developer and know a good one, I can say it's good people, good people and a cool product. So.

B (17:28)

Well, thank you very much.

A (17:32)

Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community.