What customer interviews can teach you about your pricing strategy

Pricing is one of a subscription app’s most powerful growth levers because most changes and improvements continue to reap long-term returns. Yet, it can be extremely hard to test around. Endlessly changing your price can seriously damage your brand. But keeping it static may mean it is too high or too low, negatively impacting your growth. It may seem like you literally can’t win, but there’s a way out of it, I promise.

We need to understand customers’ perceptions of pricing better and not rely on tests and competitor research. This requires us to speak to our customers (and not just hide behind surveys) to truly understand what did and didn’t drive value for them. Yet, what customers say and what they do can differ, so before we dive into the actual questions, we need to understand the potential risks and misperceptions along the way. Let’s get started.

What should you watch out for regarding user interviews?

When it comes to interviewing about pricing strategies, there are two key pitfalls to avoid:

1. People want to please us in user interviews 
2. People are terrible at predicting their future actions

‘The Mom Test’ by Rob Fitzpatrick talks about both of these risks and even suggests (potential) customers may lie to us:

“People will lie to you if they think it’s what you want to hear.” – Rob Fitzpatrick.

Before you charge over on your high horse, please know that it’s not with any malicious intent at all. They might not even realize that they’re lying. In psychology, it’s known as a response bias, and it is driven by various reasons, such as an attempt to conform to social norms and a desire to be likable. Despite its [good] intentions, it’s an issue in growth, as it will certainly impact findings. In this case, what can we learn about pricing strategies, and how can we get those findings? 

If you were to ask a participant, “Would you pay this price?” they will likely enthusiastically nod their head in the affirmative. If you ask, “Is our app too expensive?” they will likely shake their head and try to reassure you that it isn’t, “Yes, it is on the higher side, but it is well worth it.” They aren’t intentionally lying, but they want to help you. This is why compliments from a user are a major red flag in user interviews. They’re trying to make you feel good when you are keen to discover the underlying reliable truth to drive decisions.

This brings us to the second issue present in user interviews, especially with potential customers, where it is different to say what you will do vs. what you actually will do. That made sound like a riddle, but it’s basically being all talk and no action or assuming more of yourself.

Rob has the following to offer when it comes to asking about price: 

“Anything involving the future is an over-optimistic lie.” – Rob Fitzpatrick

Basically, this means that someone claiming, “Sure, I’d pay that,” is often at a much higher price point than when they actually have to pay an annual subscription for an app they’ve used a few times. When push comes to shove, they’re not willing to fork out those additional bucks for it, despite their optimistic claims.

This makes conducting user interviews about pricing a tricky matter. This is not to say we can’t learn about pricing from interviews, but rather that we need to be conscious of what we ask and how we ask it to get actionable insights.

As with any hypothesis built to drive experiments or changes, we need to rely on a multitude of research techniques before drawing conclusions. So, even if you get valuable insights from user interviews, you want to see how you can use other techniques like quantitative analysis, user testing, and, if possible, A/B testing before making permanent changes.

Now let’s look at what you can learn about pricing from three key groups:

• Potential customers
• Existing customers 
• Churned customers

We will also cover what questions to ask each of them to get the best insights and avoid these pitfalls as much as possible.

Did you know that pricing is one of the biggest areas where Android and iOS differ? Yep! So ensure that with all interviews, you note down which device they use and treat the learnings and insights from Android and iOS separately.

How to interview potential customers 

By speaking with potential customers, we can determine what they would be willing to pay, which is especially valuable for a new app that is still working out its pricing model. Even an existing app can benefit from speaking to potential customers to better understand what could drive value and get unbiased feedback on pricing models. 

It starts with selecting a group of relevant potential customers based on various qualifying questions. Your insights will only be as strong as your selection of interviewees, and I don’t mean selecting based on superficial demographics such as gender, age, and interests. 

Let’s try an example. Imagine you work for an advanced meditation app for people with sleep problems. You know your users tend to meditate several times a week already to help them fall asleep. You wouldn’t want the qualifying questions formatted like the following, and keep in mind that the bold text signals which response would qualify them for interviews.

1. Do you meditate several times a week?

• Yes
• No

2. Do you have sleep problems?

• Yes 
• No

Immediately, you’ve got a response bias. You’ve asked close-ended questions that highlight exactly what you’re looking for. Users will intrinsically want to respond in the affirmative, so your findings are immediately skewed.

Instead, you might ask:

1. Which, if any, of these do you do at least 3-4 times a week? (Optional)

• Exercise
• Yoga 
• Meditation
• Walking
• Journaling

2. What is the main reason you meditate?

• Improve focus and concentration
• Better sleep
• Stress reduction
• Emotional wellbeing
• Self-reflection
• Pain management
• Other

The results you’re looking for are the same, but you’re ensuring not everyone is herded in that direction. This allows you to preselect relevant potential customers to interview. It acknowledges the many reasons someone might meditate, especially as nowadays, who doesn’t have sleep issues at some point in their life?

From there, you want to understand better the problem they are trying to solve and ask questions like:

• What solutions are you currently using?
• What is the main reason you use [current solution]?
• How long have you used [current solution]?
• How much do you pay for those solutions? 
• What makes it worth that price for you?

This is far more reliable than “Would you pay X?” as you focus on what they are currently spending rather than future potential action. They’re not imagining themselves to be someone willing to pay a certain amount; they’re looking at what they currently pay for the issue and solution. It also teaches you about what is important to them in terms of a solution.

You can also interview potential customers to understand better what potential pricing packages or features to include in a paid plan. One option is presenting them with a conjoint analysis. This pricing research technique breaks down a product or service into smaller attributes (e.g., features, price) to understand how consumers prioritize different product attributes when making buying decisions. 

While it is still hypothetical, it can help to research what attributes they value and what their preferences are around pricing. Here you can see what this  would look like for choosing a coffee machine:

For an app, this could translate to different pricing packages you are considering and what features they get with each one. Once again, it is hypothetical, but it is more reliable than just naming a price or getting them to name one. 

Here is an example of what this could look like for Mimo, an app to help you learn to code, where you could share the model displayed on their pricing page:

Credit: Mimo

The great thing about doing this in an interview vs. through a survey is you can follow up with additional questions to understand in more depth why they chose that option. Such questions could include:

• What made you choose that specific package?
• Was there anything unclear about any of the packages?
• Are there any other features you are looking for?

One thing I like to do, which is a bit unconventional but works really well, is ask:

• What additional information would you need to feel confident about purchasing it?
• What would hold you back from purchasing it?

It’s a fine line because you don’t want to come across as too ‘salesy,’ but you want to understand if they are actually willing to pay that price. You’ll get a better answer than a simple affirmative, that’s for sure.

How to interview existing customers

Existing customers are also great to interview as they can give you more insights into who is willing to pay for your product. As the difference between them and potential customers is that they are actually paying, or at least using it, already. I advise interviewing customers with a high lifetime value who actively use your app. This means that you weed out those who downloaded it and haven’t opened it since. Ideally, they haven’t been onboard for too long, so they still remember trying out your app for the first time. Usually, I look for highly engaged customers that have been onboard for around six months, but this varies; if your typical customer only stays for 3-4 months, you’ll probably look at customers that have been onboard for three months.

You start with understanding that initial journey:

• What led you to try out [app name]?
• How long had you been struggling with [problem]?
• How did you realize this was a problem?
• What other solutions did you try out before that to solve [problem]?
• What did you like and dislike about [each solution mentioned]?
• What led you to switch to [app name]?
• Could you walk me through how you came across it?
• What was your first impression of it?

You are really trying to understand their Jobs to be Done (JTBD) and the emotional needs behind them, so don’t be afraid to ask more about the situation and feelings that they were facing at that moment. A JTBD is not what your customers buy when subscribing to your app but rather the change they wish to experience with your product. It’s not what you offer; it’s what it promises to do.

From there, you can understand how and when they purchased it. How you phrase the first question will depend on your pricing structure. For example, if you offer a free version, you would ask, “When did you decide to purchase a paid account?”

If you offer a trial version, you’d ask instead, “What made you decide to stay on after your trial?”

From there, you can dive deeper:

• What factors most influence your decision to purchase [app name]?
• What product attributes provide the most value?
• What features or improvements would make the app feel more valuable to you? 
• If you could no longer use our product, what would you use instead, and how much would you expect to pay? 

This helps you better understand what drives value and leads people to pay for your app. It also generates ideas for actions to drive pre-purchase and which features make sense in each pricing plan. 

An alternative approach could be interviewing customers on different pricing packages with the same questions or comparing light vs heavy users. This can help you understand who is attracted to which offering and why. This is especially helpful if you have usage tiers. An example of this is how Duolingo offers Free, Super (removing ads and the heart system), and Duolingo Max (same as Super but includes AI learning). It may be that Duolingo sees that customers move from one tier to another or that each tier attracts a different type of customer.

How to interview churned customers

It’s tricky when a customer says they’ve churned because of price. And let’s be honest, this is not an uncommon reason. It doesn’t necessarily mean you are charging too much, but somewhere, there is a mismatch. I’m not saying you need to lower your prices immediately, but you also shouldn’t brush it off as the customer’s own problem. If more people are saying this, something needs to be done, but what? That’s what interviewing churned customers will teach us, with questions like:

• Are we attracting the wrong types of customers?
• Is there a mismatch between expectations and the reality of the app?
• Are we not effectively driving them to use the most valuable features or communicate value?

It can also teach us more about what they value and what can drive better value to ensure it is worth the price we’re currently asking. It’s hard to come back from a price drop, and if you have a value issue, a price drop won’t solve that problem. 

It could be that they have a different need for high-spending customers. To rule this out, you should always start these interviews with the question, “What led you to use [app name]?”

This helps you understand whether your churned customers have a similar problem to that of your highest-spending customers. If that problem is similar, you then want to work out why they found it too expensive to keep using. 

Before we do this, we want further clarification on how they used your app. This helps you see if they are reaching the most valuable parts of the app or not. Even if you can pull this data out of your analytics, here we want to rule out that it isn’t unrelated to your app, e.g., they lost their job, or there has been another change which means they no longer need your app.

You do this by simply asking, “What led you to stop using [app name]?” I know, it’s that easy.

Ideally, you are interviewing customers who indicated that the price was why they stopped using your app in your cancellation survey, but even then, it is worth asking them why they stopped using your product again. They may have chosen a random reason on the cancellation survey or might phrase the real reason they canceled differently.

If it does indeed seem to be a price issue, it’s time to dig deeper. Here’s my preferred first follow-up question:

• Was there something that [app name] didn’t do that you were expecting it to do?

This helps you understand expectation vs reality. Was there something they expected it to do that it didn’t do? For example, does your marketing not match the delivery? If there are things they mention, you can follow up with questions like:

• When did you feel that [app name] was not providing enough value for the price?
• Could you walk me through how you realized this?

This helps you better understand what is essentially the opposite of the aha moment, which we’ll call the oh no moment. Sometimes, this isn’t a specific moment but several individual moments. If they are struggling to answer it, you might ask, “Could you share what prompted you to cancel your subscription instead?”

It is important to stay neutral in these situations, focusing on understanding their emotions at the time and what was happening rather than assuming, such as by asking, “What was frustrating you about the app?”

Don’t get defensive or argue your case; you’re not here to convince them to return. You can ask about potential improvements, but keep in mind that customers may not always know what they need. They just know that it’s not this. If you want to try, ask questions like:

• What improvements or changes would have made [app name] worth the price? 
• What would it look like if you could redesign [app name] to fit your needs?
• What would have provided enough value for the price of [app name]?

Finally, it is worth understanding whether they switched to a different solution, even if this isn’t an alternative app. This will offer context into what they are willing to spend (existing behaviors vs. future behaviors) and clarity on what they were missing from your solution:

• Have you switched to an alternative solution to solve [stated problem]? 
• What led you to try out this solution?
• How much does this solution cost you? 
• Can you walk me through your experience using this solution?
• What’s working well for you so far, and what could be improved?

There is no assumption that other solutions are working better for them. Instead, we are trying to understand what they share and (assuming you can see them) their non-verbal communication and how they feel about this alternative.

One final note about churned customers is that my experience has taught me they are really tricky to get a hold of, especially for apps. My biggest tips for trying to get them to sign up for an interview are:

• Keep the interviews short (maximum of 30 minutes)
• Offer a good reward that isn’t your app subscription
• Use a personal plain text message 
• Don’t be afraid to follow up
• Make it very easy to book in with a Calendar tool and plenty of available slots

Even if you get just a few, it can prove hugely insightful.

From learnings to experiments

While user interviews rarely tell you the full truth about pricing, they’ll give you enough insights to learn and understand. They’ll ensure you don’t waste those precious opportunities to run experiments on assumptions, but to test strong hypotheses. I particularly recommend mixing user interviews with other research techniques to build stronger findings.

From there, you want to build an experiment that tests actual behavior. This still doesn’t need to be integrated into your app, but it can be the next step from what they say to what they do, like presenting different options through email or ads to see what drives more clicks. 

If nothing else, I hope you walk away with two learnings. Firstly, conduct user interviews for your pricing. There is no excuse for avoiding them when they’re full of potential insights, and you can learn a lot from each sub-group. 

Secondly, you can’t just prep your questions a few minutes beforehand, as you risk tainting your results before they’ve even opened their mouth. You need to be careful what you ask and how to get reliable insights. With that in mind, go book some user interviews; I guarantee you won’t regret it.