Software pricing : Standard and Pro editions

Our Collectorz.com programs are all available in two editions: Standard and Pro. The Standard edition sells for $29.95 and is lacking a couple of “advanced” features compared to the $49.95 Pro edition.

We have been selling our software this way for a long time. Before we introduced these two pricing levels, we were selling our software for $29.95. Adding the more expensive Pro edition for $49.95 was a good way to increase the price without dropping the old price. After the change, about 80% of our customers started opting for the Pro edition, causing a nice jump in profits.

The presence of two editions also gives our visitors a choice. Price conscious customers can opt for the cheaper Standard edition. Buyers just looking for the best, regardless of price, can choose the Pro edition. The availability of choices helps to increase conversion rates.

As you can see in the image above, we have done something similar with our range of barcode scanners, a cheap CueCat for $19.95 as an entry level scanner, a deluxe laser scanner for $139.95, and a mid-level option for $79.95.

But offering multiple editions also has one drawback: it adds complexity.

Complexity

If you offer multiple editions of your software, at different prices, you will have to as clear as possible about the differences between them. Our solution for this is to include the little blue question mark thingies everywhere we mention the two editions. Clicking it pops up this feature comparsion chart:

But still, a large percentage of the support questions we get is about standard and pro editions. People still ask about the differences between them. And about how to upgrade from Standard to Pro. Or why feature X has suddenly disappeared after unlocking the trial edition (the trial edition has all Pro features, so unlocking to the Standard edition disables some features). Also, we get people complaining about feature X being a Pro feature, while they think “this is something every user needs” (yes, we also get this for advanced stuff like “Export to XML”).

Having two software editions also adds complexity to your shop page, especially if you offer multiple products. The page has to show list both editions, with their prices and again some way to find out more about the difference between them. The buyer must be able to to add either the Standard or the Pro edition to the cart, and preferably the shop page should allow switching between the two. In the Collectorz.com shop, it looks like this:

So I began wondering: is the availability of the two editions still increasing my profits? Or is the extra complexity hurting my conversion rates? Well… if you have been reading my posts for a while, you can probably guess what’s next…

The test

Here’s the A/B split test I have been running for the past 14 days:

  • Version A: As described above, the product pages and shop offering two editions, Standard and Pro.
  • Version B: Product page and shop listing just the $49.95 edition, just called “Movie Collector”, without the Pro postfix.

In the B version, the Buy-box on the product pages looked like this:

And the shop page could be reduced to:

Simpler, but less choice and looking more expensive.

The results

Well, let’s start with the good news:
In the B group the average purchase value was 31% higher.
But the number of sales (= conversion rate) dropped by 25%, causing an overall 2% drop in profits.
The conversion to trial sign-ups also dropped, by about 3%.

Interestingly, during the first few days of the test, the results looked promising. The B edition immediately showed the increase in purchase value, but the number of sales was higher too. The A version proved better in the end, but took more time to pick up steam.

What’s happening here? Well, I can’t be sure, but it looks like the more price-conscious customers are also taking more time to decide on their purchase, e.g. by seriously evaluating the trial edition. The kind of user who had no problem with the $50 price tag apparently also had no problem buying without trying. Hey, why not add a 2nd $50 program and the deluxe scanner too 🙂

Anyway, it seems like we shouldn’t get rid of the Standard edition (yet). The 2% decrease in profits is small, but a 25% drop in new customers being added to “the pool” is unacceptable and could cause a large drop in profits in the long run (less cross-sells, less up-sells, less upgrades, etc…).

But wouldn’t it be great to increase the average purchase value by 31%, without the drop in conversion rate? Back to the drawing board…

2 thoughts on “Software pricing : Standard and Pro editions

  1. If 80% of customers are buying the pro edition, then maybe it is too cheap? I have 3 product levels and the different in price between the bottom and top is 10:1. Maybe you should try $29.95 and $59.95?

    Also I have the user choose at install time which edition they want to evaluate (they can change dynamically at any time). So there is no issue with features ‘disappearing’ when they buy.

  2. We have exactly the same issues. However, our price range is even more spread ($30, $50, $140).

    We are now considering a way to only sell the $30 variation and upsell the additional features within the application. This gives a cheap entry and users can extend if they want. That is what most of the cheap-version buyers do anyway as they realize that they need the extra features.

    Downside: Users may stay with the reduced feature set as happy campers causing us loss of profit. Currently, most users just buy the top-of the line software just because they do not want to miss anything.

    You just can’t make it right. 😉

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