Case Study: Shopify App pricing optimisation

Syncmatic Facebook Audiences is a Shopify App which lets users synchronise customer data between Shopify and Facebook Custom Audiences. In this case study, I will show how Fusionmetrics helped to optimize the app for revenue growth and what changes have been done on the app.

Over time, I have experimented with some pricing changes and you might have heard about the dogma, that most people are under pricing the SaaS they are building. However, as I have learned also overpricing can change to slow growth, maybe even more so.
This is why I want to share this case study that show how you can asses if you plans are making sense for your Shopify app.

Case Study: Revenue breakdown over time for a Shopify app with changes in pricing
Case Study: Revenue breakdown over time for a Shopify app with changes in pricing (green bubbles)

Shopify merchants can have different plan names most notably “Basic” and “Plus”. The main difference is that whereas the Basic plans are relatively low cost with less then $50 per month, Shopify Plus subscriptions start at $2000. This suggests that Shopify plus customers have a lot more money to spend, since they are able to afford the subscription. So the idea regarding pricing was to use this information which can be accessed by the Shopify admin API and charge more from Shopify Plus customers as well. After all they usually have a lot more customers to sync and create higher load.

This is exactly what was done around Sept. 2022. As we can see in the chart, the revenue from new customers (blue shade) increase immediately. Sweet profit – or?
30 days later however we can see that not only the new profit is back to before, but even worse, the revenue churn (orange) increase almost by as much. An also in the following month, we see higher churn as compared to before our price change.
But maybe thats just a seasonal effect, so I decided to wait a little longer and see if growth would pick back up. However this was not the case.
After digging into the numbers however the picture became clear:
When looking at customer lifetime values Shopify Plus customers were only half on Basic. This means that churn was in fact so high, that it overcompensated the higher revenue.
With this, I reverted the plans back to the previous pricing of $10 flat.

With this, growth actually picked up and soon after the app managed to cross the $1000 MRR barrier for the first time.

So I recommend that if you app has multiple plans to always monitor the life time value for example using Fusionmetrics. Also increase your pricing in small increments (e.g. 10%) and wait for 1-2 Month to gather enough data.