AI predicts the optimal price for subscription to The Wonder Weeks app

Background

The Wonder Weeks app guides parents of newborns with knowledge and advice throughout various growth stages. The app is available in 19 languages. The Wonder Weeks team is considering switching to a subscription model for the app and has asked Neurensics to investigate the price users are willing to pay for this subscription. Additionally, they are curious whether willingness to pay differs between countries.

The research question

What is the willingness to pay for a 24 month subscription toThe Wonder Weeks app?
- Does the willingness to pay varies across different countries?

Research set-up

To thoroughly investigate willingness to pay, we selected 300 partners (or single women) in Germany and the U.S. who were either planning to expand their family, expecting a child, or had a baby between 0 and 3 months old. Participants were shown a short video introducing the app, highlighting its various features and useful benefits. At this stage, no pricing information was mentioned.

In close collaboration with The Wonder Weeks, Neurensics determined specific price points within a predefined test range. to accurately assess willingness to pay, this range needed to include the tipping point from cheap to expensive.

With the NeuroPricing™ Online tool participants indicated at various price points whether they considered the cost expensive or cheap for a 24-month subscription to The Wonder Weeks app. Based on the unique methodology of this tool, we determined the optimal pricing - the 'Feel Good' price.

We then used the results from Germany and the U.S. from this Online NeuroPricing™ test to predict the expected price elasticity and optimal pricing for five other countries. Using a set of relevant macroeconomic parameters, AI-drived extrapolation enabled an accurate forecast.

Results

Value Perception

Every consumer has an individual ' Value Perception': the value you assign to a product or service, expressed in euros. At the peak of the personal Value Perception curve lies the 'Feel Good' price.

Demand curve

The actual price elasticity of a product is shown in the so-called Demand Curve. this curve illustrates the decrease in demand for a product as prices rise. We speak of high price elasticity when the demand for the product is (very) strongly affected by price increases.
We found that German consumers are willing to keep their subscription for a longer period at a higher price compared to American consumers.

Revenue curve

The ultimate question, of course, is where the optimal revenue point lies - in other words, the multiplication of price by the number of people who purchase the subscription at that price. The answer to this question is found in the Revenue Curve: this graph multiplies the demand for the product at each price point by the price to determine the Revenue Optimum Price.
We found a Revenue Optimum Price well above €30 in both countries, with a willingness to pay between 60-70%.

Predictive AI econometric model

Based on the obtained results from German and American consumers, along with several macroeconomic indicators relevant to The Wonder Weeks app, we were able to predict the Revenue Optimum Price points for five other countries (the Netherlands, Australia, Brazil, Canada, and the United Kingdom).
AI predicted the highest Revenue Optimum Price for the Netherlands and Australia. In Brazil and Canada, the predicted Revenue Optimum Price was significantly lower, while the United Kingdom fell somewhere in between.

Conclusion

From this strategic pricing study on willingness to pay for a 24-month subscription to The wonder Weeks app, we conclude that in various countries, the optimal price for this subscription is around €35. This is the price point where the revenue forecast is highest.

AI modeling based on relevant macroeconomic indicators showed that the level of available mobile subscriptions in a country (mobile penetration) and government spending on Early Childhood Education and Care (ECEC) are better at explaining differences between countries than the seemingly logical parameter of 'income per capita'.

This analysis revealed that the Netherlands and Australia would show the highest willingness to pay, while Canada and Brazil would have the lowest. Germany, the U.S., and the U.K. fall in the middle range.

In practice

The Wonder Weeks app has followed our recommendations based on these findings - with succes!
The price of a 24-month subscription to The Wonder Weeks app is now $34,99 (±€34). The company has observed that subscription numbers in Brazil are relatively lower compared to the other countries.
While some consumers do find the price high, this does not apply to the vast majority. As a result, both the number of subscriptions and the revenue for The Wonder Weeks have increased significantly. And according to the reviews, users highly appreciate the price-to-quality ratio.