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How this app pricing will skyrocket your ecommerce sales

By 02/28/2017 June 4th, 2019 No Comments
7 min read

I use plenty of apps in my own ecommerce stores. But boy, I hate their pricing plans. I hate them all…

Seriously, how often do you visit a pricing page and say:

“What incredible and fair pricing! Can’t wait to pay these people! “

Hmm… Almost never, right?

No doubt you’ve been met with some ridiculously high and/or confusing price points.

$50 fixed monthly. $80 for 30,000 visitors. Free, but I have to pay $20 to make it actually work. $40 for 100 orders.

Here’s the truth:

None of these plans makes sense whatsoever.

It’s almost as if app developers simply forgot why we use their apps in the first place…

Apps installed in my Shopify store

Apps installed in my Shopify store – Yeah, I love experimenting…

Anyway, why do we use apps?

We, online entrepreneurs, are constantly striving for a better version of ourselves and our stores.

One the surface we use apps to increase conversion rates, save time and make our customers happier.

But ultimately, it all comes down to one thing:

We want to create more sales and make more money. 

Ninety-nine percent of the apps out there claim to focus on the above point. However, in using those apps we get charged in every possible way apart from on the extra sales they make us.

Go figure.

Most popular sales apps on the Shopify App Store – none of them uses a pricing based on actual performance (except for Recart!)

Have you ever paid for an app based on the sales it made you?

Exactly.

And it turns out this payment madness is way worse for you than you might first think…

How and why do we get charged?

I did a little research and checked more than 150 popular apps in the Shopify app store.

Broadly speaking, I found out they use 6 main pricing methods:

  1. Free
    These apps are forever free to use, but they usually upsell their premium plans or other apps super aggressively.
  2. Fixed monthly
    No matter how much money these apps make you, they charge you a fixed price, every month. It doesn’t matter if makes you a dime or not, you’ll pay the same. The only thing you can do is to tweak or delete the app.
  3. Visitor-based
    As the name suggests, visitor-based plans are built upon the visitors you have every month. Note: it doesn’t matter how much revenue the app generates you, you’ll simply be charged on your number of visitors.
  4. Order-based
    The order based pricing makes a little more sense, but it’s still very unfair. It doesn’t matter if you sell pencils or high-end watches – you’ll pay the same.
  5. Performance-based
    The performance-based plans are the closest to being fair. Although, most of them still don’t make much sense… For example: why would I pay for a cart abandonment solution based on the number of emails I send, when the ultimate goal of the app is to make me money from my lost sales?
  6. Feature plans 
    You pay more, you get more. But here’s the thing: you get more features, not necessarily more sales. You’re not able to get the most out of the app until you pay for the largest plan.

What’s the common theme in these pricings?

They are never being forced to make you more money!

Think about it… When you pay a fixed price, the one and only goal for the developer is to keep you paying. They usually do enough to keep their app working, but they’re never forced to create more value for you over time.

The same will happen if you pay based on visitors. The app developer’s goal is to generate you more visitors. The more visitors you receive, the more money they make. Sounds okay on the surface, but in reality, there’s much more to making sales than simply an increase in traffic volume…

Order-based and performance-based structures continue along the same thread. If they charge you on orders, that’s slightly better, because they’re constrained to generate you more sales.

If not, they usually want you to send more abandoned cart emails or have more subscribers. It doesn’t matter if those emails or push notifications convert at all. All they need is to send.

Performance based pricing

This app charges me for the number of emails I send out – but what about the quality of those emails and the sales they may or may not lead to?

Why? Why? Please, why?

Explain to me this:

Why the heck should I pay for emails sent?

I want more sales!

If the emails the app developers provide don’t convert, who will be forced to make it work? Me! And I’m still paying for the solution.

Why should I pay for visitors I receive?

How does the app know how much revenue that amount of visitors brought me? I need visitors of course, but in the end, I need more sales! What guarantees me that I will receive more sales from the app if I have more visitors? Nothing.

Why should I pay the same amount every month without making sure it will be a great investment for me? It doesn’t make sense!

This all comes down to the same thing:

99% of the pricing plans suck, because app developers aren’t compelled to make us more money.

Enough of the madness. Time to do things right

I’m in a strange situation because I’m a store owner and app co-founder simultaneously.

I literally spent months thinking about Recart’s pricing. (If you’re not familiar with Recart, you can check it out here.)

What does Recart do for you?

In short:

Recart makes you more money.

What most ecommerce apps should do, right?

OK, I admit: at first, I toyed with the idea of building feature-based plans.

It sort of made sense, as most of the software-as-a-service apps do this. We would put our features into packages and the users would choose, like so:

Recart's first pricing draft

Recart’s first pricing draft

But.

Then I thought:

Wait a minute. Isn’t our goal to make extra sales for the clients? Then why the heck we would restrict them on features?

If Recart’s goal is boosting your sales, we can’t go ahead and lock out you from anything that will allow you to do just that. It just doesn’t add up. We have to provide all the features to help you make the most extra sales possible.

We also took a look at the order-based pricing, but again, it’s still not fair. Applying the same pricing for 50 sold pencils and 50 sold high-end watches? No way.

All this led to Recart’s current pricing…

Introducing: The Extra Sales Pricing

After much deliberation, we went with the model that made the most sense for everyone:

Extra Sales-Based Pricing.

Recart's current pricing

Recart’s current pricing method

Here’s the thing:

We only charge you on the extra sales we make you.

The more we make you, the more we charge you. That’s it.

I believe this is the best way to go, simply because this pricing forces us to make you more sales.

If we aren’t good enough, we starve to death. So we’ll always be giving you our best.

What does this mean for a Recart user?

You hear it here at Recart first:

Extra Sales-Based Pricing is the pricing method of the future.

It’s simply the best format for any ecommerce owner because it:

  • Is as fair as fair can be.
  • Places the company focus on the extra sales.
  • Is affordable for every size of businesses.
  • Compels us to build new features fast.
  • Ensures excellent support.
  • Grants that we’ll give you the best-converting templates ever.

None of these points stand true with any other type of pricing structure, and I strongly believe this is the smartest way to go for both the company and the merchant.

We rolled out this pricing a few weeks ago and our users love it. Even though they pay a little more than they did with our old pricing structure, the new features we’ve been able to introduce will allow them to make much more money as they move forwards.

This is the pricing method that’ll really boost your sales, and I’d love to see other co-founders and apps moving towards a similar structure in the future.

What do you think about these pricing structures? Would you pay for a visitor-based rather than an extra revenue based app? Let me know your thoughts!

P.S: I found that Nosto and Carthook are also in this small group of extra revenue-based pricing companies. Big up to them! And of course, I understand that there are apps where there’s no way to apply the revenue-based pricing (like inventory apps or other small extensions), but most of the cases, it could be implemented easily! 

 

Soma Toth

Soma Toth

Soma grows Recart, the future of ecommerce marketing. As CEO, he makes sure that all the 60,000 businesses powered by Recart stay successful and make more sales with Messenger marketing.