Sales are Down but Revenue is Up

A few weeks ago I was having some post-CocoaHeads beers with Jon Trainer and Daniel Jalkut. We were talking about the success I’ve had with Labor Mate. They both insisted I raise the price from $0.99 to something higher. Both had sound reasons why a price increase would work for Labor Mate. For instance, the price range for competing apps range is from free to $9.99. A higher price point will help Labor Mate stand out. Everything Jon and Daniel said made sense, but I was skeptical.

For those who don’t know, Labor Mate is a niche app for the iPhone. It has been in the Top 100 in the Health and Fitness category for multiple App Stores including the U.S. for more than a year. Back in November Labor Mate’s status in the Health and Fitness category started to drop due to two competitors being mentioned in the What’s Hot lists. Despite the drop in rankings Labor Mate continues to sale well, slowly and steadily earning more money per month. A big part of this success comes from international sales, which have steadily improved since translating Labor Mate into 8 other languages. Another part of the success comes from the fact that the app is rock solid. It doesn’t crash, and as one of the reviewers recently said about Labor Mate, “Maybe not the slickest looking app for counting contractions, but we didn’t want to risk crashing or accidentally losing data - we just wanted a reliable app that would work under pressure.”

Even though I was not confident of a positive outcome, I decided to follow the advice from Jon and Daniel. I raised the price of Labor Mate from $0.99 to $1.99. My plan was to leave it at the higher price for a minimum of one week. As expected the first full day at the new price saw spike in revenue. However, sales dropped. This trend continued for the first week. As a result, Labor Mate lost most of its visibility in the App Store’s Top 100 for Health and Fitness. I figured it was only a matter of time before sales and revenue hit an all time low.

Despite what appeared to be a downward trend, I decided to continue the pricing experiment for a second week. To my surprise sales started to return to its normal pattern, a spiky, Bart Simpson-like hair cut. What I noticed was exactly what Jon and Daniel said would happen. I started making more money. Jon and Daniel were right! Sure, daily unit sales were lower than before the price increase, but revenue was higher for those two weeks. So while Labor Mate dropped from the rankings of the Top 100 in the Health and Fitness category and the number of units sold per day dropped, in the end I made more money.

The next big question now is, will Labor Mate revenue continue its slow but steady climb at this higher price point, or will the overall trend start heading downwards? I’ve decided to keep Labor Mate at the $1.99 price for another week to see what happens.

Meanwhile, for those of you who prefer looking at charts, I’ve included the sales and revenue charts for Labor Mate covering the time period between April 1, 2010, and May 31, 2010. There was a spike in mid-April but sales started dropping afterwards. The red-dash line is the first full day at the new, higher price. The spike on that day was almost as high as the spike in April.