Elasticity: the costless way to boost your in-app purchases

What we did and learned from experimenting with prices in countries outside the United States.

By Lucas Kriletich, Marketing Data Lead at etermax

As many of you may already know, in the world of free-to-play mobile games, ads play a fundamental role in generating revenue. However, for some time now, in-app purchases have begun to arouse the interest of developers and became a fundamental part of the gaming economy.

At etermax, we faced a big problem when it came to getting users to make purchases outside of the United States. To put a few numbers on the matter, 75% of Trivia Crack purchases were made in the US, when this market only represented 20% of our active users. On top of this, it was 20 times more difficult to convert a new user to a paying user in markets like Latam than in the US.

What we discovered digging a little deeper into this matter was that all prices were the same for the different products, no matter what market the users were in, and this was not something that no one knew, but something that had never been questioned. This was what triggered the idea of developing an experiment, reducing product inventory prices in markets that have considerably less purchasing power than the US, to see how elastic the demand for in-app purchases is. The price elasticity of demand is a measure used in economics to show the degree of response, or elasticity, of the quantity demanded of a good or service to changes in the price of said good or service.

We were looking for an increase in transactions, a greater conversion of installers to buyers, and, above all things, we were looking to take care of the purchase revenue. Many of you may say “Why don’t we look for a revenue increase too?”. In this instance we concentrate on acquiring more buying users, who are very valuable to us beyond the revenue they generate.

Something important to note is that, while experiments of this style often involve costly product development, in this case what was done was simply to edit the prices of the SKUs in a store template, shortening experiment setup times.

When we went to see the results, we found that, as expected, there was an increase in daily purchases in both countries, doubling the values they had been showing.

From a revenue point of view, we did not see a drop due to lower prices, which was something that worried us. As I said before, not seeing an increase in sales revenue is not a sign of failure, because a buying user is a user who has a higher retention and in-game metrics.

We managed to convert more users to payers in different time windows, especially 7 and 14 days from the install, where the conversion rose between 25 and 50%. This made our marketing campaigns that optimize for purchases show an increase in the return on investment. Last but not least, we encouraged not only installers but active users to make a purchase for the first time in their history.

In conclusion

It’s not necessary to have a great analysis accompanied by an extensive and expensive development to achieve impact, but to be willing to put ideas into practice, analyze the results, and iterate. With a simple price idea we managed to:

• Increase transactions outside the US
• Raise the percentage of conversion to buyers
• Get more learning instances for our acquisition campaigns.
• And most importantly, allow more users around the world to have a better experience in our games.

And the team continues to investigate new markets where actions like these can achieve a greater impact on our users, because that is what we do at etermax: we experiment, learn, and try again.