Why Charging More Can Improve Your Customer Service?

By Press on March 4, 2016 in Passive Income Journey
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Recently, I acquired Wallet+, a highly polished wallet app that help backing up all the store cards, credit card, air miles cards in the comfort of your iPhone.  You don’t need to carry around all the store cards just in case you find something on sales at The Bay.

The original app comes with an iCloud backup function.  Big mistake.  For one thing, iCloud has been notoriously flaky since the first version and causes problem with every single iOS upgrade.  Second, app with iCloud integration can’t be transferred.  It means if I want to sell the ownership of this app to another person, the new owner will have to forgo all the ranking, reviews etc.  In effect, I will be selling only the source code and not the revenue stream.  It’s kinda like selling the new owner the tables and chairs of the restaurant without selling the current location and clientèle.  Because of this, the original owner was willing to sell the app at a discounted price, but still at a 2 to 3 times multiple of the cost of developing the app from scratch.  It will probably take 3 weeks to a month to get the app done and probably another week or 2 for Apple’s approval, I decided to dive in and make something out of this scenario.

I worked out a deal with the original owner.  The plan was to use the existing version as a lead generation tool by making it a free app with only 2 cards limit and disable iCloud.  I put together a one tap migration function in the original app so the existing user can seamlessly migrate all the existing data over to the new app.

Long story short, I managed to get both app published and released after a couple of back and forth with the AppStore.  The result?  A Gazillion of support emails!  In fact, it has so many support email that I have to quickly set up a ticket system to handle them.  You will be surprised that how many people think they own your baby’s life after spending $1.99 for an app.  At $1.99 LTV, you heard me right, $1.99 LTV.  What was I thinking, I must be drunk that night when I made the deal.  Any how, I quickly swept all of the angry customer email into the support ticket queue and quickly setup some “canned” response.  Most of the user are having problem with the one tap transfer.  Why?  I have tested it and asked one of my engineer friend tested it.  With the help of one of the customer, I found out there is a size limitation for the current solution, the same solution that I used for MileBuddy.  MileBuddy was using a sqlLite database with mainly text data, so it never occur to me that the code will bump into a size limitation.

Well, back to the drawing board and googling stackoverflow for answer.  I found that now Apple allow other app to directly open a document URL from another app.  Nice~.  I quickly put together a fix and make sure I mock up 15+ cards data for testing.  I finished the code in record time and managed to throw in an auto prompt for Touch ID verification.  It’s one of the most requested feature and to be honest, it bugs me to have to click another button to trigger the touch ID when I was testing the app, so I add it in to scratch my own itch.  Sssh, don’t tell my customers.

So what does all these have to do with charging more?

After all the hard work, you know what I get from my beloved customers?  More support emails!  Now that the one tap transfer was fixed, my customer should be happy, right?  Nay.  Now they switched to complain about the missing iCloud backup.  You see, @ $1.99 LTV price point, the app business model is really a pyramid.  If solely rely on new customer revenue to provide on going support for existing customers.  In other word, it just doesn’t work.  Well, unless your app go viral like Angry Birds or Tiny Wing.  Which brought me to the conclusion that if I decided to keep this app going, I have to create some kind of recurring revenue from the existing customer base.   How about making the new Backup function based on credit?  I have used another app called DocScan which is a handy app for scanning documents, it provides a fax capability that charge credit per fax.  With this model in mind, I farmed the work out to my long term contractor for implementation.

The download for Wallet+ Pro has been steady on the finance category sitting anywhere between the top 30 to top 40 in the US.  However, it’s nowhere in sight in the gross ranking.  Well, it’s time to raise prices.  I remember watching the presentation of Jesse Mecham, the owner of  YNAB talked about pricing.  It goes something like doubling the price until revenue stopped increasing.  I immediately bumped up the price from $1.99 to $6.99.  The backup cost $4.99 for 5 uses.  So there you have it, I am hoping raising the price will turn off the grumpy cheap people and having a recurring backup function let the people who needs to the functions pay to support the ongoing upgrade.

The only cure for better customer support is to charge more, yes, you heard, me.  Charging more will eliminate the grumpiest and cheapest customers from my user base, it allows me to focus on improving app and supporting the high value customers.  Looks like a win win to me!

Well, the LTV is still tear-dropping low… back to working on my SaaS.  Stay tuned.




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