The new and old billing plans, by the numbers
Now that a full month has passed, I can actually take a look at how the new pricing plan is working as compared to the old one with some level of statistical rigor. I expected and/or hoped for three things:
- A better conversion rate from “activated user” to “paying user”, because the pricing was clearer and anchored lower for a non-trivial portion of folks;
- A slightly worse conversion rate from “prospect” to “registered user”, because the free tier’s efficacy was diminished;
- A net improvement in overall conversion from “prospect” to “paying user”, meaning that point 1) would outweight point 2)
| Month | April | May |
|---|---|---|
| Distinct visitors | 8800 | 9700 |
| Registration rate | 6% | 4% |
| Activation rate | 83% | 85% |
| Conversion rate | 2.5% | 7% |
| ARPU | $31 | $25 |
| New MRR | $339 | $577 |
A couple caveats and points of elaboration:
- I think the non-trivial bump in page-views was exogenous; a good deal more articles went viral in May than they did in June, and the marketing site is the lucky beneficiary of that.
- That ARPU going down is reasonable, and a little bit expected (like I mentioned in the launch blog post, many cohorts of user would be paying less in the new plan and indeed I am getting a lot of $9/month signups!)
- That activation rate (“activation” meaning nothing fancier than “confirmed their email address”) feels woefully low, even though it’s not impacted by the pricing changes.
- This is new MRR, not net new MRR, so not counting churn or expansion/contraction revenue (though churn over the past two months has been static and very low). It’s certainly possible that I’m exposing myself to a cohort of new customers whose lifetime value is much lower than I expected, but such a revelation will only come in time.
Still. I mean. 70% increase in new MRR. That is a dramatic improvement. This is why I’ve been excited for the past few weeks as the numbers have slowly baked out: May was one of Buttondown’s best months ever.
Working on this funnel analysis also pointed me towards two obvious things that I’ve overlooked in favor of general ergonomics & feature improvements:
- At the current conversion rates and ARPU, a single page view is worth six cents in MRR; just getting a mere hundred more distinct viewers is a $6 bump in MRR. Being able to reason about marketing work through that lens is a useful way for me to figure out how much time I’m going to spend on content (more than before, certainly.)
- Bringing that activation rate up to, say, 95% feels like a really useful goal. I’m sure the cohort of folks who “signed up but couldn’t be pushed to make sure they activate” is not exactly the conversion-happy type, but it still behooves me to make sure I’m sending at least a single follow-up reminder (which of course right now I am not.)
About assembling that table: I did it largely by hand, with each row being its own SQL query hitting my production Postgres database. Do you have any idea how tempting it is to automate that such that I can hit “run query” and get the pretty results in a table? Extremely. I also don’t think I can justify the effort at the moment — it’s probably a three-hour rabbithole in backfilling and searching arcane rollup functions for something that I should only be looking at once a month or so.