Sub Club Podcast: Maximize Revenue with Regional Pricing — Dmitry Gurski, Flo App

0:00hello I'm your host David Barnard today's conversation is shorter than usual and will be featured in Revenue cat state of subscription apps report each episode in this series will explore one crucial metric and share actionable insights from Top subscription app operators with me today Dimitri gersi CEO and co-founder of flow Health on the podcast I talk with Dimitri about why the Big Mac index fails for app pricing how Spotify and Netflix are Paving the way for subscriptions globally and while lower prices may be the key to unlocking profitable user acquisition in Emerging Markets hey Dimitri thanks so much for joining me on the podcast today hello D

0:42thank you for inviting I'm really excited to talk to you specifically about Regional pricing it's something we're going to be sharing stats on in the 2025 stateus subcription apps report and it's something I don't think many apps have really cracked but flow is one of the few apps I've seen that does a really good job at Regional pricing so at a high level how do you think about it what has kind of guided your strategy for regional pricing around the world there are several principles my first statement will be that it's not right to use very simplistic approach like for example like a mark index or for example

1:21to use pricing of Netflix or Spotify in most of cases it would not work and for example why it would not work in case of of ma index when you're comparing like cost of burger in United States is cost of burger in Brazil the main reason that you have very different audience like different customers for burger and potentially for your app I may predict that average buyer customer of burger in Brazil is just like average person in Brazil but average customer of your subcription in Brazil probably is a more like more effluent part of society and probably you iOS device rather than Android device and because of that price

2:04may be much higher than your big market index like would predict almost always prices originally are lower than United States but there is like a huge difference between approach pricing for iOS for Apple devices and for Android if you compare like Optimal pric and for IOS and Android in rich countries like United Kingdom for example or United States like Android is always cheaper almost always cheaper how not so much cheaper maybe 20% cheaper maybe 15% cheaper regions like Brazil difference in optimal pricing may be huge because richer part of society use iOS devices and because of that propensity to pay and even ability to pay is extremely different

2:53between this categories of users in English speaking world and worldwide and because of that the pricing for IOS and Android originally may have very big difference in comparison with IOS and Android in United States or in English speaking world as a larger app you get to do a ton of experimentation even in some of these countries I think that is a struggle for a lot of apps is that they don't have the volume how do you think about actually testing these prices and how do you run those tests and then how do you evaluate the winner they have like a luxury have huge audience and we have huge audience

3:31worldwide like four is the biggest Health app in the world and we have maybe more than 200,000 installs daily and of course having such audience and having 70 million mon diffusers worldwide we may afford like making ton of experiments and because of that and like we may make such experiments just like using like kind of brutal force approach just like to create enough testing group like to put many prices to test you compare with the initial price and make a decision for each region but very significant moment she consider that we not measuring pricing and success in pricing by conversions and it's very often a big mistake we measure

4:15pricing by influence on average revenue per user and why because price is correlated with many other metrics conversion rate to trial then activation in trial then retention of subscription depends sign ific anly on cost we have situation when price may be significantly cheaper for example twice cheaper but then retention is Three Times Higher and overall rpu will be much higher and because of that we are making decisions not based on price in s for conversion but based on influence on rpu do you have any specific examples of countries where you did do price experimentation and like what the results of that price experimentation was on Revenue the got quite significant

5:01success in Brazil this year and significant means that Revenue was growing like hundreds of per or year to year very significantly and now Brazil is a number three market for us for so maybe market number four significant Market really significant market and what happened we reduced price significantly really significantly and it helped not just uh increase conversions and improve retentions but also what was the result we didn't expect it unlocked P user acquisition because with this price conversions are enough to provide enough signals to networks and to get the traffic profitably like we found like a hot spot for p acquisition with this price and the increased volume of P acquisition in

5:54Brazil very profitably significantly this year because of that and it would not be possible with higher prices just because like level of conversions is not enough like to really start wiing auctions it's such a counterintuitive thing but in a country like Brazil where the ad inventory is so cheap then the lower prices and the lower prices giving a decent bump in conversion actually makes it work so that's fascinating I'm going to go out on a limb and propose that subscription apps across the entire industry should instead of using the Big Mac index they should be using the flow index given how much price testing you've done do you think that your

6:36pricing and your strategy and I would say like percentages so if if us is the index of one and then your Brazil pric is2 and your Mexico pric is.3 and your Germany pric is8 you know that would be kind of the flow index of pricing do you think the pricing works very specifically for flow or do you think that what you've learned about pricing might be even more broadly applicable to the industry recently which we compared our prices of inlow with like average prices in health and fitness category and not even in absolute numbers but more kind of relatively to United States and I would say that it's pretty much

7:17correlated but there are exceptions and mostly this exceptions maybe not so much about the country itself maybe more about what apps are popular and age distribution in this apps because Flo naturally has mostly users younger than 35 and other heals they significantly sell subscriptions to people older than 45 and then the demographic and distribution of Android and iOS May influence like average price a lot and because of that I would not advise to use any index or any Benchmark because optimal price May depends on many parameters like age of your users platform type of product cultural specifics and it just must be tested that's really fantastic advice and the

8:07cumulative effect of this approach is that Flo seems to be doing much better outside the US than a lot of subscription apps I mean so many apps I talk to are so dependent on the US and make almost nothing in other countries what does that look like for flow what percentage of Revenue or how are you doing outside the US compared to inside it's true and our International Revenue is growing and even this grow is speeding up for example this year we like Revenue out of Rich English speaking Vault increased like almost 80% and English speaking Vault was 35% and mix was like something like 45% of Revenue growth this year but

8:52my prediction that long term FL will even more money originally than in United States and not even like in English speaking world because I Al like Australia Canada United Kingdom like behave pretty much the same as United States and now we have maybe 70% of our revenue from this kind of English speaking VA like what is traditional source of money for subcription companies but regions are growing very fast and it's much more cultural phenomenon than anything else and I have a hypothesis that it's pretty much driven by efforts of each subcription businesses like Spotify and Netflix because we see that uh when Spotify Netflix and apple when they double down

9:36on specific market for example Germany or then Brazil then several years after people there start to pay for FL subscription or other subscriptions just because they get in this habit they acceptance that it's okay to pay for digital subscriptions and there are plenty of regions where people have decent income for example Italy or Poland and conversions to sub are really low and not just for FL but for all companies and again not just because people there can't pay it's because of cultural acceptance of the idea itself that it's okay to pay for digital products yeah that's fascinating the last thing I wanted to talk to you about

10:16was flow is doing something really different than I've seen any other app do and that's that you're offering a completely free version in a lot of countries tell me about why you're doing that and how that's playing out we believe that Flo is a very valuable very useful product and me just don't believe we have many scientific research to prove that and we just think that it's not right to blocks so useful product behind pay wall in countries where women just can't pay because of different reasons because in some regions they just don't have credit card or they just don't have money all together and conversions to subscriptions would be

10:59really low and 99% or even more of our users would not have access to the most useful features and because of our mission we decided that it's better if you just open that for free and hundreds of million women worldwide will be able to become healthier and get knowledge because of FLW and up to this moment we have given more than 20 million subscriptions like 20 million subscriptions we gifted more subscriptions than we because like now we have 6 million active subscribers maybe this like CH maybe I don't know maybe we have sold 10 million or so but we have given 20 million and 20 million women worldwide

11:44in poor countries they may use floor for free and there not like a business here it's like our idea that if you are doing something good then when people may pay they should pay but when the people can't pay it's almost kind of sinful to hide the product behind payable and because of that flow is for free in uh more than 50 countries wow that's incredible and a great way to align the mission are there learnings that do help is there data coming from those users or or other things that do help Propel the business or is it just fully kind of a charity oh it's the just charity you're

12:24not getting any business value from that like we're getting business value in sense that our employees are more motivated because Flo is good company and our users more motivated because of that and we inform that like they are doing this Pro social campaign but there is no like a direct business value like I don't know like additional revenue or some additional growth we would get because of that no it's just like kind of because of our mission and our desire not just in money but also that to be a good company and improve this that's fantastic I don't know how many other apps are so Mission driven that

13:03they' be willing to do that but I think it's incredible I mean for other apps there may even be things like they could do Tom's Shoes kind of made this famous of like you buy a pair and then a pair is donated maybe some apps could even experiment with that even if they aren't quite as generous a mission trim as as you and the flow team are but I think it's an incredible place to wrap up aligning the mission and giving away value for free to those who can't afford and not getting business value out of it is it's really an incredible thing it's something I commend you for but as we

13:32wrap up anything else you want to share with the audience very interesting moment she built subscription apps and she built Health apps and all business model has started working really well and it was difficult to imagine that apps would become like businesses with hundreds of million in Revenue several years back and next year Flo will earn close to 300 million if you're successful and it's the biggest Health app in the world with 703 million month selective users and in United States 25% of all women younger than 45 are month selective users of course we are Hing and I believe that the quality of the team is the main

14:18source of success let's look on our open positions on our website or in LinkedIn and please apply I'll share links to your careers page and Linkedin in the show notes so those of you who were inspired by this conversation I want to work for one of the coolest biggest subscription apps in the world take a look in the show notes and Demitri thank you so much this has been such a fascinating conversation I'll have to have you back we had pages and pages of notes that we could have talked about we'll have to do a podcast later in the year and really dive into more of your

14:49learnings because you've learned so much and shared so much and I really appreciate it thank you much thank you for inviting me thanks so much for listening if you have a minute please leave a review in your favorite podcast player you can also stop by chat. sub club.com to join our private community