Pricing A/B Test Revenue Model

    21

    Determine whether switching to an annual pricing model generates more immediate revenue than a monthly model based on A/B test conversion and WTP.

    NOTEAbout This Model
    ## Determine whether switching to an annual pricing model generates more immediate revenue than a monthly model based on A/B test conversion and WTP. This model estimates **Revenue Delta** based on uncertain inputs: Willingness To Pay Monthly, Willingness To Pay Annual, Conversion Rate Monthly, Conversion Rate Annual. Run the simulation to see the distribution of possible outcomes.
    VARIABLEConversion Rate Monthly
    beta(2, 18.9)
    Historical conversion rates for lower monthly friction.
    conversion_rate_monthly
    VARIABLEWillingness To Pay Monthly
    triangular(10, 55, 100)
    Typical SaaS monthly pricing range based on user segment sensitivity.
    willingness_to_pay_monthly
    VARIABLEConversion Rate Annual
    beta(2, 19.45)
    Annual plans often convert at roughly half the rate of monthly due to higher commitment.
    conversion_rate_annual
    VARIABLEWillingness To Pay Annual
    triangular(100, 550, 1000)
    Annualized willingness to pay, typically discounted relative to 12x monthly.
    willingness_to_pay_annual
    FORMULARevenue Monthly Cohort
    test_cohort_size * conversion_rate_monthly * willingness_to_pay_monthly
    Monthly plan revenue per 1000 visitors (ARPV)
    revenue_monthly_cohort
    FORMULARevenue Annual Cohort
    test_cohort_size * conversion_rate_annual * willingness_to_pay_annual
    Annual plan revenue per 1000 visitors (ARPV)
    revenue_annual_cohort
    FORMULARevenue Delta
    revenue_annual_cohort - revenue_monthly_cohort
    Difference in cohort revenue (Annual - Monthly)
    revenue_delta
    OUTPUTRevenue Delta
    revenue_delta
    Revenue difference between pricing variants. Positive values favor the test variant. Use the distribution to assess statistical confidence—if it spans zero, the test may be inconclusive.
    CONSTANTTest Cohort Size
    1000
    Number of users in each pricing test group.
    test_cohort_size

    What is Carlo?

    Carlo is a visual tool for Monte Carlo simulation. Model uncertainty by dragging probability distributions, connecting them visually, and running thousands of scenarios instantly.

    More Product Models