tl;dr pricing in creative impacts the type of customer you attract

Last week, I mentioned how pricing/offer impacts the audience FB goes after.

I want to share one example of a test I ran with a client to try and move them away from value based messaging in ads...

We had a client we worked with that had "Bed, Bath, and Beyond Syndrome." Like visiting a BBB, if you shopped on their site without a coupon, you were doing something wrong.

(all raw numbers adjusted for illustrative purposes, but proportionality remains same)

We believed this approach was hindering their ability to grow the business profitably. So we set up a split test.

Offer 4 different versions of their hero product at 4 different prices:
- $90 (this was their initial offer)
- $95
- $99 with a gift card
- $99 with no gift card

According to the data they shared, this was the breakeven ROAS at each price point

When we ran the test at scale with statistical significance, the results were surprising.

While $90 offer was ROAS winner, $99 offer w/ no gift card was 2nd best performer & also had best chance of profitability.

Our best margin (worst consumer) offer could be most profitable.

Then we decided to wait and look at LTV on these orders two weeks later. The numbers we're even more enlightening.

Not only did our $99 customers spend more upfront, they ended up spending 20% more two weeks later.

Our ROAS was actually better on a $99 price point and was profitable based on the provided unit economics.

While only a 10% price increase, FB found higher quality users. CPAs & ROAS were less cost efficient, but LTV & profitability improved.

Oftentimes, you'll see advertisers push free simples or limited time offers to try and bring people in the door. ("They'll be loyal once they try the product.") Unfortunately that's not alway the case.

Lowering prices or offering free trials can lead to a more undesirable consumer, a deal seeker with high price loyalty and no brand loyalty.

Instead of focusing on maximum ROAS or lowest CPA, it's important to keep in mind the margins you're working towards for profitability and ensure you're bringing the right customer through the door. Not the cheapest.