Problem
User Problem
In 60% countries around the world (e.g. Brazil, South Africa, Romania) the cost of an Adobe All Apps plan can be up to 1/4 of their monthly income. This creates significant price sensitivity, leading to reluctance to purchase and lower conversion rates in checkout.
Insights
60% of worldwide markets suffer from price disparity and lower purchasing power in comparison to the US, but have a greater than average performance during promo periods (highly price elastic) in relation to Adobe products.
Hypothesis & Estimated Impact
Hypothesis
If Adobe adopts region-specific pricing strategies that account for local purchasing power and price sensitivity, then it will compel more users to purchase, improve conversion rates, and enhance market penetration in price-sensitive regions, improving ARR, conversion, YoY growth and competitiveness in international markets.
Estimated Impact:
$505K Quarterly ARR ($2.02M annualized)
Business Problem
Adobe's goal is to establish a strong international presence. Adobe's current international pricing strategy, based on a “one-price-fits-all” global pricing approach, fails to address regional price disparities and lower purchasing power compared to the US. This lack of localized pricing hinders market penetration and growth in price-sensitive regions, where competitors are already leveraging more tailored pricing strategies.
Project Design
Control
Challenger
Results
High-Level Impact
$573k Quarterly ($2.2M Annualized)
Learnings
Introductory Pricing works (almost everywhere): this test proved that at least in some price-sensitive regions, a discount can encourage purchase enough to increase overall ARR, outweighing the loss from the discount. The most negative Impact was seen in Italy, Saudi Arabia, and Portugal — where orders actually dropped. Market-specific factors such as perceived value of the discount, existing market conditions, or a mismatch between the discount level and local purchasing power are likely factors.
EMEA and LATAM were big winners: 14 countries showed positive lift — 9 from EMEA (47% of ARR impact), 3 from LATAM (39% ARR impact) and 2 from APAC (13% of ARR impact) — the top winners where Mexico ($29K lift), Chile ($20K lift), and Thailand ($15K lift)
Follow-up Testing
Investigate Local Factors: Conduct in-depth market research in Italy, Saudi Arabia, and Portugal to understand local pricing expectations, competitive landscape, and purchasing power. Gather feedback from users in these regions to understand their perceptions of the discount and barriers to purchase.
Tailor Discounts: Experiment with different discount levels and pricing strategies specific to these regions to find the optimal balance between attractiveness and profitability.
Benchmark Against Competitors: Compare Adobe’s pricing and promotional strategies with those of local competitors to identify potential areas for improvement or differentiation.