The problem with the price increase is not whether it is too much or not. It is 3 or 4 espresso drinks (or whatever your poison).
The problem is that Zwift is now the most expensive of the virtual riding apps: when evaluating options the highest price option will often be rejected because it is too hard to figure out which is “best”. Among equally priced choices, quality or personal preference take over. So, it would be better for Zwift to “neutralize” on price and win on other attributes, which is easier than trying to overcome a price disadvantage.
The business objectives should be rider growth and retention. If net growth has flattened (highly unlikely–just a smaller % on a larger base), a price increase won’t help revenue growth because switching costs are low and people have options. The price increase is a very short term thinking.
Most of the costs are fixed costs. The only variable cost is data ingress/egress and that is minimal because the app runs locally. Fixed, if you don’t know accounting, doesn’t literally mean fixed: Zwift hires more people, spends more on marketing, whatever. But, the cost of another person doing another ride is close to nil. In these cases, revenue and profit (someday maybe) are more linked to net subscriber growth.
I can’t believe that the price increase is meant to reduce demand because of capacity problems (with the big group rides). That is a very short term problem. The VCs told them to raise prices, so they did.
It would be far smarter to offer a more aggressive annual price to get more people to choose annual instead of month-by-month and add features that increase per person usage and renewals: more ride variety, fun training, serious training (different strokes for different folks), easier/better rider interaction, more realistic avatars (user preference). This surely not the best list, but I am sure Zwift has decent research and insight from the forums and actual usage.
Another important way to improve is to think about audience segmentation and decide who to prioritize at a given point in time: newbies, casual riders, “keep fit” riders, “entertainment” riders, “social” riders, serious trainers, competitive riders. It’s not either-or across the segments but at a given time the product may benefit more from more investment in features to attract more riders from a given segment–this can shift over time and as the product is fleshed out more.
All this will do more for the business than a monthly price hike, which feels like very short term, charge-what-the-market-will-bear thinking.