STRAVA have changed the name of the paid-for service ‘PREMIUM’ to STRAVA Summit’. The pricing model has also changed and there is now the ability for you to pay for the bundles of features you most need. Or not. There is still a free option.

Basically the bundles comprise: the in-workout stuff; the post workout stuff; and the safety stuff. Fair enough.

$7.99 a month to make the most of your sport with all 3 Summit Packs, or $59.99 a year

Here is the press release: link to STRAVA.com

And here are comments from dcrainmaker: link to dcrainmaker.com. Specifically to a comment by Aaron from SPORTTRACKS. But you can read DCR’s thoughts too above Aaron’s comment.

Opinion

I would like to throw my opinion into the mix.

First up there are pro’s and cons of this pricing model. STRAVA will gain some paying users and probably lose a few too. Some people will be happy they’ve saved a few dollars and some will buy the whole package even though they don’t use all the features – some people are nice that way and want to pay for the value they get from stuff.

The press release says they have 32m global users. I’m sure some clever person in STRAVA has done some modelling in Excel and came out with a higher number than the current revenue stream delivers. Awesome. Companies need to make money as otherwise they vanish.

Maybe this new pricing model could deliver $1m extra a year ? or more? or less? I don’t know.

Well, it’s not quite right that STRAVA need to make money. As long as they are cash positive they can keep trading at a loss (if they are making a loss) – but that will generally require external investment, let’s assume it’s from VCs. It is.

As was pointed out in DCR’s article and specifically in Aaron’s comment about the possible value of STRAVA, VCs want a significant return on their investments. Whilst an extra $1m profit a year will increase the valuation, will it increase it enough? I suspect not.

I wrote something a few years back stating that I thought the trend for sports data was towards being stored in large generic repositories, probably not even being owned by the device manufacturers who funnel the data there. That’s still happening to some extent with fitness and health data (Google and Apple), partly because there is value in such data eg to help medical research or life insurance companies. To some extent that trend will be resisted by the likes of Garmin who also realise there is value in their own data stores eg for frequently used route navigation

But that is not the game going on here with STRAVA.

My opinion is that the STRAVA-game is about ‘community’. We saw that starting at the back-end of last year.

STRAVA morphs into FACEBOOK with STRAVA POSTS ?!?

Community is nice. Community is fluffy and makes everyone feel good. Even the odd troll, or two, will be happy in their own way.

VCs? Oh yes. I nearly forgot about them.

Let’s say that the 32m users stated by STRAVA is really 24m relatively active users. That number helps with the math. Let’s say each user conservatively engages in some way with STRAVA 4 times a week (could be a share, could be a kudos, could be a look at their own data, could be an opened email alert of some sort). That’s about 4×52=200 engagements per STRAVA user per year.

That’s 24m x 200 = 4.8bn engagements pa

A reasonable rate for single advertisements might be $6, or more, as a CPM (link to wiki you will see lower amounts referenced also eg google it but at certain times of the yar it could be over $10). More than one ad can be on a page, sometimes the ads wont be shown at all..it’s complicated. But 6 is not unreasonable for STRAVA.com IMO.

So the annual revenue that STRAVA could get from advertising at those engagement points might be 4.8m (not bn) x $6 (CPM) = $28m pa (rounded down)

This is where someone will say “STRAVA have promised never to show ads”

This is where I say : $28 million per year. Straight on the bottom line, pretty much. *

Sounds a lot. Maybe none of the VCs have thought of that 😉 Maybe my calcs are wrong? I’ve probably assumed too high a level of active users but perhaps too LOW a level of active engagement for each ofthose users. Also the $6CPM could easily be made higher with an INTRUSIVE level of ads which, of course, paying STRAVA users would nbot see. Anyway; it’s going to be more than the extra million or so from fiddling around with the price of STRAVA Premium

So there you have the future for STRAVA. It’ll be something like Facebook. But with a power meter.  Maybe Facebook would even buy it.

Of course, as with Twitter (and FB), the trick is to find the right time and right way to introduce ads so as not to deter the community developing to reach the critical mass required to ensure its own longevity.

Or Nike will buy it. I’ll hedge my bets.

Or they will do an IPO. Done it again. I love topiary.

* Divide it by 10 it’s still a big number