Dating apps test just how much users will pay for love

DATING is already an expensive business, and for those looking for love on their phones, it is only getting pricier.

In an increasingly crowded market and battling a slowdown in growth, apps such as Tinder are looking to more expensive tiers of service and added perks in order to increase revenue, putting to the test just how much people will pay to find a partner.

Since their introduction over the past decade, dating apps have redefined courtship for a generation, growing into a multibilliondollar market in which consumers spent more than $5bn globally last year, according to app market researchers data.ai.

Match Group, a $9.9bn company that owns 45 dating brands including Tinder and Hinge, raised prices and introduced new subscription levels across its biggest platforms in 2023. The company is hoping that charging users more can help it turn around a slowdown in revenue growth and boost its ailing share price.

In September, the group introduced a controversial $499 a month Select subscription on Tinder, available to just 1 per cent of the app’s users. It promised “unrivalled access to the absolute best of Tinder” for its most “sought-after profiles”. Tinder, which still dominates the online dating market, has also increased prices for its other tiers in the US, offering perks such as unlimited “likes” and the ability to message before matching.

Higher charges come at a price, with Tinder’s customer base dropping 6 per cent year on year to 10.4mn in the third quarter of 2023 due “primarily...to the expected impact of US price optimisations”. But higher revenue per user boosted Tinder’s overall revenue to $508mn in the three months to September, up 10 per cent year on year.

“Tinder has . . . embarked on a comprehensive strategy around pricing . . . which is something that really should be happening on a regular basis,” Gary Swidler, Match Group chief financial officer, said in an earnings call in May, adding that there was still “room to increase prices in certain spots”.

“We’re not focused on a specific key performance indicator, whether it’s payers or revenue per payer . . . we want to maximise overall revenue,” he added.

The shift comes as Match is battling a slowdown in sales growth and a drop in the number of paid users. The company revised down its fourth-quarter revenue expectations from $890mn to between $855mn and $865mn in November. Its shares remain about 63 per cent below their listing price in 2020, after a bruising tech stock rout last year.

Dating apps have largely eschewed advertising in favour of “freemium” models, whereby users can sign up for basic services but pay for extra tiers and features. The apps rely on those to make money, a strategy that has become increasingly vital as competition has intensified and new users have grown harder to attract.

In 2022, the number of dating app downloads hit their lowest point in four years, according to data from Sensor Tower. Meanwhile, year-on-year growth in global customer spending on dating apps for the period between January and November slowed to 9 per cent compared with the previous year, according to data. ai, down from 14 per cent between 2021 and 2022.

Lauren Schenk, equity analyst at Morgan Stanley, estimated in April that “an increased push towards monetisation would drive around 70 per cent of revenue growth [in the dating app market] from 2022 to 2030, compared with 60 per cent from 2014 to 2022”.

But not all users are happy to pay. One 35-year-old female customer in London, who asked not to be named, said: “Dating is bleak enough already, and I just don’t like the idea of commodifying that part of my life.” Although she uses Hinge’s free service, she said she would be unlikely to pay for extra features.

Other millennials are more comfortable with the idea. A 34-year-old Londoner said: “I’d be tempted to pay if it meant I was only talking to other people who paid, so you knew they were serious about it.”

Hinge, which says it was the fastest-growing dating app in the US, UK and Canada in 2022, introduced subscription tiers Hinge Plus and Hinge X in February. The services cost between £2.91 and £14.99, and £5.05 and £24.99 per week in the UK, depending on how long users sign up for. The most expensive tier comes with enhanced profile exposure, meaning that users are seen sooner and by more people. Lower tiers include features like unlimited likes and the ability to filter for height.

In May the group said that 20 per cent of new users had opted to sign up and pay for the cheaper Plus option which comes with unlimited “likes” and more detailed browsing filters. That helped to significantly boost the app’s annual revenue per payer to nearly $27 in the third quarter, an 8 per cent year-on-year rise.

The app’s total revenue surged 44 per cent over the period to $107mn, with a 33 per cent rise in paying users to 1.3mn, the group reported.

Hinge chief executive Justin McLeod told the Financial Times that the current level of uptake of the app’s new subscriptions was “about in line with where we expect”, and that although the group was “pretty pleased with the launch” the platform plans to explore other avenues of monetisation.

Apps focused on younger users, like Bumble, are also turning to

monetising their user base in order to increase revenue. The company is also under pressure after chief executive Whitney Wolfe Herd announced in November she was leaving. Its shares are currently down over 80 per cent over the past five years.

Herd told investors in November that while the group’s products had focused largely on Gen Z engagement, “monetisation with the recent launch of weekly subscriptions, addition of new features behind the paywall, and progress of revenue optimisation” had been a critical part of recent strategy.

However, with a cost of living crisis weighing on millennial daters, the idea of paying for love is turning some off. A recent masters graduate living in London, aged 22, said: “I would not pay [for a dating app] until I have completely and utterly lost any faith in meeting someone in the old-fashioned way.” She added that amid a cost of living crunch, paying for extra services was not feasible.

“The majority of people using dating apps don’t have the extra money to pay for an additional subscription,” she said, and there was no guarantee that you would be more successful by paying.

“I doubt many people would pay for it over their daily coffee.”