After a short analysis of our folder with stories about successful mobile apps we realized that most of them reached this performance following the same business model: Freemium. There are also a couple of exceptions but the general trend is to gain users and money in the same time, through this system. And guess what? We decided to reveal all the secrets behind this revenue method. Let’s proceed.
18 Aug How To Create A Great Freemium Pricing Strategy
Posted at 09:17h in Mobile App Development, Mobile App Marketing Articles0 Comments
Step 9: On the next page, you will find the app in the list, and it confirms that the Spotify premium iPhone app has successfully installed on your phone. Step 10: Go to your menu, and find the app on your smartphone. Step 11: Launch the Spotify app on your smartphone, and enter the credentials, then test the services to stream music. Spotify is the best music streaming app the people use around the globe. Spotify has been designed to work on Android devices, computers, PlayStation and Smart TV, etc. It is available in two versions: Spotify Freemium and Spotify.
What is Freemium?
Well, we can’t start without a proper definition of this term. With freemium model customers start by trying the free version of the app and when they decide that they need more advanced futures they pay for premium. As you can imagine the trick is to convince them to pass the bridge from free to paid options and this is where we want to help. But if you are still not convinced about the advantages of this model, we have to clarify it for you.
Benefits Of Freemium
Before going further, let’s see the reasons why fremium could be so efficient for your plans.
Image Source: https://hbr.org/2014/05/making-freemium-work Avdn codec quicktime mac download.
Low Barriers To Entry For Users
As we said before, it is easy to gather a huge number of users, since they can download the app for free. Without the urge to purchase people won’t think twice before installing the app. After they tap on a button the app will be on their device.
Testing Opportunity For Users
As a consequence of the idea presented above when people spread the word about your creations, other users will immediately try your app because they know that if they don’t like it they can delete it without losing anything. Of course, you must avoid that by any means.
Wider Target Audience
With a freemium app you can also reach those users who aren’t so willing to spend their money before trying an app. Further, it is your job to make them stay and to go from free to premium.
In – App Ads Are Applicable
When they don’t pay for an app, people expect to see in – app ads and this means that there are more chances to increase your revenue. If in – app purchases don’t work for certain users, then the ads can be a good source of income. Keep in mind to present only relevant and engaging ads.
Higher Virality Rates
https://energybinary915.weebly.com/canon-powershot-sx130-is-user-manual.html. Wider audience means more chances to make your app viral. It is easier to take advantage of the word of mouth with a free than with a paid app. Even if they hear about a great app people are afraid to spend their money on something that they don’t know how useful it is for them.
Users Feel Psychologically Comfortable
Let’s think about it for a second. When you pay for something you are more exigent from the start and it is impossible not to find the smallest flaw that will ruin the entire experience. Without any costs you will enjoy more your journey when you want to discover the new app installed.
Image Source: https://quartsoft.com/blog/201206/freemium-business-model-benefits
How To Use Freemium For Your App
So far we taught you some theory. Let’s see how you can apply it for your business. Software for downloading android apps on pc. How to get photoshop for free mac.
Image Source: https://www.macstories.net/news/in-app-purchase-revenue-growing-as-developers-adopt-freemium-model/
Set Dynamic Pricing
From the start you need to decide on the prices and this could be the hardest stage. Here you have two options. You can set the cost of the items you want to sell and stick with those values in form of static prices. Or you can use a special tool called dynamic pricing which will set the price according to each user. Based on machine learning, these algorithms are less risky when you want to avoid losing customers because of high fees or losing money due to low rates.
Use Subscription System
If your app generates valuable content that encourages users to open it periodically, it means that it is suitable for subscription plans. This scenario also requires realistic prices but if you convince a part of your customers to pay a monthly fee for premium features your strategy will function even better.
Try To Create Network And Reward Sharing
More valuable users, means more chances to increase your revenue. But not all your users are willing to pay and you have to be aware of this fact. Even though you won’t see the money from all of your audience some of them can bring you more than that. They can recommend your app to their friends that will observe the potential of your paid options. Encourage this behavior as much as you can.
Make Free Version Almost Perfect As Premium
If you thought for a second that making the basic version … well, too basic, then think again. If users don’t trust your brand from the beginning the chances to go from free to premium are zero to none. Instead, transform your free app into an adventure and if users look for extra challenges they will have to pay for them.
Spotify Freemium Model
Follow Your Competitors Wisely
With millions of app on the main markets, you probably aren’t the only one in your niche. So, before making a decision, try to observe your rivals. What they did, and with what results? If it was a good strategy, you should make it better. If it wasn’t successful to discover what went wrong for them and avoid those mistakes.
Ofer Free Trial Of Premium For Limited Time
Just like with the entire app, premium features aren’t so compelling if users can’t imagine the overall experience. For obtaining this effect you can offer those elements for free but not for long. Announce your target audience about your plan and then make them feel the taste of your paid items. If they will see their value, maybe they will consider to purchase them.
Send Promotional Notifications
Meanwhile, you can remember all your users about the opportunity to increase their power in a game or to complete other tasks in a simpler way with your premium features by using relevant notifications. This technique is also useful when you want to announce your offer with a free trial of premium.
Pay – as – you – go Model Can Help
If your app type is not suitable for subscriptions, a pay – as – you – go service could be more convincing. Without any obligations, users can spend their money when they are really engaged with the app for a specific item. You just need to catch the right moment for this event.
Do A/B Testing
And the best-kept secret of all is … to always test your solutions. How to download farming simulator 17. Well, it is more like a rule. You can’t figure out what your users will want without asking them first. Discover what makes them to spend their money and then present that version in the most delightful mode.
Successful Freemium Apps
Do you want the proof that everything we said is true? Let’s see some strategies in action.
Spotify
Spotify is the perfect example that a subscription campaign is really successful when users are willing to pay over a long period of time for receiving exclusive content.
Spotify Freemium App Subscription
Image Source: https://www.digitalmusicnews.com/2016/03/21/spotify-officially-announces-30-million-paid-subscribers/
Candy Crush Saga
The creators of Candy Crush Saga adopted a slightly different version called free – to – play, because users could play the game from the beginning to the final level without paying anything. In case they wanted extra lives or some other benefits they needed to spend the money on in – app purchases.
Freemium Games
Image Source: http://www.digitaltrainingacademy.com/casestudies/2013/09/app_case_study_how_mobile_phenomenon_candy_crush_saga_makes_850000_a_day.php
Evernote
The fremium model that works for Evernote is the result of their strategy to increase their retention rate. The team behind this famous productivity app believes that the solution to their growth is to make their users happy.
Image Source: https://www.slideshare.net/nasakin/evernote-overview-sept-2011
FINAL THOUGHTS
This is our secret guide about a smart freemium strategy. Remember everything you learned and apply it according to your app category. The most important advice is to remain close to your users and to understand what they enjoy most about your app. Maintaining a great relationship with them could be the key for the door between free and premium.
Free users are the life blood of Spotify.Spotify’s recent jump to 40m paid subscribers demonstrates just how critical its free users are and why their numbers need to keep moving upwards. Spotify has announced that it has hit 40m paid users gaining 10m users in the last 5 months (2m per month) compared to Apple which has 17m users gaining 4m in the last 4 months (1m per month).
- Apple has a huge advantage over Spotify because its service is installed on the devices belonging to over 440m users with whom it already has a payment relationship and who can activate the service with the touch of a button.
- Furthermore, on the Apple App Store, Spotify is a lot more expensive than Apple Music because of Spotify is forced to pass 30% of its revenues to Apple for distributing its service (see here).
- Against this Spotify competes with a superior service but its key weakness to date has been its marketing because only people who already use the service really know that it is better.
- This is why the free tier is so important.
- Free users don’t pay anything but have to endure regular programming breaks so that Spotify can afford to pay the labels for access to the music.
- This is often a bad business but in Spotify’s case, I think it is providing the company with a huge advantage to which the latest figures are testament.
- First: Free users get to spend time with the service without paying for it, making it much easier to make these users understand why the service is better than anything else available.
- In effect, it is like a trial that never expires and I think that increasing numbers of these users are becoming attached enough to the service to be willing to pay to get rid of the advertisements.
- Second: These free users generate data which Spotify can use to train its algorithms which can in turn be used to make the service better.
- Apple also has a lot of data but has not been nearly as good at turning raw data into actionable intelligence with which it can improve its service.
- With the total user count now past 100m users, I think Spotify has hit critical mass and will soon be able to negotiate better terms with the labels to keep more of the revenues for itself.
- I have long believed that it is the music labels that are making the most money from music streaming (see here) but I think that the balance will soon tip in favour of the music streaming companies and the artists.
- This is because the time is rapidly approaching when the labels will need the music streamers and the artists more than the streamers and artists need the labels (see here).
- This is why I remain unconcerned with the risk contract renegotiation with the labels as the risk will soon be in the other direction.
- I think that the key issue for Spotify going forward is to maintain momentum of growth of its free users.
- It is the free user pool that has been the source of its outperformance of Apple, meaning that it will be critical to keep the paid tier (where the real money will be made) increasing at this very healthy rate.
- I continue to think that there is enough space in this market for 2 big players and with those spots filled, it is the fortunes of Pandora, Tidal, Deezer and so on that trouble me now.
This article was first published on RadioFreeMobile.