Want a lucrative app launch? Freemium is key — but tricky. Learn how to balance free versus paid features without pissing your users off in our latest interactive VB Live event, where industry leaders will take you for a deep dive into best practices for app monetization.
The trickiest part of a successful app launch, says Eric Shashoua, CEO of Kiwi for Gmail, is nailing the pricing structure. Everyone knows that freemium is often the most lucrative path for productivity and gaming apps — which are also usually the apps with the longest lifetime value for users — but there’s a catch, and it’s a big one.
“The key thing there is that you have to be really careful about that dividing line between what is free and what is paid,” Shashoua warns. “If you give people too much on the free side, which is very easy to do, you can’t go back from that and roll back those features. And then you have a very big problem later on to try and add more compelling features when you’ve already designed the entirety of the application.”
So what happens if you go too far the other way?
“If you don’t give enough for free, then it’s just not compelling enough for people to even think about paid,” Shashoua says. “Because the key thing here is that people won’t even tend to look at paid very much unless they’re experiencing some challenge or some difficulty on the free side. They won’t even bother to look at the paid side of the application.”
Testing is key to uncovering and maintaining that balance, he adds, because understanding how people are using the application helps you map out typical user journeys and develop a feature hierarchy. But that’s useless unless your app is compelling out of the gate.
“Launching a free version first and then adding the paid features later is a very good way to test that stickiness of the application,” Shashoua says. “One thing that’s very important to understand about the free side in this model is that that’s really part of your marketing funnel.”
Shashoua notes that of course the freemium model won’t work with every application type, but there are other options. “You have to also think about which apps people will only pay for as one-time purchases, and which they find acceptable to pay for as subscriptions,” he says — but luckily millennials, he adds, are (as usual) a special case.
“They view a yearly subscription as the same as a one-time purchase,” he explains. “That is a key distinction for a lot of people. People think of subscriptions as a monthly thing. But if you price your app as a yearly subscription you can actually get a lot of traction there that you can’t otherwise.”
For more insight into why where you launch is key to your monetization success, the key factors behind successful subscription models, launching internationally, and more, don’t miss this interactive VB Live event.
Don’t miss out!
In this VB Live event, you’ll learn to:
- Customize your monetization strategy so that it’s scalable
- Unlock the revenue potential of lower spending users
- Attract higher-spend users
- Negotiate monetization strategies without alienating current users
Speakers:
- Maximo Cavazzani, Founder and CEO, Etermax (Trivia Crack)
- Eric Shashoua, CEO, Kiwi for Gmail
- Stewart Rogers, Director of Technology, VentureBeat
Moderator:
- Wendy Schuchart, Analyst, VentureBeat