Freemium could be a solution, but beware of it…

Reading time: 4 minutes

In How I Killed App Sales By Going Freemium, Shuveb Hussain tells how he changed his business model from his $1.99 upfront paid send-to-kindle items app to a freemium, free download with in-app purchases.
His idea was this: a free app available on the marketplace that would allow the download of 10 free articles initially, enough for users to get a feel for the service. After these “article credits” ran out, users were still able to submit one article per day for free. To overcome this restriction of one item per day and send items to kindle unlimitedly, users could buy “item credits” through in-app purchases and send items at any time.
But really, one article a day was enough for most users. However in recent times, Comfy Read has had few purchases from the app.
Freemium is tricky, even more so when the model is B2C. Its effectiveness depends a lot on where you can put the purchase barrier in the app. In many types of apps there is simply no place to put that barrier…
In this case, Shuveb ran into a fatal combination of two major problems:
– His app is a nice-to-have, and he can only make money with intensive use. The free version is enough and plenty for most users.
– His purchase barrier – of more than one item per day – discourages more frequent use, which makes retention difficult. When they encounter a paywall, most people try to bypass it unless there is a good enough reason to pay. The few customers who have reached Comfy Read’s paywall have probably limited themselves to thinking “maybe I won’t send this article to my kindle” or “there’s probably another app for this.” Users have no chance to see the app become a crucial part of their work process or to become more loyal to it before they hit the paywall.
It may seem contradictory, but in my opinion the free version works too well and too poorly at the same time. What makes freemium so complex is that it is impossible for these two characteristics to be true at the same time. And, in many types of apps, this cannot be solved. This is why it is so difficult for many apps to succeed with the freemium model.

I have been thinking about this regularly and there are some interesting solutions, for example unlimited use for most free features, with limited demo access to premium features before purchase. At the limit of the solution, the Paid-up-front system is not always easy and will not always work, but it is much simpler.

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