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The Freemium Model- Are you ready to pay $.99?

The Freemium Model- Are you ready to pay $.99?

Marketing

The Freemium Model- Are you ready to pay $.99?

We live in the era of the app. We love them. There is an app for just about everything- from diary notifications to dating. Pretty much anything you have an interest in has an app to make your life easier, more interesting, or more creative.

There are some really great apps out there, and some not so great ones. It’s not always easy to tell how exactly the app works, or even what it does. This is probably why most people are sort of… apprehensive to spend money on an app before trying it out.

According to research there is also a phycological reason for people not wanting to pay for apps. It has to do with society having set the mental price anchor for these things as free. It’s difficult for us to come to grips with the idea of paying for something which we inherently expect to receive for free. But this anchor is changing.

Today, many people are willing to pay for an app if they are certain that it’s what they’re looking for. According to Fortune.com, 75% of people who download an app abandon that app after opening it JUST once! There are a lot of apps out there and it can take some trial and error for users to find what they like. How do they search? By going for the Freemium model first.

What is Freemium?

Freemium is a combination of the words “Premium” and “Free”. It refers to a business model in which the developer gives away the core product for free and sells the premium product at a subscription price. Another way that Freemium models operate is to give away the core product for free and sell in-app purchases for propriety features and virtual goods. The nature of these in-app purchases depends largely on the kind of app it is.

If it’s a game you may have to pay to personalize your character, buy extra weapons or powers, or level up. On popular PC app, Skype, you get to use the PC calls for free, but you have to pay for voicemail, landline calls and other products.

 

The obvious advantage for consumers is that it allows you to sample an app product before having to make a purchase. There are many apps that are so functional on the Freemium level that you never need to subscribe to premium. I mean.. why pay extra, right?

 

This works out as an advantage for developers and manufactures because customers are happy. They sample the product, offer feedback, give great reviews and many of them make the decision to purchase and upgrade to unlock premium features. (Come on, Adobe, give us freemium version of your products!)

 

 

How Many People Pay for Apps?

More than you might think.

According to a Mobile Study conducted by branchfire, 49% (So almost half) of Smart Phone owners are willing to pay a monthly subscription for a premium app (usually for streaming movies), and 43% have already paid for an app.

Of these app buyers, 31% paid under $2.00, 63% paid under $5.00 and a whopping 83% paid under $10.00. telling us that consumers are not shy to pay for something if they feel that they are getting what they want.

 

What would make someone pay for an app?

You might think people are most likely to pay for apps that assist them in their work or take care of their health, and many of them do. However, the overwhelming majority of app sales belongs to the world of entertainment.

Companies like Netflix are responsible for the largest portion of the subscription sign-ups, but they are not the only ones gaining traction. The following genres are also starting to rake in sales and subscriptions:

Productivity Apps: 11% of subscriptions

News and Magazines: 25% of Subscriptions

Music Streaming: 27% of subscriptions

Games: 30% of subscriptions

Another genre which is rapidly gaining in downloads are shopping and lifestyle apps. They may even start pushing some of the other top contenders around soon.

 

Now take into account how many people we are talking about. 102,062m. That’s how many apps were downloaded since June 2015. The anticipated download number for 2017 is 268,692m. 9.19 billion PAID apps have been downloaded since 2011.

The total revenue generated by paid app downloads in 2015 alone amounted to $41.1billion. Even if your category is only 1% of that market, it’s still a lot of zeros.

 

The long and short of it is, Mobile users are happy to spend money on their apps. The important question is: How will they spend on apps? According to a Gartner survey, users are willing to spend 24% more on in-app purchases than they will spend on the app itself. However! Avoid the mistake of thinking you can make your money on ads within the app. Not only do 80% of users never (purposefully) click these ads, but many of them actually uninstalled apps because they contained too many advertisements.

Instead look at providing options for both recurring in-app transactions as well as once-off upgrades and premium purchases.

What makes a great app?

 

There are so many apps out there. Some of them we can’t live without and some of them fail horribly. Whatever your concept and your genre, there are a couple of things factors you should always consider. These are the little things that make a good app great.

 

Solve a Problem

An app should solve a problem. If you are developing a lifestyle app you have to be providing the user with something that will make their life better, easier, happier. Think about exactly what the problem is you’re trying to solve before you get started.

 

 

Do one thing well

A common mistake that developers make is to try and cram too many different features into one app. Instead choose the one thing your app does well and focus on that. Give it a chance to make an impact on the market before adding the next feature.

 

Know your audience

You have to have a very clear picture of exactly who you are designing this app for. Understand your audience and design for them, specifically. Your app needs to cater specifically for the people who are going to be using it. This can drive your decisions around features and connectivity.

 

Make it fast and stable

No-one wants to use an app that hangs or crashes regularly. Your app should do what it promises to do quickly and efficiently, with no fuss. If your app causes the user’s life (and phone) to slow down, you can be sure they will uninstall.

 

Send it to finishing school

A great app has all the bells and whistles shined up. Make sure that every last thing is smooth in both functionality and appearance. It must behave perfectly. Life is too short for ugly apps, we will delete them.

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