Freemium Strategies for Mobile Apps
Jun 4th, 2010 by admin
For providers of mobile apps, it is worthwhile to use the so-called freemium strategy to extend awareness of the product and from that market base attempt to maximize profits. The freemium model consists of a free offering as well as a payment linked premium offering which is invariably coupled with additional value-added functions. In essence, it is a multi-level pricing strategy where the lowest level is completely free.
Picture of In-App Sales or Free Apps: Freemium Strategies for Mobile Apps [source:excitingcommerce.com]
The question to consider is which format is the optimal one to
use. For mobile apps, two main types of strategy have evolved:
1. Two independent apps: One app is free to use, whereas a second, more feature rich premium version is readily available for upgrade for paying customers.
Examples: MobileRSS, a GoogleReader client for the iPhone exists in a free version as well as a purchasable version. The current most liked iPhone game Angry Birds can be played with a few levels in the free lite version. To get the further levels, the premium version needs to be purchased (which interestingly doesn't include the levels found in the lite version).
2. In-App sales: The second possibility is to integrate additional, pay for use premium functions directly as supplementary offerings to the free application. Users can then buy these additional functions from directly within the application.
Example: The iPhone app Beatwave allows music to be generated via a Tenori-On-like matrix. The application itself is free to download. However as soon as you would like to use different tones or export your melodies into a universal data format, these functions need to be paid for.
It is not always the case that both strategies make sense for a particular application. As long as both possibilities are compatible with the application in question, it is generally wiser to go for the in-app sales model. Here the effort level for the user is smaller. If the payment for premium functions can occur from directly within the app, the switch from free to paid model goes quickly, without needing additional steps such as downloading a new version, de-installing an older version, create new login profiles, etc.
The increased ease of upgrade would lead to the conclusion that the likelihood of converting a free user is higher. Furthermore, any desired number of price levels could be defined according to granularity of the applications feature set.
Similar considerations are valid when the app, instead of representing the entire offering, is simply a part of the offering. Companies such as Evernote work with something like a freemium model, although the functionality of the app only indirectly reflects the original version.
In App purchase programming guide from Apple for the iPhone Stackoverflows discussion on the implementation of In App purchasing with Android PayPals launch of an In App payment library for Android
PayPal X: PayPal Launches Platform For Third Party Apps App Strategies: Taobao Refinances Auctions with Apps and Ads The Next Web (of Applications): The Future Building Blocks
Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.[source:excitingcommerce.com]
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