Appszoom for Developers

The paid, the free and the freemium – Part 2

Posted by on 02/23/2016


In the previous part in this series, we described the characteristics, the pros, the cons and the pitfalls of paid apps, and how to decide whether or not the paid model is suitable for your project.

In this part, we’ll look over two other models, the free and freemium options.

Missed part one? Find out who should be using the Premium business model – and how to do it right

Free apps

Free apps are what they claim to be: totally free. There’s no catch, and users doesn’t have to worry about venturing in uncharted territory and being caught unaware in a trap further ahead that will drain their money. Instead, free apps rely on advertisement and content delivery networks for monetization. These providers will display ads and promoted content in your app, and in return they reward you for impressions and click-through rates.

Since most users are inclined toward downloading free apps, there are considerably more free apps in app stores than paid ones. Therefore, there’s virtually no genre and category where you can’t create a free app.

However, here are some considerations about app types when choosing free apps.

  • Office and utility apps: If the app you’re creating will be something that users will be using for long periods as one of their main office tools, consider going for the paid model. Ads tend to be frustrating and intrusive, especially when being used in work environments and aimed at accomplishing serious tasks.
  • Games: The exception to the previous rule, games have enjoyed great success in ad monetization. Users will be playing with them for hours on end, but they usually won’t mind seeing ads in between their gaming, especially if it adds value to their experience.

As with paid apps, you should be aware of the characteristics of free apps in order to harness their power to its fullest. Here are a few things should know if you’re planning to release a free app:

  • Download rates are much higher: In comparison to paid apps, free apps are downloaded at much higher rates. But the competition is stiffer as well, and you have to have a well-thought marketing campaign if you want to succeed.
  • Expectations are lower: Since users aren’t paying a cent for using the app you’ve created after much effort and toil, they won’t be as severe as paid app users and they’ll show more leniency when faced with errors and shortcomings. However, that doesn’t mean you shouldn’t provide them with channels and features to express their grievances and help you improve your app.
  • User engagement is lower: Users decide to download and install free apps on a whim, while paid apps require decision and thinking (as is the case with any interaction that will result in some sort of payment). Therefore, lead value and user retention is generally lower and user are more prone to forgetting about your app and possibly abandoning it.

So if you think that the free model is suitable for your app, here are a few pitfalls you should avoid:

  • Decrease ad intrusiveness: No matter what you do, users won’t like ads. But they will accept them as the price of getting free services from you. However, if you use ads aggressively and without any optimization, you’ll end up turning off your users and giving them the impression that their device is being used as an ad delivery platform.
    There are plenty of methods that can help you
    decrease the invasiveness of ads, including offering rewards in exchange for viewing ads. This is a model that has been successfully tested in gaming apps. Also, consider using analytics to display ads that are more likely to be appreciated by the user.
  • Improve user engagement: As mentioned before, user engagement in free apps is considerably less than paid apps. In order to overcome this shortcoming, consider user engagement campaigns.
    Again, analytics can come to the rescue by helping you segment your users, specify demographics and characteristics and target users with push notifications and offers that are more likely to convince them to return to your app.

Freemium apps

Freemium apps are apps that are free to download, but include features that will be unlocked only after a user pays a specific amount. In many ways, freemium apps are a “best of both worlds” scenario: You get the benefits of high download rates that free apps offer you, plus you get to monetize the features of your app.

In terms of characteristics, they share properties with both paid and free apps, and with the right adjustments, you can practically apply the freemium model to all categories of apps, including games, news, and entertainment.

However, although using the freemium model sounds very exciting, there are a few caveats. Before diving headlong into it, take care to read the following tips:

  • The free version should have value per se: Freemium app publishers are wont to make the free version of their app too limited and dismal to force users to pay for the premium features. This is a big mistake that can result in premature user drop off.
    The goal should not be
    forcing users to pay for the extra features; you should instead be encouraging them to make the purchase. This can be achieved by embedding enough features in the free version to make sure that it offers value to all users, even those who aren’t paying for it. This will help improve user retention, and with enough patience, many of the free users will convert to paid users after appreciating the real value of your app.
  • Offer different models to fit the needs of all users: In order to appeal to the spending tastes of all your users, offer different payment models. For instance, users can be given the choice to pay a small fee for making a one-time use of an app feature, make a one-time payment to unlock it for a month, or make an ultimate payment to unlock it permanently.
    ou can also offer different premium packages that enable users to purchase a bundle of features all together. Offering flexibility will help users better decide and plan their budgets and feel compelled that they will save more by spending more.
  • Use ads with caution: Ads have a well-established history in freemium apps. You can develop your app to display ads to users who are using the free version of the app. This will make sure you can get a minimum revenue from free users as well as paid ones. But consider that the general rule of thumb for ads is that users who spend money will expect to be spared the intrusiveness of ads, and unless ads are excellently blended into your app, disable them for paid users.

Bottom line

Making money out of apps is a challenge that can be overcome with meticulous thinking and planning. Choose your model, make your plans, and start your engines!

So what model works best for you: the paid, the free or the freemium? I’ll be happy to have your thoughts in the comments section below.

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