How To Create A Great Freemium Pricing Strategy

After a short analysis of our folder with stories about successful mobile apps we realized that most of them reached this performance following the same business model: Freemium. There are also a couple of exceptions but the general trend is to gain users and money in the same time, through this system. And guess what? We decided to reveal all the secrets behind this revenue method. Let’s proceed.

What is Freemium?

Well, we can’t start without a proper definition of this term. With freemium model customers start by trying the free version of the app and when they decide that they need more advanced futures they pay for premium. As you can imagine the trick is to convince them to pass the bridge from free to paid options and this is where we want to help. But if you are still not convinced about the advantages of this model, we have to clarify it for you.

Benefits Of Freemium

Before going further, let’s see the reasons why fremium could be so efficient for your plans.

Image Source: https://hbr.org/2014/05/making-freemium-work

 

Low Barriers To Entry For Users

As we said before, it is easy to gather a huge number of users, since they can download the app for free. Without the urge to purchase people won’t think twice before installing the app. After they tap on a button the app will be on their device.

Testing Opportunity For Users

As a consequence of the idea presented above when people spread the word about your creations, other users will immediately try your app because they know that if they don’t like it they can delete it without losing anything. Of course, you must avoid that by any means.

Wider Target Audience

With a freemium app you can also reach those users who aren’t so willing to spend their money before trying an app. Further, it is your job to make them stay and to go from free to premium.

In – App Ads Are Applicable

When they don’t pay for an app, people expect to see in – app ads and this means that there are more chances to increase your revenue. If in – app purchases don’t work for certain users, then the ads can be a good source of income. Keep in mind to present only relevant and engaging ads.

Higher Virality Rates

Wider audience means more chances to make your app viral. It is easier to take advantage of the word of mouth with a free than with a paid app. Even if they hear about a great app people are afraid to spend their money on something that they don’t know how useful it is for them.

Users Feel Psychologically Comfortable

Let’s think about it for a second. When you pay for something you are more exigent from the start and it is impossible not to find the smallest flaw that will ruin the entire experience. Without any costs you will enjoy more your journey when you want to discover the new app installed.

Image Source: https://quartsoft.com/blog/201206/freemium-business-model-benefits

 

How To Use Freemium For Your App

So far we taught you some theory. Let’s see how you can apply it for your business.

Image Source: https://www.macstories.net/news/in-app-purchase-revenue-growing-as-developers-adopt-freemium-model/

 

Set Dynamic Pricing

From the start you need to decide on the prices and this could be the hardest stage. Here you have two options. You can set the cost of the items you want to sell and stick with those values in form of static prices. Or you can use a special tool called dynamic pricing which will set the price according to each user. Based on machine learning, these algorithms are less risky when you want to avoid losing customers because of high fees or losing money due to low rates.

Use Subscription System

If your app generates valuable content that encourages users to open it periodically, it means that it is suitable for subscription plans. This scenario also requires realistic prices but if you convince a part of your customers to pay a monthly fee for premium features your strategy will function even better.

Try To Create Network And Reward Sharing

More valuable users, means more chances to increase your revenue. But not all your users are willing to pay and you have to be aware of this fact. Even though you won’t see the money from all of your audience some of them can bring you more than that. They can recommend your app to their friends that will observe the potential of your paid options. Encourage this behavior as much as you can.

Make Free Version Almost Perfect As Premium

If you thought for a second that making the basic version … well, too basic, then think again. If users don’t trust your brand from the beginning the chances to go from free to premium are zero to none. Instead, transform your free app into an adventure and if users look for extra challenges they will have to pay for them.

Follow Your Competitors Wisely

With millions of app on the main markets, you probably aren’t the only one in your niche. So, before making a decision, try to observe your rivals. What they did, and with what results? If it was a good strategy, you should make it better. If it wasn’t successful to discover what went wrong for them and avoid those mistakes.

Ofer Free Trial Of Premium For Limited Time

Just like with the entire app, premium features aren’t so compelling if users can’t imagine the overall experience. For obtaining this effect you can offer those elements for free but not for long. Announce your target audience about your plan and then make them feel the taste of your paid items. If they will see their value, maybe they will consider to purchase them.

Send Promotional Notifications

Meanwhile, you can remember all your users about the opportunity to increase their power in a game or to complete other tasks in a simpler way with your premium features by using relevant notifications. This technique is also useful when you want to announce your offer with a free trial of premium.

Pay – as – you – go Model Can Help

If your app type is not suitable for subscriptions, a pay – as – you – go service could be more convincing. Without any obligations, users can spend their money when they are really engaged with the app for a specific item. You just need to catch the right moment for this event.

Do A/B Testing

And the best-kept secret of all is … to always test your solutions. Well, it is more like a rule. You can’t figure out what your users will want without asking them first. Discover what makes them to spend their money and then present that version in the most delightful mode.

Successful Freemium Apps

Do you want the proof that everything we said is true? Let’s see some strategies in action.

Spotify

Spotify is the perfect example that a subscription campaign is really successful when users are willing to pay over a long period of time for receiving exclusive content.

Image Source: https://www.digitalmusicnews.com/2016/03/21/spotify-officially-announces-30-million-paid-subscribers/

 

Candy Crush Saga

The creators of Candy Crush Saga adopted a slightly different version called free – to – play, because users could play the game from the beginning to the final level without paying anything. In case they wanted extra lives or some other benefits they needed to spend the money on in – app purchases.

Image Source: http://www.digitaltrainingacademy.com/casestudies/2013/09/app_case_study_how_mobile_phenomenon_candy_crush_saga_makes_850000_a_day.php

 

Evernote

The fremium model that works for Evernote is the result of their strategy to increase their retention rate. The team behind this famous productivity app believes that the solution to their growth is to make their users happy.

Image Source: https://www.slideshare.net/nasakin/evernote-overview-sept-2011

 

FINAL THOUGHTS

This is our secret guide about a smart freemium strategy. Remember everything you learned and apply it according to your app category. The most important advice is to remain close to your users and to understand what they enjoy most about your app. Maintaining a great relationship with them could be the key for the door between free and premium.