So, you have your app developed and ready to enter the market. You have already mapped out a marketing strategy and now it is time to make the decision about how you will generate revenue from your app. If you Google “app monetization strategies”, you will find dozens of proven and reliable ways to make money with your app like advertising, partnerships and sponsoring, in-app purchases, affiliate marketing, etc.
To ensure your app’s success, your monetization strategy needs to constantly be a balance between revenue generation and user experience, as one is worthless without the other. Many of monetization strategies, such as advertising, can be pretty distracting for users, which may result in the lower engagement and loss of interest.
The necessity to keep users satisfied and generate revenue within the app created a “Freemium” app monetization strategy, which remains one of the most popular and user-friendly of the ways to make money with the app.
So what is Freemium and why we love it?
What is Freemium?
The term Freemium a portmanteau consisting of 2 parts: “free” and “premium” to describe a mobile (or web) application that costs nothing to download and use, but often includes in-app purchases or a paid premium version with additional features.
The strategy is simple. You offer users free, simple, and yet valuable option of your application. And while they use your app, you educate them about the advantages of using the special features available in premium versions and persuade them to the decision to purchase the paid version of your app.
Depending on the product or service, you can decide on your own freemium restrictions, but here are some of the common options:
Based on features: users get access only to the basic features and to get additional access you need to pay for the full version or subscribe to a membership or subscription for exclusive content. For example, Relax Melodies, offers the additional number of sounds and guided meditations as part of their PRO version.
Based on time: the user gets access to the full version of the application for a limited amount of time to test out the premium features, and once the free trial period expires they can either pay to continue using the full version or choose to return the basic version. It’s a very common to offer 7 or 14 days of free trial to give the users a good taste of the applications features.
Based on the number of uses: in this model user has access to all features of the application, but they can access them for a limited number of times, after which they will need to pay for the upgrade to continue using it. For example, Medium allows users to read only 3 stories per month, after which you can get a monthly subscription to get access to all of the content.
Based on the customer type: this is a rarer model because it requires a certain level of user verification, but Autodesk as an example, allows students to use their services for free, while everyone else needs to get a paid license.
Sister app: creating a separate version of your app that is premium/paid- so you have two apps on the market - one completely free and one available only with payment.
Giving users a free or discounted version of the application helps them understand what your app can do for them,how useful it can be, and why they should subscribe or purchase the upgrades.
The main advantage of the freemium revenue model is that it can be applied to a majority of applications. If your application is useful and provides value to the users, there will be no lack in the demand for it. However, you should really focus on the functionality of the app, ensuring that it is already established and has a good user retention, because this is what will set it aside from the other ones in the market.
Freemium allows your users to get familiar with the application and discover what they like about it while they learn the basic functionalities to appreciate its value. It’s much harder to get them to pay for an application that they haven’t tested and don’t know what to expect.. Freemium gives you a chance to nurture and educate your free users before they convert into paid ones.
This revenue model can create a lot of positive outcomes for your branding and ranking on the market. When users decide to try it, the value of your app goes up, which creates a buzz and interest around it. Educating users about the features in the right way helps them to see how your app can help them and makes them share what they think with their friends and social networks- nurturing your users can help the app go viral.
It’s not enough just to build a good application - you need to know how to position it in the market so that it gets noticed. Offering users a free option to introduce them to your app’s features is a proven way to attract interest around your app.
If you have an idea of a mobile application, Trio can help you to bring it to life. We help small and mid-sized business to develop high-quality software and applications that meet their business goals. Can we help you as well? Tell us more about your project!