I’m : a programmer, writer, podcaster, geek, and coffee enthusiast.

Freemium is hard

In How I Killed App Sales By Going Freemium, Shuveb Hussain recounts switching his send-to-Kindle app from $1.99 up front to a free-with-in-app-purchase model:

This is what I came up with: A free app that allowed 10 free articles initially, enough for users to get a taste of the service. After these “article credits” ran out, users would still be able to send one article every day for free. To overcome the one article per day restriction and send articles anytime, users could buy “article credits” via in-app purchases and send articles anytime.

Actually, one article per day was enough for most users. […]

In the past 20 days, Comfy Read 2 has seen just 5 in-app purchases.

Freemium is hard. Its effectiveness depends on where you can put that purchase barrier in your app. Many app types simply don’t have a good place for it.

In this case, Shuveb faces the fatal combination of two major problems:

  1. His app is a lightly used utility, but he only stands to make money from heavy use. His free tier is good enough for most users.
  2. His purchase barrier — more than one article per day — discourages more frequent use, which hinders habit-building. When faced with a paywall, most people will try to avoid it unless there’s a compelling reason to pay. The few customers who hit Comfy Read’s paywall probably just think, “I guess I won’t send this article to my Kindle,” or “I guess I’ll use another app for this.” Users aren’t given the chance to let the app become a crucial part of their workflow or build any loyalty toward it, which would make them more willing to pay, before hitting a paywall.

These seem like opposites: the free tier is both good enough and not good enough. What makes freemium so tricky is that these can both be true simultaneously, and for many app types, this can’t be resolved. That’s why it’s so hard for many apps to succeed with a freemium model.

I spent months debating which features should be behind Overcast’s in-app purchase. If I limited the number of subscribed podcasts for free users, I’d be discouraging people from trying new podcasts. If I put Smart Speed, Voice Boost, and my smart playlists completely behind the paywall, most users would never experience my best features and wouldn’t think my app was very good. But if I kept the paywall too easy to avoid, like showing ads with a purchase to remove them, it wouldn’t sell well. (No-ads upgrades never sell well, by the way.) And whatever features I limited would be free in many competing apps, including the one Apple includes on every iPhone for free.

What I came up with — unlimited general usage and most features being free, with limited demo-like access to premium features before purchase — was a tricky balance and a compromise. Freemium always is.

Paid-up-front isn’t always easy and doesn’t always sell well, but it is much simpler.