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Freemium: What's Hot? What's Not?

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A presentation on what works and doesn't work for Freemium apps. This presentation was developed for Wix developers. Wix is a website development platform that uses an HTML5 editor. The company recently had an IPO and is expanding its App Market to business applications.

Publicado en: Tecnología, Diseño
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Freemium: What's Hot? What's Not?

  1. 1. Freemium What’s Hot? What’s Not? Wix Developers Meetup, Parisoma, San Francisco, December 18th, 2013 AN G E L A H E Y, T E C H V I S E R @AMHEY A N G E L A H E Y. C O M @TECHVISER TECHVISER.COM AMHEY@TECHVISER.COM 1
  2. 2. What’s Hot? What’s Not? What Is Freemium? How Much Do You Charge? Why Offer Freemium Pricing? What Do You Price? Which Designs Work Well? How Will You Fund Your Business? 2
  3. 3. What Is Freemium Pricing?  Free +  Premium Source Price Chart: www.eventscream.com/blog/pricing 3
  4. 4. Is Freemium Good For You? If a company segments the market and understands who will pay, why waste resources on freeloaders? Get traction with free users, when there are millions we’ll give you a term sheet 4
  5. 5. Freemium - Pros Fast User Acquisition  Free Users Promote  Gain Market Share Fast 20000  Fast User Feedback 15000  Meaningful Analytics 10000  Qualified Paid Users 5000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ‘000s of Users 25000 Free Paying - Pricing Tier 1 Paying - Pricing Tier 2 5
  6. 6. Freemium - Cons Percentage of Users  Soaring Costs  Wasted Sales & Marketing Resources  Capital Requirements Dilute Founder Equity Free Paying - Pricing Tier 1 Paying - Pricing Tier 2 6
  7. 7. Users Might Think…  Buggy: “How Can They Even Charge For This?”  Unsubscribe: “I Need To Delete This Upgrading To Premium”  Crap: “This is very clunky!”  Mailing: “All emails are getting sent to spam folders and not even delivered to Outlook.com!!!!”  Common Ninja on Facebook: “Both Wix's app and Ninja websites are separated, meaning, if you're premium in one of them is not necessarily that you're premium in the other one. Those are also 2 different accounts.” Source: Wix App Market, Common Ninja’s Facebook Page 7
  8. 8. The Right Price WHAT WILL USERS PAY FOR? 8
  9. 9. Who Pays For Mobile Games? Source: Flurry = Posted by Jeferson Valadares on Fri, Sep 16, 2011 9
  10. 10. Charge For Quantity Users o Contacts o Simultaneous Users Time o Real Time Updates o Length Of Audio/Video System o Bandwidth o File Storage Resources o Pictures o Files Uploaded Financial o Maximum Transaction Amount o Maximum Transferred o Maximum Stored 10
  11. 11. Charge For Design Customization o o o o Designer templates User can edit CSS files Choice of colors Choice of headers, backgrounds Globalization o Languages o Culture aware graphics o Foreign currency support Branding o User logo o Remove software developer logo Advertising o Remove ads Enterprise Sales o Make it their product - White label 11
  12. 12. Charge For Interfaces  Import and Export  Social Media Integration  Message Routing  Format Conversion Source: Jorge Calvo - SensationalFix.com Flat Icons © SensationalFix 12
  13. 13. Charge For Reports And Stats Reports o User Reports o Admin Reports o Automatic Reports o Messages o Emails, RSS Feeds o Newsletters Stats o Analytics o User Cohort Analysis o Forecasts, Predictions o Segmentation Charts, Graphs o Social Networks o Interest Networks Hot o Trends 13
  14. 14. Charge For Timeliness 14
  15. 15. Charge For Attracting Users  Coupons  Gift Cards  Developer Advertises Customer Site  Featured Site, Site Of The Month  Integration With Ad Network  Affiliates  Affiliate Component For Website  Developer Attracts Affiliates Who Can Market User’s Site  Link Bait  Humorous Web Elements  Personalized Links Source: Coupons.com 15
  16. 16. Wix Market Users (Sample Size 60 Apps) 60% 50% 40% 30% 20% 10% 0%  Average Price $6.73/Month Source: Wix App Market and Techviser 16
  17. 17. Design WHAT MAKES A GOOD DESIGN? (REALIZING WIX APP MARKET HAS STANDARD DESIGN) 17
  18. 18. Do You Display Free Option? Source: 123ContactForm.com 18
  19. 19. Most Expensive On Left HOT • Put Free Version On Right • Free Trial NOT HOT • Showing Free Version • Enterprise Likes Price Too Source: Bookfresh 19
  20. 20. Increase Sales, Free On Right Hot Source: Wufoo.com – form building app 20
  21. 21. Maybe You Don’t Display Free Hot 21
  22. 22. Annual or Monthly Fee? HOT • Showing Best Value • Annual Plan For Business NOT HOT • Poor Contrast • Repetitive Wording • Lowest Cost On Left Source: Ecwid 22
  23. 23. Pictures? NOT HOT • Pictures Confuse • Too Many Checklists • Most Features In All Versions • Price At Bottom Of Long Table etc., etc., etc., etc., etc. Source: Pnyxe 23
  24. 24. Less Is More HOT • 4 Tiers • Colors • Premium Image – No Bronze NOT HOT • Too Long • Headings Waste Rows • Too Many Features and Categories 24
  25. 25. Simple – Call To Action HOT • Concise • Common Features Below • Clear Differences NOT HOT • Color • “Please”…weak? Source: Maverick.appforma.com – Maverick an Appforma Ltd. Brand 25
  26. 26. Live Agent Hot 26
  27. 27. Free Trial HOT • Free Trial • No Credit Card For Trial NOT HOT • Poor Contrast • Features Hard To Read – Crossed Out 27
  28. 28. Example - MailChimp HOT • Simplicity Source: MailChimp 28
  29. 29. Example – Google Apps HOT • $5 Not $4.99 • $50/Year – Discount • Vault – Security NOT • Free for non-profits and education, buried in FAQ Source: Google 29
  30. 30. Example - Wix HOT • Lower priced options on right • No free option shown • Clear feature list NOT • Too much space for prices • Gift voucher buried 30
  31. 31. Wix App Market – Features • Wix Pricing Is Different From Company Website • Oversized – Users Have To Scroll Source: Wix Marketplace 31
  32. 32. Wix App Market Design HOT • Uniform View For All Apps • Simple • Colors NOT HOT • User Has To Scroll • Only One Pricing Level • No Annual Fee At Top Source: Wix App Market 32
  33. 33. Feature Diffs – Top or Bottom? BOTTOM NOT TOP HOT Source: Wix App Market 33
  34. 34. Funding Sources OTHER PLACES TO GET MONEY 34
  35. 35. Other Revenue and Asset Sources  Goods  Affiliate Programs  Data  Corporate Customers  Channel Partners  Adverts  Code – Open Source  Artwork 35
  36. 36. Trend – In App Purchases Number of Apps In Top 20 With In-App Purchases 20 15 Number of Apps Out Of 20 10 5 0 Amazon Appstore Apple iPhone Apple iPad Google Play App Stores Free Paid Top Grossing HOT • Despite HTML5 Growth Apps Are Still Hot 36
  37. 37. Can You Afford Free? HOT • Free Entry Level Experience 37
  38. 38. 600 $M Funding 500 Is It Worth Chasing Venture Funding? 400 300 200 100 0 Dropbox Evernote HootSuite (+$3M debt) LinkedIn Pandora Other 63.8 119.5 Series D 91.3 53 35 Series C 70 12.8 SurveyMonk ey (+$450M debt) 12 Series B 250 10 185 10 7.8 450 Series A 6 6.5 1.9 4.7 1.5 65 1.2 9 Angel and Pre-VC HOT • Capital Efficiency RARE • Big VC Rounds Angel and Pre-VC Series A Series B Series C Series D Other Source: Crunchbase and Techviser – note some venture rounds were added to a Series Round if they came in between rounds 38
  39. 39. Take Aways Set Goals Identify And Test Items To Monetize Quality Design Validate Funding Sources 39
  40. 40. Further References  http://onstartups.com/tabid/3339/bid/84427/FreemiumPricing-for-SaaS-Optimizing-Paid-ConversionUpgrades.aspx - has examples of good designs  http://visualwebsiteoptimizer.com/split-testing-blog/abtesting-free-trial-versus-freemium/ -giving up freemium model increased paid signups by 268.14% for Acuity Scheduling 40

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