Freemium model is a monetization model for mobile apps where app businesses provide a combination of features: basic features for free and premium features for a subscription or a paid upgrade – hence ‘free-mium’.
- This means that users can utilize an app’s core functionalities for free, and pay when they wish to use additional benefits.
- This also means that app founders can quickly break even because they don’t have to give everything for free – just a flavor of the app’s overall user experience with core features to tempt more users into buying the premium membership.
Quickest Examples of Freemium Model Implementation
While the most important implementation of the freemium model comes in the form of free basic features then paid features, there are other examples of how app founders actually implement this monetization model.
A lot of apps, especially mobile games, are free. Though, they allow users to unlock an ad-free experience against a small fee – this is the implementation of the freemium model where your users get a flavor with ads, then pay a premium amount for an ad-free version.
How Freemium Model Works for Monetization
Here is a quick explanation of the mechanism of the freemium model.
1. Free Features
The app offers a basic version with essential features or content available to users for free. This allows users to experience the app’s core functionalities without any initial payment. While this still helps apps with a combination of monetization model because such apps can still earn through ads, it opens ways for users to experience the app and become a potential lead that could convert in future.
2. Premium Features or Content
The app offers premium features, functionalities, or exclusive content that are only accessible to users who upgrade to a paid subscription. This can be in the form of in-app purchases, or an altogether new version with a more aesthetic interface. These premium offerings typically provide additional value, convenience, and enhanced user experience.
3. In-App Purchases
Freemium apps also earn through in-app purchases. So instead of paying a monthly charge for a premium version, users have the option to purchase virtual goods, in-game currency, energy and lives, boosters and other additional content directly within the app.
These in-app purchases can unlock special features, levels, and customization options and allow users to progress faster in the app.
4. Subscription Plans
In addition to in-app purchases, some freemium apps also offer subscription plans that charge recurring payments. Users get access to premium features or content on a monthly or annual basis. Subscription plans do offer benefits such as ad-free experience, unlimited access to premium content, and exclusive perks for subscribers.
5. Advertising Revenue
Freemium apps have basic versions that earn from ad revenue. App founders generate revenue through advertising by displaying targeted ads to users based on their preferences, behavior, or demographics.
Advertisement programs like Google AdSense pay the app founders for displaying their ads, and the app earns revenue based on ad impressions, clicks, leads and downloads.
Where is the Freemium Model Often Viable?
Experts from mobile app development companies in Dubai would usually recommend the freemium model for apps that have:
- A strong, massive user base
- B2C features that require decent development and maintenance budget
- A strong differentiation between free and premium content so users know how valuable the payment is.
Building onto this, here are four scenarios when it is not viable to use the freemium model.
- App businesses with a limited user base in a specific niche can’t rely solely on the freemium model.
- Apps that offer business-centric features that are rare to find and expensive to maintain, then the freemium model isn’t sustainable in the long term.
- Apps with high development costs in the first build or MVP can’t sustain on a freemium model – especially if your app is B2C. It is often difficult to convert users to buy premium features when they can access features for free, but businesses have to continue on-goingwith thisweb developer company in dubai thatspecializes in this domain which doesn’t balance against app revenue.
- Apps that can’t offer a variety of options to differentiate between free and exclusive premium content can’t monetize with the freemium model. Users would delete the app or leave negative reviews if the premium, paid version doesn’t make a difference for them.
- Apps that operate in a heavily regulated geographical location where there are strict rules for data monetization as well as online payments
- Apps that have high competition where alternates are free, then it is difficult to convert to premium subscription.
Freemium Model Case Studies
These are top 5 apps that are making handsome money with the freemium model:
Clash of Clans
This is a free-to-play mobile game that makes money with in-app purchases like virtual currency, gems, and other resources. While the free version is engaging, these premium features and access to digital downloads accelerate gameplay progress.
Dropbox
This is a cloud document storage app that offers a free version with limited storage space. There are subscription plans in this freemium app that offers additional storage and better sharing and security options.
Evernote
This is a note-taking app that offers a free version with basic note-taking and organization features. The premium subscription comes with advanced features including offline access to notes, larger upload limits, and collaboration tools.
Conclusion
So this quick rundown on the freemium model as app monetization strategy concludes here. When implementing the freemium model, make sure to factor in user experience, difference between free and exclusive content, market competition, and user acquisition costs. It is ideal to develop a strong monetization strategy with the help of a mobile app development company in Dubai, implement the monetization model, evaluate, analyze, A/B test and continue with what’s working to maximize the freemium earnings.
