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.

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. 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. What Is Freemium Pricing?
 Free
+
 Premium
Source Price Chart: www.eventscream.com/blog/pricing
3

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. 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. 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. 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. The Right Price
WHAT WILL USERS PAY FOR?
8

9. Who Pays For Mobile
Games?
Source: Flurry = Posted by Jeferson Valadares on Fri, Sep 16, 2011
9

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. 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. Charge For Interfaces
 Import and Export
 Social Media Integration
 Message Routing
 Format Conversion
Source: Jorge Calvo - SensationalFix.com Flat Icons © SensationalFix
12

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. Charge For Timeliness
14

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. 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. Design
WHAT MAKES A GOOD DESIGN?
(REALIZING WIX APP MARKET HAS STANDARD
DESIGN)
17

18. Do You Display Free
Option?
Source: 123ContactForm.com
18

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. Increase Sales, Free On
Right
Hot
Source: Wufoo.com – form building app
20

21. Maybe You Don’t Display
Free
Hot
21

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. 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. 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. 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. Live Agent Hot
26

27. Free Trial
HOT
• Free Trial
• No Credit Card For Trial
NOT HOT
• Poor Contrast
• Features Hard To Read –
Crossed Out
27

28. Example - MailChimp
HOT
• Simplicity
Source: MailChimp
28

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. 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. Wix App Market – Features
• Wix Pricing Is Different From Company Website
• Oversized – Users Have To Scroll
Source: Wix Marketplace
31

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. Feature Diffs – Top or
Bottom?
BOTTOM NOT
TOP HOT
Source: Wix App Market
33

34. Funding
Sources
OTHER PLACES TO GET MONEY
34

35. Other Revenue and Asset
Sources
 Goods
 Affiliate Programs
 Data
 Corporate Customers
 Channel Partners
 Adverts
 Code – Open Source
 Artwork
35

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. Can You Afford Free?
HOT
• Free Entry Level
Experience
37

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. Take Aways
Set Goals
Identify And Test Items To Monetize
Quality Design
Validate Funding Sources
39

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