App Economy

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App Economy
 – Business models and emerging market opportunities.

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App Economy

  1. 1. Hello!AppEconomyWe are DesignitBusiness models and emergingmarket opportunitiesHenrik HedegaardInformation Architect
  2. 2. AppEconomy
  3. 3. AppEconomy
  4. 4. AppEconomy
  5. 5. AppEconomy
  6. 6. AppEconomy
  7. 7. AppEconomy
  8. 8. AppEconomy
  9. 9. Two pathsContinuous pricing and Freemium
  10. 10. Continuous pricing- Start with a low price- if it sells good/popular, increase the price- if it sells bad/unpopular, lower the price- result: revenue is (about) the sameGeneric example from app-culture:1) Start price at $10 dollars2) 10.000 copies sold3) Price increase to $154) Sells drops to 6.500Total revenue is (about) the sameDecrease in size of user base
  11. 11. Freemium"Give your service away for free, possibly adsupported but maybe not, acquire a lot of customersvery efficiently through word of mouth, referralnetworks, organic search marketing, etc., then offerpremium priced value added services or anenhanced version of your service to your customerbase."Fred Wilson. March 2006
  12. 12. Freemium"Give your service away for free, possibly adsupported but maybe not, acquire a lot of customersvery efficiently through word of mouth, referralnetworks, organic search marketing, etc., then offerpremium priced value added services or anenhanced version of your service to your customerbase."Fred Wilson. March 2006Examples of limitations- Feature limited (e.g. no calendar)- Time Limited (e.g. 30 day full trial)Examples of plans- “Free” plan- “Recommended” plan (best overall)- “Hail mary” plan (all inclusive)
  13. 13. Freemium It’s not Gillette"Give your service away for free, possibly adsupported but maybe not, acquire a lot of customersvery efficiently through word of mouth, referralnetworks, organic search marketing, etc., then offerpremium priced value added services or anenhanced version of your service to your customerbase."Fred Wilson. March 2006Examples of limitations- Feature limited (e.g. no calendar)- Time Limited (e.g. 30 day full trial)Examples of plans- “Free” plan- “Recommended” plan (best overall)- “Hail mary” plan (all inclusive)
  14. 14. Freemium It’s not a cheap"Give your service away for free, possibly adsupported but maybe not, acquire a lot of customers iPhone with a hugevery efficiently through word of mouth, referralnetworks, organic search marketing, etc., then offer subscription planpremium priced value added services or anenhanced version of your service to your customerbase."Fred Wilson. March 2006Examples of limitations- Feature limited (e.g. no calendar)- Time Limited (e.g. 30 day full trial)Examples of plans- “Free” plan- “Recommended” plan (best overall)- “Hail mary” plan (all inclusive)
  15. 15. Freemium It’s supplying a free"Give your service away for free, possibly adsupported but maybe not, acquire a lot of customers product or servicevery efficiently through word of mouth, referralnetworks, organic search marketing, etc., then offer that won’t requirepremium priced value added services or anenhanced version of your service to your customer extra supplementsbase."Fred Wilson. March 2006 in order to support the customer!Examples of limitations- Feature limited (e.g. no calendar)- Time Limited (e.g. 30 day full trial)Examples of plans- “Free” plan- “Recommended” plan (best overall)- “Hail mary” plan (all inclusive)
  16. 16. Freemium It’s supplying a free"Give your service away for free, possibly adsupported but maybe not, acquire a lot of customers product or servicevery efficiently through word of mouth, referralnetworks, organic search marketing, etc., then offer that won’t requirepremium priced value added services or anenhanced version of your service to your customer extra supplementsbase."Fred Wilson. March 2006 in order to support the customer!Examples of limitations- Feature limited (e.g. no calendar)- Time Limited (e.g. 30 day full trial)Examples of plans Like these....- “Free” plan- “Recommended” plan (best overall)- “Hail mary” plan (all inclusive)
  17. 17. Freemium"Give your service away for free, possibly adsupported but maybe not, acquire a lot of customersvery efficiently through word of mouth, referralnetworks, organic search marketing, etc., then offerpremium priced value added services or anenhanced version of your service to your customerbase."Fred Wilson. March 2006Examples of limitations- Feature limited (e.g. no calendar)- Time Limited (e.g. 30 day full trial)Examples of plans- “Free” plan- “Recommended” plan (best overall)- “Hail mary” plan (all inclusive)
  18. 18. Freemium"Give your service away for free, possibly adsupported but maybe not, acquire a lot of customersvery efficiently through word of mouth, referralnetworks, organic search marketing, etc., then offerpremium priced value added services or anenhanced version of your service to your customerbase."Fred Wilson. March 2006Examples of limitations- Feature limited (e.g. no calendar)- Time Limited (e.g. 30 day full trial)Examples of plans- “Free” plan- “Recommended” plan (best overall)- “Hail mary” plan (all inclusive)
  19. 19. AppEconomyWhy’s Skype’s business a success? Low cost Great free app Paid = new value Low pricing
  20. 20. AppEconomyWhy’s Skype’s business a success? Low cost Great free app Paid = new value Low pricing Skype: $185 million in revenue in Q3, 2009 - Free: 27.7 billion Skype-call minutes - Paid: 3.1 billion Skype-call minutes (SkypeOut) - Oct. 2010: +12 million iPhones with Skype installed
  21. 21. 5 key points#1 Horizontal integration#2 Conversion through scale and distribution#4 In-app up-selling additional functionality#3 Monitor user patterns#5 Facilitating marketing with freemium
  22. 22. AppEconomy Access your business through apps #1 - Apps are rarely singular. Integration with additional services - Support for “on-the-move” tasks - Support the core business when your customer is “off-the-grid”
  23. 23. AppEconomy Conversion through scale and distribution #2 - It’s a “Download-and-delete” culture - Paid apps generate barriers and minimize sale - Free apps provide volume and support “discoverability” in App Store
  24. 24. AppEconomy In-app up-selling additional functionality #3 - Don’t hide premium functionality - Premium upgrades promote new needs and demands - Simple in-app transactions for premium upgrades
  25. 25. AppEconomy Monitor user patterns #4 - Retain customers through engagement - Support and identify user needs and demands (e.g. VoteBox) - Continuos engagement of users
  26. 26. AppEconomy Facilitate marketing with freemium #5 - Free > volume > awareness - Free > volume > word-of-mouth effect - Free > volume > customer as “brand ambassador” } BRAND VALUE
  27. 27. Pricing
  28. 28. AppEconomy Prisfaktorer The business IxD, UX, design Implementation LaunchPrice: €€ Price: €€€ Price: €€€€€ Price: €€€€€- What’s your business? - Definer IxD and IA framework - Back-end requirements? - Market your app!!- What’s your goal? - User test your framework - Integrate with services? - Long-term / short-term?- Who’s the customer/user? - Define initial UI-framework - Any complex interaction? - Cross-media- Target groups? - User test UI-framework - Any complex transitions? - Engage the users- App specifications? - Scale to app-wide framework - Listen to feedback- Business & project plan - Constant enhancement - What about tomorrow?Timeframe: 1-2 weeks Timeframe: 2-10 weeks Timeframe: 5-20+ weeks Timeframe: 2-10+ weeks
  29. 29. it’s on slideshare.netHenrik HedegaardInformation Architecthenrik.hedegaard@designit.com+45 87 30 90 91

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