6 ms·

"So, don’t be stingy: a product with no paying users is (usually) better than a paid product with no users. It’s much easier to upsell to an existing customer t

by sidlls 9y ago

"So, don’t be stingy: a product with no paying users is (usually) better than a paid product with no users. It’s much easier to upsell to an existing customer than it is to find an entirely new paying customer." This is generally true, but it seems a bit like applying an Enterprise view of sales to a market of minnow sized budgets. It reinforces app consumers' view that apps should only charge for marginal value, not core value or the biggest value. This sort of "freemium" model leads to basically a market of pure crap with extremely rare gems. Edit: I'm not dumping on the author, here. Were I to "do mobile" I'd probably take a similar approach because it clearly works.

taylodl 9y ago
I must be in the minority, but I refuse to use freemium applications (those relying on in-app purchases to complete their functionality). My attitude is if you don't think your app is worth anything - I agree. Look, I'll walk into a Starbucks and spend $3 on something I'm going to consume in 30 minutes without even batting an eye. If you think your software is worth less than that then it probably doesn't warrant my time to check it out. I'm willing to concede I'm in the minority - but I'll also point out this goes a long way toward explaining why the quality of indy mobile apps is so abysmal.
- scarface74 9y ago
  Did you ever buy shareware back in the day like Doom? What's the difference?
  - bluejekyll 9y ago
    This is a great question. Shareware locked into this idea that if I could only get my game or application into people's hands, then they will love it and pay for the other features. This definitely is a similar model to a free app with in-app upgrades. The challenge is coming up with a model where the user will decide they want to upgrade. Is it more features? Is it a restricted timeframe? More game levels? I bet different app types do better with different options. I'd be curious if anyone has captured data on the best option for the different categories.
    - foobarian 9y ago
      A long time ago I made a DOS shareware app and posted it on various BBS/ftp servers. 6 months went by, and to my great surprise I got a check for $10 in the mail with an appreciative note asking for the full version with the extra features. By this time I completely forgot about the app, and of course I'd never made the full version. I think there might be a moral in there somewhere kind of like how backups don't work unless tested regularly.
      - Jaruzel 9y ago
        A long time ago I made a Windows (3.1/95) app that invisibly used a file share to send 'Post it' notes to peoples screens. It served a purpose for myself and my colleagues at the time as we were in an organisation that barely used email, and also had no IM facilities whatsoever. I threw it online, by uploading it to several of those shareware app hosting sites that used to exist and hosted it on my own site as well. The app was fundamentally free, but if you wanted to use it legally in an organisation you had to by per-user licences. To my utter surprise, cheques started arriving in the mail, some for 100's of user licences. Several were FTSE100 companies. It turned out that my app had a killer feature - when you sent a 'note' to someone else, it appeared on their screen almost immediately on top of what ever they were doing. Apparently traders loved this, so my apps was being used in several banks on their trading floors. The whole thing was short lived, and the money I made was a short bubble. Less than a year later it all dried up, and NetNote[1] was consigned to history. Back to point though, and why I'm replying - one of the large banks asked me to come in for meeting to discuss upgrades to the app - as they'd paid for 1000+ user licences I felt duty bound to attend the meeting. However, what they basically wanted was a complete overhaul of it and had a request list as long as my arm. As an indie developer I couldn't commit to that, so I didn't make any promises, and then completely failed to deliver on their requests. Of course I regret that now. -- [1] https://web.archive.org/web/20030323215705/http://www.jaruzel.com:80/netnote.shtml https://web.archive.org/web/20030323215705/http://www.jaruze...
  - rbritton 9y ago
    If you look at the IAP option list you can tell if it's freemium or not. I don't put a free app with a $9.99 "Unlock Pro Functionality" in that category. Fifteen different "Buy xx Gems" is.
  - tonyedgecombe 9y ago
    The difference is the rock bottom price, you can't (I don't think) put a time limited app in the app store. I use the 'shareware' model for my software and trials outnumber purchases 50-1. Put that number into an environment where $3 is seen as expensive and the economics don't look very good.
- Nition 9y ago
  To be fair, no-one thinks their app is worth less than $3. They just know the market thinks their app is worth less than $3.
- ramshanker 9y ago
  In isolation, you may not think free app is worth its time, but when a friend tells you to checkout this thing, suddenly perspective change.
  - taylodl 9y ago
    Indeed it does and your friend has provided a valuable service - they've searched and reviewed the app for you. This applies to free and paid-for applications. I've had apps I've recommended to friends where it turns out they were looking at the app but wondered whether it was worth $4.99. After seeing it they happily paid the $4.99. I ribbed them about their reluctance to pay the $4.99, given the cost of their daily Starbucks habit, and essentially what they responded was they're accustomed to apps being bad, but free. They're suspicious that paid-for apps are just as bad, but not free. This is anecdotal, but if it represents the attitude of the user community at-large then it goes a long way to explaining the state of apps today: no one is expecting them to be any better than they are.
- Trundle 9y ago
  Businesses don't charge what they think their product is worth. The concept of "thinking what its worth" is silly all by itself. They charge the profit maximising amount in the profit maximising way. If you could get one customer at $100 or fifty customers at $10, what is your product 'worth'?
  - ImSkeptical 9y ago
    I think you do need to assess what your product is worth, simply because you don't know how many customers you'll get at each price point and if you experiment thoroughly it'll take time and may ruin your market. On the other hand, if I conclude that my product provides X dollars of value to my customer, I know I should be able to set the price at X-Y and get many customers.
    - icebraining 9y ago
      That's the point, there's no such thing as a fixed amount of dollars of value per customer. You may have found a segment willing to pay X-Y, but you may be leaving a lot of money on the table by not selling to the potentially much larger segment that only gets X/2 dollars of value from your product.
- downandout 9y ago
  "My attitude is if you don't think your app is worth anything - I agree" By this logic, all free apps are worthless. Do you mean to tell me that each and every app on all of your devices were paid downloads? I find that unrealistic and hard to believe. Also...do you use Facebook and/or Google? Those are also free to use and think it would be a stretch to call them "worthless" (I'll concede that many people, including me, find Facebook next to useless except for marketing purposes, but I would not try to make an argument that it is worthless).
  - tonyedgecombe 9y ago
    "By this logic, all free apps are worthless." That's largely my experience, there are one or two exceptions but if I look at the stuff that I use for years, software that has been continuously maintained and is functionally rich and stable it's nearly all commercial.
- benjismith 9y ago
  I'm compelled to ask how much you're paying for your "Hacker News" subscription... because the rest of us are somehow finding legitimate economic value in this nominally free resource.
  - sillysaurus3 9y ago
    I don't have a stance on the issue either way, but that's not a fair comparison. HN is free because it makes YC one of the most powerful tech organizations on the planet. (HN is one of the main reasons YC is in its current position. But that's a topic for another time.) It's the same reason Reddit is free: because that makes Reddit one of the most influential news sources circa 2017.
    - mankash666 9y ago
      In a similar fashion, a coffee from Starbucks isn't the same as an app download. For instance, though Netflix is about 2 Starbucks orders, it's subscribers attribute greater value to it. However, a $1 monthly increase brings out the pitch forks in them. It's all very confusing
      - TeMPOraL 9y ago
        It's less confusing when people stop trying to convert bewteen "value received" and "dollars paid". Starbucks coffee and Netflix subscription cost what they cost. Take it or leave it. If you take it, that becomes your baseline. And regulars/subscribers generally don't like when the base price goes up. Doesn't matter if the base price was $3 or $30.
      - pbhjpbhj 9y ago
        I think you're making the mistake of considering all Netflix users to be the same. We just got Netflix, it beat other options (Amazon mainly) because of the low price. I never get Starbucks (nor go out for a hot drink) because it's too expensive; when Netflix price increases I'll be moaning. Those moaning with me are likely to be people who also can't afford $overpricedCaffeineProduct, no?
- prawn 9y ago
  "complete their functionality" Depends on your judgement of complete functionality. If you only need the functionality short of the IAP, then what's wrong with using the free app? And if you want the full functionality and are happy to pay the IAP, why not just consider it a paid app with something of a trial? On the latter point, given there is no real app store functionality for trials, free with IAP should be cut some slack when done properly IMO.
  - LeoNatan25 9y ago
    Agree on theory. The net result, however, is that most “free with IAP” is a cesspool of manure. And that’s before we even start to talk about games with this model.
    - yoz-y 9y ago
      I think even if there were no "free with IAP" apps, most of the applications would be really really bad. Most shareware applications were bad too, most web services/web applications are bad. Most paid applications are probably bad too, but one can only test a few of them. The perceived badness of free applications is overblown because there are so many of them (but that is mostly because mobile made distributing applications trivial) and one can test swaths of them, well, for free.
- m_fayer 9y ago
  A lot of times a "freemium" application is really just developers rolling their own "try before you buy" solution. A few bucks makes sense for something trivial, but if I'm charging north of 5$ for something that will be in frequent use (say, an expense tracking app), I completely understand that the user first wants to verify that the app fits to their needs, something you can't do from looking at a few screenshots.
- gabemart 9y ago
  > Look, I'll walk into a Starbucks and spend $3 on something I'm going to consume in 30 minutes without even batting an eye. Because you know exactly what you're going to get from Starbucks. Or even if it's a coffee shop you've never been to before, you have a pretty good idea what to expect when you order a coffee. I made my first iOS app freemium because you just can't tell what an app is like by looking at some screenshots. Freemium lets the user assess the quality of the app before paying for it.
  - Klathmon 9y ago
    Yeah, when it comes to unknown names, freemium is (in my opinion) best for both the creator and for the user. The user gets to make sure they aren't completely throwing money away, or don't need to hassle with refunds, and the creator gets an easy way to get their name out there and grab users from the competition without any commitment. As long as the price isn't obfuscated, i love the freemium model.
  - taylodl 9y ago
    You've never tried a new restaurant or a new dish? Sometimes the fun in life is not knowing exactly what you're going to get. Sometimes you win, sometimes you lose. This is only true for things costing small sums of money. Shelling out $5-$10 for a new drink at Starbucks or a new dish at a restaurant and not being completely happy with the result is no big deal. Shelling out $25K for a new car and not being completely happy with the result is a big deal. My question then is why are we treating mobile apps like new cars when they're priced (or as I'm arguing - should be priced) like new coffee drinks? I'm no economist, but I think a nominal fee for apps would have a huge impact on the app store. Reviews will be more honest and as such the crap will sink much faster and the cream will rise much faster. It would then be much easier to find good apps, apps that no one would think twice about paying a nominal purchase price. That's my $0.02's worth anyway!
    - ice109 9y ago
      >You've never tried a new restaurant or a new dish? you realize that most people don't do this right?
- neonhomer 9y ago
  So would one solution be to have (1) a $3 app that already has the features unlocked, and (2) a free version with the IAP to open up those features?
jasonthevillain 9y ago
I really think this is a symptom of iOS not supporting free trials.
Quarrelsome 9y ago
its worth also noting that this is also an expectation of the SEA market now so its really pissing into the wind to try to not to do it if you're selling to consumers. As it can be interpreted as a "fuck you" to people in developing nations.

by sidlls 9y ago

taylodl 9y ago

I must be in the minority, but I refuse to use freemium applications (those relying on in-app purchases to complete their functionality). My attitude is if you don't think your app is worth anything - I agree. Look, I'll walk into a Starbucks and spend $3 on something I'm going to consume in 30 minutes without even batting an eye. If you think your software is worth less than that then it probably doesn't warrant my time to check it out. I'm willing to concede I'm in the minority - but I'll also point out this goes a long way toward explaining why the quality of indy mobile apps is so abysmal.

scarface74 9y ago
Did you ever buy shareware back in the day like Doom? What's the difference?
- bluejekyll 9y ago
  This is a great question. Shareware locked into this idea that if I could only get my game or application into people's hands, then they will love it and pay for the other features. This definitely is a similar model to a free app with in-app upgrades. The challenge is coming up with a model where the user will decide they want to upgrade. Is it more features? Is it a restricted timeframe? More game levels? I bet different app types do better with different options. I'd be curious if anyone has captured data on the best option for the different categories.
  - foobarian 9y ago
    A long time ago I made a DOS shareware app and posted it on various BBS/ftp servers. 6 months went by, and to my great surprise I got a check for $10 in the mail with an appreciative note asking for the full version with the extra features. By this time I completely forgot about the app, and of course I'd never made the full version. I think there might be a moral in there somewhere kind of like how backups don't work unless tested regularly.
    - Jaruzel 9y ago
      A long time ago I made a Windows (3.1/95) app that invisibly used a file share to send 'Post it' notes to peoples screens. It served a purpose for myself and my colleagues at the time as we were in an organisation that barely used email, and also had no IM facilities whatsoever. I threw it online, by uploading it to several of those shareware app hosting sites that used to exist and hosted it on my own site as well. The app was fundamentally free, but if you wanted to use it legally in an organisation you had to by per-user licences. To my utter surprise, cheques started arriving in the mail, some for 100's of user licences. Several were FTSE100 companies. It turned out that my app had a killer feature - when you sent a 'note' to someone else, it appeared on their screen almost immediately on top of what ever they were doing. Apparently traders loved this, so my apps was being used in several banks on their trading floors. The whole thing was short lived, and the money I made was a short bubble. Less than a year later it all dried up, and NetNote[1] was consigned to history. Back to point though, and why I'm replying - one of the large banks asked me to come in for meeting to discuss upgrades to the app - as they'd paid for 1000+ user licences I felt duty bound to attend the meeting. However, what they basically wanted was a complete overhaul of it and had a request list as long as my arm. As an indie developer I couldn't commit to that, so I didn't make any promises, and then completely failed to deliver on their requests. Of course I regret that now. -- [1] https://web.archive.org/web/20030323215705/http://www.jaruzel.com:80/netnote.shtml https://web.archive.org/web/20030323215705/http://www.jaruze...
- rbritton 9y ago
  If you look at the IAP option list you can tell if it's freemium or not. I don't put a free app with a $9.99 "Unlock Pro Functionality" in that category. Fifteen different "Buy xx Gems" is.
- tonyedgecombe 9y ago
  The difference is the rock bottom price, you can't (I don't think) put a time limited app in the app store. I use the 'shareware' model for my software and trials outnumber purchases 50-1. Put that number into an environment where $3 is seen as expensive and the economics don't look very good.
Nition 9y ago
To be fair, no-one thinks their app is worth less than $3. They just know the market thinks their app is worth less than $3.
ramshanker 9y ago
In isolation, you may not think free app is worth its time, but when a friend tells you to checkout this thing, suddenly perspective change.
- taylodl 9y ago
  Indeed it does and your friend has provided a valuable service - they've searched and reviewed the app for you. This applies to free and paid-for applications. I've had apps I've recommended to friends where it turns out they were looking at the app but wondered whether it was worth $4.99. After seeing it they happily paid the $4.99. I ribbed them about their reluctance to pay the $4.99, given the cost of their daily Starbucks habit, and essentially what they responded was they're accustomed to apps being bad, but free. They're suspicious that paid-for apps are just as bad, but not free. This is anecdotal, but if it represents the attitude of the user community at-large then it goes a long way to explaining the state of apps today: no one is expecting them to be any better than they are.
Trundle 9y ago
Businesses don't charge what they think their product is worth. The concept of "thinking what its worth" is silly all by itself. They charge the profit maximising amount in the profit maximising way. If you could get one customer at $100 or fifty customers at $10, what is your product 'worth'?
- ImSkeptical 9y ago
  I think you do need to assess what your product is worth, simply because you don't know how many customers you'll get at each price point and if you experiment thoroughly it'll take time and may ruin your market. On the other hand, if I conclude that my product provides X dollars of value to my customer, I know I should be able to set the price at X-Y and get many customers.
  - icebraining 9y ago
    That's the point, there's no such thing as a fixed amount of dollars of value per customer. You may have found a segment willing to pay X-Y, but you may be leaving a lot of money on the table by not selling to the potentially much larger segment that only gets X/2 dollars of value from your product.
downandout 9y ago
"My attitude is if you don't think your app is worth anything - I agree" By this logic, all free apps are worthless. Do you mean to tell me that each and every app on all of your devices were paid downloads? I find that unrealistic and hard to believe. Also...do you use Facebook and/or Google? Those are also free to use and think it would be a stretch to call them "worthless" (I'll concede that many people, including me, find Facebook next to useless except for marketing purposes, but I would not try to make an argument that it is worthless).
- tonyedgecombe 9y ago
  "By this logic, all free apps are worthless." That's largely my experience, there are one or two exceptions but if I look at the stuff that I use for years, software that has been continuously maintained and is functionally rich and stable it's nearly all commercial.
benjismith 9y ago
I'm compelled to ask how much you're paying for your "Hacker News" subscription... because the rest of us are somehow finding legitimate economic value in this nominally free resource.
- sillysaurus3 9y ago
  I don't have a stance on the issue either way, but that's not a fair comparison. HN is free because it makes YC one of the most powerful tech organizations on the planet. (HN is one of the main reasons YC is in its current position. But that's a topic for another time.) It's the same reason Reddit is free: because that makes Reddit one of the most influential news sources circa 2017.
  - mankash666 9y ago
    In a similar fashion, a coffee from Starbucks isn't the same as an app download. For instance, though Netflix is about 2 Starbucks orders, it's subscribers attribute greater value to it. However, a $1 monthly increase brings out the pitch forks in them. It's all very confusing
    - TeMPOraL 9y ago
      It's less confusing when people stop trying to convert bewteen "value received" and "dollars paid". Starbucks coffee and Netflix subscription cost what they cost. Take it or leave it. If you take it, that becomes your baseline. And regulars/subscribers generally don't like when the base price goes up. Doesn't matter if the base price was $3 or $30.
    - pbhjpbhj 9y ago
      I think you're making the mistake of considering all Netflix users to be the same. We just got Netflix, it beat other options (Amazon mainly) because of the low price. I never get Starbucks (nor go out for a hot drink) because it's too expensive; when Netflix price increases I'll be moaning. Those moaning with me are likely to be people who also can't afford $overpricedCaffeineProduct, no?
prawn 9y ago
"complete their functionality" Depends on your judgement of complete functionality. If you only need the functionality short of the IAP, then what's wrong with using the free app? And if you want the full functionality and are happy to pay the IAP, why not just consider it a paid app with something of a trial? On the latter point, given there is no real app store functionality for trials, free with IAP should be cut some slack when done properly IMO.
- LeoNatan25 9y ago
  Agree on theory. The net result, however, is that most “free with IAP” is a cesspool of manure. And that’s before we even start to talk about games with this model.
  - yoz-y 9y ago
    I think even if there were no "free with IAP" apps, most of the applications would be really really bad. Most shareware applications were bad too, most web services/web applications are bad. Most paid applications are probably bad too, but one can only test a few of them. The perceived badness of free applications is overblown because there are so many of them (but that is mostly because mobile made distributing applications trivial) and one can test swaths of them, well, for free.
m_fayer 9y ago
A lot of times a "freemium" application is really just developers rolling their own "try before you buy" solution. A few bucks makes sense for something trivial, but if I'm charging north of 5$ for something that will be in frequent use (say, an expense tracking app), I completely understand that the user first wants to verify that the app fits to their needs, something you can't do from looking at a few screenshots.
gabemart 9y ago
> Look, I'll walk into a Starbucks and spend $3 on something I'm going to consume in 30 minutes without even batting an eye. Because you know exactly what you're going to get from Starbucks. Or even if it's a coffee shop you've never been to before, you have a pretty good idea what to expect when you order a coffee. I made my first iOS app freemium because you just can't tell what an app is like by looking at some screenshots. Freemium lets the user assess the quality of the app before paying for it.
- Klathmon 9y ago
  Yeah, when it comes to unknown names, freemium is (in my opinion) best for both the creator and for the user. The user gets to make sure they aren't completely throwing money away, or don't need to hassle with refunds, and the creator gets an easy way to get their name out there and grab users from the competition without any commitment. As long as the price isn't obfuscated, i love the freemium model.
- taylodl 9y ago
  You've never tried a new restaurant or a new dish? Sometimes the fun in life is not knowing exactly what you're going to get. Sometimes you win, sometimes you lose. This is only true for things costing small sums of money. Shelling out $5-$10 for a new drink at Starbucks or a new dish at a restaurant and not being completely happy with the result is no big deal. Shelling out $25K for a new car and not being completely happy with the result is a big deal. My question then is why are we treating mobile apps like new cars when they're priced (or as I'm arguing - should be priced) like new coffee drinks? I'm no economist, but I think a nominal fee for apps would have a huge impact on the app store. Reviews will be more honest and as such the crap will sink much faster and the cream will rise much faster. It would then be much easier to find good apps, apps that no one would think twice about paying a nominal purchase price. That's my $0.02's worth anyway!
  - ice109 9y ago
    >You've never tried a new restaurant or a new dish? you realize that most people don't do this right?
neonhomer 9y ago
So would one solution be to have (1) a $3 app that already has the features unlocked, and (2) a free version with the IAP to open up those features?

jasonthevillain 9y ago

I really think this is a symptom of iOS not supporting free trials.

Quarrelsome 9y ago

its worth also noting that this is also an expectation of the SEA market now so its really pissing into the wind to try to not to do it if you're selling to consumers. As it can be interpreted as a "fuck you" to people in developing nations.