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I think part of the problem with freemium is that it changes your perception of where the value lies. The user discounts the value of the free component to noth

• abhishm 11y ago
  Yup. And the problem now is if its not free, your product is not going to get ANY users. I really hope, everyone starts rolling back on freemium, because its hurting everyone (except customers).
  • mhomde 11y ago
    I would argue that it hurts customers too, at least for some apps. If a developer doesn't get constant revenue there'd be little incentive or resources to update and maintain the app. The customers are then stuck with an app that might have been good but decays over time.
    • abhishm 11y ago
      yeah
    • glesica 11y ago
      Until the next cool freemium app in that space comes out, then the customer just switches to that one. The real problem is that we just don't need 80 gazillion apps. The "app" market is extremely competitive, that's really what people are complaining about, profits have been driven down to basically nothing. Normally you would expect some developers to drop out of the market, which would help the situation, but two things are stopping that from happening, in my opinion. First, the platform companies (Apple and Google) have been incredibly successful at promoting app development as a gold mine. For every developer who gets sick of it and moves on to something else, two people become "app developers". Second, there's a startup bubble and the wisdom out there says you need an app or your startup is nothing. This partly relates to the first point, the hype around "apps", even years after Apple launched the app store, is deafening.
      • rokhayakebe 11y ago
        App stores should try charging people $100/year after the first year an app is in the store. Or the reverse, pay $100 to pull your app from the store after its first year.
        • nostrademons 11y ago
          I believe Apple does do this - it's $99/year to become an Apple Developer, and I think you need to be an Apple Developer to have an app in the app store.
          • clarky07 11y ago
            It is $99/year to have apps in the App Store, but it is per developer account and not per app. I almost think devs would be better off if it was per app. At least any devs planning to make a living off the store. It would cut down on a lot of the crappy spammy apps out there.
            • detaro 11y ago
              It would also kill the one-off hobby stuff with which many, especially teens, get their taste for (app) development, which would be a high price to pay. Without a secondary path to distribute apps I think it would be a bad idea.
  • onewaystreet 11y ago
    There are a few apps that are making a lot of money from the freemium model. As long as that continues other developers will chase that dream.
    • abhishm 11y ago
      Hmm.. which all are? Its hardly even a choice. As a consumer myself, anything not free doesn't interest me anymore. Companies are spoiling consumers (including me) silly.
      • onewaystreet 11y ago
        Look at the apps on the top grossing chart. Supercell, for example, makes over a billion a year.
        • e12e 11y ago
          I'm not sure freemium games with in-app purchases are a very good model for apps in general (I'm not saying you're suggesting anything other than that they make a lot of money, just pointing it out in the context of this discussion). It's hard for me to see how they're anything but a form of unregulated (yet) gambling/exploitation of people vulnerable to gambling. Who in their right minds think that tens, hundreds of dollars is a good price to pay for virtual gemstones? At any rate, for others that where unfamiliar with Supercell, I'm assuming parent means the makers of: https://thinkgaming.com/app-sales-data/1/clash-of-clans/ https://thinkgaming.com/app-sales-data/1/clash-of-clans/ A somewhat related article: http://www.theguardian.com/technology/shortcuts/2013/mar/26/apples-in-app-game-charges-kids-bills http://www.theguardian.com/technology/shortcuts/2013/mar/26/... (And there's of course been a number of articles on "predatory" game design, based around compulsive/addictive behaviour)
          • deleted 11y ago
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  • amelius 11y ago
    In my opinion, freemium is a form of predatory pricing. http://en.m.wikipedia.org/wiki/Predatory_pricing http://en.m.wikipedia.org/wiki/Predatory_pricing
    • ohitsdom 11y ago
      It can be done responsibly. But unfortunately, I agree it's mostly predatory.
    • DamagedProperty 11y ago
      I do believe many companies are employing this practice with freemium apps. There is something bigger happening here with freemium. At first we all called it "race to the bottom" pricing. And if felt like that. If felt like the value of our apps were dwindling to stay competitive. But let's just look at how things were for a second. If you sold an app for 4.99 you making a promise to the consumer that you would deliver value equal or greater than your price. And you if you didn't keep that promise it was up to the consumer to get a refund or suck it up. This was largely a pre-internet thing. The internet has made distribution a non-issue. Now you can get your products and ideas out there for little to no cost. What we are seeing is an opportunity to show initial value to our users and offer higher value at a premium. This increases the reach of our work and helps us to find those 1000 true fans. Of course, we have to nurture those relationships. It's a lot of work. I don't think there is anything wrong with premium pricing. People are use to it still. Why aren't we just focusing on the value we bring to people and whether it's premium or freemium none of it would be an issue.
  • soylentcola 11y ago
    Freemium can mean several things. I've purchased several apps (and generally paid more for them) when there was a free download that offers some functionality and the option to pay for the full version. Sometimes these are games where the first chapter is free and then you pay $5 for the full game after you've played a bit. It lowers the "friction" for the customer because you get to try something out at no cost but if you enjoy the first hour of play, you're more confident that you'll enjoy the other 5 hours. Other times these are utilities. The Philips Hue lamps have an official app that's passable but the third party "Hue Pro" adds functionality. The free version does basically what the Phiilps app does or you can pay $2 and unlock all of the "fun" addons like music sync and lava lamp mode. Once I know that the app works and isn't buggy, I'm glad to pay. Same for launchers like Nova. Free version is a nice launcher that I vastly prefer to the stock launcher but I can pay a few bucks and get several more options. I probably wouldn't have paid $3 times 4 or 5 launchers just to find the one I liked but once I tried all of the free versions, I paid for the full version of the one I liked best. It's like shareware. With the glut of options, you don't want to pay every time you try several solutions to find the best one so you try a bunch then buy the best. If I had to pay $1-10 to try every app on my phone, I'd just install less apps (or, to be honest, I'd probably try cracked copies to find the best option, then buy the best one). As long as the quality of mobile apps is so varied, it really is hard to convince potential customers to pay any amount of money sight unseen. I've installed so many iOS and Android apps that lasted a total of 10 minutes on my devices it's not even funny. If I paid even $1 for each of them to learn those lessons, it would've turned me off to buying mobile apps at all.
• nsgi 11y ago
  Interesting. How does this fit with the common advice (from patio11, etc.) that developers generally underprice their software?
  • scriptman 11y ago
    I'm not an expert like patio11 or others, but I think that it could be that developers aren't always as interested in economics as they should be and this can lead to not understanding the behaviour of markets. Technically, developers have to underprice their software to be successful. This is true for any product or service that you want to sell. Particularly for productivity focused software, the end user has to derive signficantly more in value than they pay in direct costs to the developer. In general, in my experience involved with b2b software/services, people want to being saving 20-30% of their time or money to strongly consider changing their existing habits. The reason for this is that there are also indirect costs that the end user incurs that developers don't always take into account in their cost models. End users incur costs in learning new software products, there are ongoing cognitive load costs in remembering how to use the product and there are opportunity costs in choosing your products over something else, not even necessarily in the same market. There is a cost that the user incurs in taking a risk that your software will solve their problem before they really understand its full capability. Even taking up an icon space on their phone/tablet/desktop has a cost to the user as it's a place they can't put a different app. Your app takes up harddrive space that the user has paid for and your app uses up some of their bandwidth. Finally, you aren't just competing against other software vendors in your market, you are competing against every other thing in any market the end user might want to spend their money on. End users have a limited amount of money and time and there are a huge amount of things they can spend their money on. You can't accurately measure any of these indirect costs, but you know they are there and you can estimate them. When you take into account the indirect costs suddenly there aren't as many dollars left on the table that developers aren't charging for. Another point is that the closer you price your software to its marginal utility to the end user, the more likely the end user is going to shop around looking for alternatives. You open yourself up to competition which could increase your marketing expenses. You could also suffer more churn, which is expensive to you. The point is, you want your users feeling like they are getting amazing value from your product. You don't want them feeling like your product costs just a bit less than the value they derive (which may seem like the most efficient price to you) because if that's the case your business is actually teetering over a precipice and any sudden shock could push you over the edge with many customers leaving all at once. Loyal, happy customers paying you recurring revenue buffing up your cash flow is worth more than anything.
• tonyedgecombe 11y ago
  Not only that but 'customers' who don't pay can also be some of the more difficult people to deal with, they are the ones who leave a 1 start review instead of sending you a bug report.
  • caseysoftware 11y ago
    I think this is a key thing that is usually overlooked. When someone gets the app for free, they haven't self-qualified by paying and as a result they have zero personal investment. They don't want to "get their money's worth" or "look forward to the next version." Instead they get annoyed, leave a comment, and quickly forget about your app. I think you should always charge something - even $0.99 - just to filter most of the casual users and get a more qualified (and invested) customer.
    • nstart 11y ago
      If everyone did this (for cases where it actually mattered. Some app types are supported fine by in app ads) I would love to see how it would change the entire market perception towards paying for software. Right now it's viewed as a risk. A "should I make my app a paid for app or not?". I'd love to live in the utopia of developers simply being able to look at their creation, say that this is the value for it, and have people respect that.
    • vijayr 11y ago
      Charging money will definitely reduce the number of stupid comments, but that is not totally foolproof either. On Amazon, I've seen many times people leaving bad reviews (after paying for it) not because the product was bad, but because they understood the description wrong and hence the product did not meet their expectations. It is amazing how many people won't take 2 mins to actually read the description before buying.
    • orasis 11y ago
      You should not charge anything if your app is semi-viral. I've done the experiments and charging kills growth for high retention apps.
  • 11y ago
• zzzcpan 11y ago
  > The user discounts the value of the free component to nothing and only measures the value of the additional functionality that is unlocked with buying the premium portion. I think you could solve this by having two distinct websites, apps or even brands. It's not going to feel like a ripoff if they are perceived very differently from each other.
  • scriptman 11y ago
    Sorry, I have to disagree. If you did this, why would you even have the free version? The whole point of the free portion is to act as feeder for the paid version. If the branding is completely separate then how are the users going to know they can have the same level of confidence in the paid version as what they do in the free version? May as well not have the free version at all.
    • zzzcpan 11y ago
      > how are the users going to know they can have the same level of confidence in the paid version as what they do in the free version? You are going to tell them. Kind of like this: "Need more space? Try our paidapp."
• Moru 11y ago
  When I was working in retail ages ago this was said many times as advice for new companies starting out. "It's easier to lower the price when you don't sell enough than to raise the price on something that is selling well." Today it seems to work this way: "We start with free stuff and then we try to find ways to make money later". I think this is part of why we have the customers we have today. They expect everything to be free and then give you 1 star reviews if the background color is off a shade.
  • scriptman 11y ago
    Today, that could be because devs tend to confuse how to measure success and keep a foot in multiple camps. If you are trying to create a viral app, then giving your software away for free increases your chances of hitting the jackpot. But it decreases your chances of achieving steady cash flow in the short to medium term. If you charge upfront, then you probably aren't going to go viral. But you might be able to pay your costs. Freemium is an each way bet. Everyone dreams of virality, but this dream might be sabotaging your nice, niche, steady earning app. You need to choose between your ego playing the app lottery or making small steady gains with real money. Sometimes going after virality is the right decision, but you have to look at your app and its target market and choose your charging model carefully. As for the customers having low expectations, if the developers don't think that their software is worth anything, then it's probably not surprising that the customers agree.
    • untog 11y ago
      Today, that could be because devs tend to confuse how to measure success Devs/VCs. Or, rather, a VC is looking for a big sale down the road, not a company that makes steady income with low priced transactions.