How can you choose between freemium and premium mobile app models?

1 What is freemium?

Freemium is a mobile app monetization strategy that offers a basic version of the app for free, and a premium version with more features, content, or services for a fee. The idea is to attract a large user base with the free version, and then convert some of them to paying customers with the premium version. Some examples of freemium apps are Spotify, Dropbox, and Evernote.

2 What is premium?

Premium is a mobile app monetization strategy that charges a one-time or recurring fee to download or access the app. The app does not have any in-app purchases, ads, or subscriptions. The idea is to provide a high-quality, full-featured app that users are willing to pay for upfront or regularly. Some examples of premium apps are Minecraft, Headspace, and Procreate.

3 Benefits of freemium

Freemium has some advantages over premium, such as lowering the barrier to entry for users, increasing the potential reach and exposure of the app, creating a loyal and engaged user base, and allowing for flexible pricing and segmentation. By using a freemium model, users can try the app before buying it, share it with others, see the value of the app and its updates, and choose the features and services they need and pay accordingly.

4 Drawbacks of freemium

Although Freemium has some advantages over premium, it also comes with some drawbacks. A large and active user base is needed to generate revenue, as only a small percentage of users will upgrade to the premium version. Additionally, development and maintenance costs are increased due to the need to support both the free and premium versions. Furthermore, Freemium risks cannibalizing premium sales as users may be content with the free version and not feel the need to pay for more. Lastly, there is a perception of lower quality associated with Freemium, as users may associate free with cheap or inferior.

5 Benefits of premium

Premium offers some distinct advantages over freemium, such as generating immediate and predictable revenue, reducing marketing and customer acquisition costs, simplifying the development and design process, and creating a perception of higher quality. With a paid app, users pay upfront or regularly for the app, are more likely to trust and recommend it, only need to focus on one version and one target audience, and expect more from it while valuing its features and services.

6 Drawbacks of premium

Although premium has some advantages over freemium, there are also some disadvantages to consider. Premium apps require users to pay before trying the app, which can raise the barrier to entry and limit the potential reach and exposure of the app. Additionally, it increases competition and pressure, as users compare the app with other paid apps and demand more updates and improvements. Furthermore, there is a risk of losing customers if they are not satisfied with the app, as they may switch to other apps or cancel their subscriptions.

7 How to choose between freemium and premium

When deciding between freemium or premium for your app, there is no definitive answer as it depends on various factors. You must consider the value proposition and differentiation of your app, the target audience and market, revenue goals and costs, and the growth strategy and metrics. It is important to do research and analysis on these factors, as well as test your assumptions and hypotheses with users. Experimenting with different models and features can also help to understand user behavior and feedback. Ultimately, you need to find a balance between offering enough value for free to attract users, and enough value for a fee to convert them.

8 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?