Users like an app. The app is free. They download it. After some time, say a few hours, a few days, a few weeks later they are bored with it. They uninstall the app. End of engagement.
Familiar story? Way of our life actually, repeated many times over in a month or months.
Markets are saturated.
Too many apps with short shelf lives.
A very small price window to earn something on the apps you develop after spending thousands of dollars developing them.
There simply are too many app developers trying to survive on ads alone while they offer their apps for free. App developers and app marketers are left scratching their heads. Sustainable models are the need of the hour. We need longer engagements of users with the apps. Apps need to live long to turn profitable for app publishers. For apps, therefore subscription business model is the best way forward to make regular and recurring revenue. There is now a shift in the way app business worked. From charging a one-time fee for apps publishers and developers are moving towards charging a recurring fee.
This model is being adopted by more and more publishers. App Annie’s Chief Marketing Officer Al Campa considers app subscriptions one of the highest growth areas thanks to the success of apps such as Netflix and Spotify. According to Google play, revenue from subscriptions has increased 10 times in last 3 years.
“You’ll see subscriptions making their way into gaming. Rather than buying a new version, paying $5 to download it (one game), if you had a subscription for $15 per month, you’d have access to a collection of games. It would be similar to Netflix model. Even health, fitness and lifestyle apps are becoming more subscription based because it’s a one-time decision”, said Al Campa.
People were spending 99 cents per song on iTunes. They soon realised they could instead just pay $9.99 per month to Spotify and listen to whatever they wanted , as many songs as they wanted.
The gist is – App subscription is here to stay. It is a new sustainable way of generating revenue. But how do you get your users who are happy using your free version to reach into their pockets to pay for monthly subscriptions? You would need to put on your thinking hat and use a few strategies we discuss here to convert your free users into paying customers.
#What are Some of the Reasons For Conversions?
According to Google’s insights 78% of subscribers start with the free version of the app and then they subscribe. The opportunity to try an app for free goes a long way in encouraging users to try new apps. If you want your users to move beyond free and convert, having good content in the subscription version will win the day for you. Most of the times. And you need to provide it consistently. Let’s look at the reasons users convert from free version to a subscription version.
According to a research by Google users who converted from free trials of app use to monthly /quarterly/yearly subscriptions basis did so because of three big reasons.
- 26% of users wanted additional content which was only available to subscription users.
- 23% of users took advantage of an offer which offered them the subscription on a discount.
- 17% of the users converted to subscriptions as their free trial had run out and they wanted to continue the use of the app.
#How to make your app users opt for subscription model?
This research provides useful insights to the app developers on enabling users transition from free model to subscriptions.
- Content drives the conversions. If possible ensure the app the users subscribe to has impressive content strategy. It must have better/more content than what you offer in free trial. Valuable and fresh content keeps your users subscribing. You need to time your content releases strategically so that the users feel they are getting new and fresh content consistently.
- Offer interesting discount offers to sell your subscription model to all your users. Focus and target users who have their free trial version ending shortly. They will be the ones most interested in opting for subscription model if they like your app.
- Tell your users with the help of campaigns that the subscription version of your app comes without ads. Ads can be a big irritant to some users. Though it is obvious, but if you remind your users of this plain fact subtly you will get a fair amount of conversions.
- Talk to your users about the convenience they will have if they subscribe for your app. Tell them about the additional features/ tools they would be able to access. Offer interesting options in the subscription model through campaigns.
- Do not offer free version of app on different devices to your users. Limit the use to one device. You can later use this strategy for conversions. Tell them if they subscribe they would be able to use the app on different devices and ensure they are able to sync it all too.
To increase conversions you have to ensure you inform your users about all the advantages they would be missing out on if they do not subscribe. The message has to be delivered in the right way at the right time. Pace the reminders of the message as you deem fit. Include push notifications in the strategy.
#What else can app developers do to push app subscription model?
There are several other tools and strategies app developers can make use of.
- As developers, you can ask your happy users to share their reviews. It can be on the social media platforms, app store review platforms or through Firebase invites. Firebase invites (for android apps) basically are recommendations and sharable in-app content sent by trusted sources like friends and relatives via email or SMS. You can read more about them here.
- You can have a reward program for app subscribers who recommend your apps to others.
- You can have an influencer program where you get the influencers to share content about your app.
- You can encourage app subscribers by directly replying to their reviews on the Google Play console.
- You can use Universal app campaigns to market your apps. Universal app campaigns create ads in a variety of auto generated formats which are then shown across search networks, display networks and Youtube. You can read more about Universal app campaigns here.
- You can try to create a community around your app and use user generated content in creative ways. Instagram is doing that beautifully.
# How much should you charge your monthly subscribers?
This is tricky. You need to keep the charges in the mid range between ‘Too-cheap-to-be-of-value’ and ‘Too-costly’. Price depends on the category of the app too.
According to a research by Google, in US, most of the apps charge between $5 per month to $20 per month. If your app belongs to categories like Education, News and Sports – you should try to price its subscription between $5 to $20 per month. If your app belongs to categories like Health, Productivity, Entertainment, Kids and Music you can price subscriptions for it in the range between $5 to $15 per month. If you price any app below $5 per month you will probably find very few takers – too cheap. If you price it above $20 per month, it will be considered too costly. Subscriptions for dating apps however can be priced around $20 and more per month. You can test different price points and reach your own conclusion. Don’t be afraid of experimenting.
# How are the app stores responding?
In Apple’s App Store all app categories will be able to offer auto-renewing subscriptions. Users will be sent prompts when their subscription expires to renew their subscription. The revenue split will be in developer’s favour. It will be 70/30 in the first year of subscription where developers would get 70% and Apple 30%. The percentage will change to 85/15 when renewed for the second year.
As a part of app subscription economy, Google Play will go for 85/15 split from the first year itself. App publishers can offer automated and manual options for subscription renewals. You can read more on it here and here.
App publishers with subscription based business model will benefit and will be able to generate more revenue. They now have a chance to increase the ARPU – Average Revenue Per User by billing their App users on a recurring basis. This model will however work only if the app publishers are able to retain customers by providing them enough value so that they continue to renew subscriptions and stay with your app for long. If you would like to talk to experts, we can help.
And that will be all from my desk for now. Until next time, Adios.