If you are developing a mobile app, you need to decide how to monetize it. Two popular options are freemium and free trial models, but what are the differences and benefits of each one? In this article, you will learn the basics of these monetization models and how to choose the best one for your app.
The freemium model is based on offering a free version of your app with limited features or functionality, and then charging users for unlocking more content, services, or capabilities. This way, you can attract a large user base and generate revenue from a smaller segment of loyal and engaged customers. The freemium model works well for apps that have a high value proposition, a clear differentiation between free and premium features, and a low marginal cost of serving additional users.
Simply In a freemium model, the basic version of the product or service is offered for free, but there are premium features or advanced functionalities that are locked or users can access by paying a subscription fee but they can use the basic content for free for lifetime. Simply in other hand, Free Trial: In a free trial model, users get access to the full range of features for a limited period, typically 7, 14, or 30 days. After the trial period, users are required to pay to continue using those features. But here they can't access the even the basic content for free after the certian trial period is over.
Freemium vs. Free Trial: ?Access: Freemium = limited forever, Trial = full for a bit. ?Payment: Freemium = unlock more later, Trial = convert now or lose it. ?Users: Freemium = long-term needs, Trial = unsure & curious. ?Strategy: Freemium = slow burn, Trial = urgency & exclusivity. ?Metrics: Freemium = engagement & upgrades, Trial = sign-ups & conversions. ?Best for: Freemium = regular use & clear value, Trial = complex & needs investment.
Freemium apps may also offer free trials. This is a common strategy to let users test and enjoy the full experience and convert them to pay.
In a freemium model, users get a basic version of a product for free indefinitely, with the option to pay for additional features or premium content. Meanwhile, a free trial offers full access to the product for a limited period, after which users must pay to continue using it. Freemium allows ongoing free access with limited features, while free trials offer temporary full access before requiring payment.
Freemium offers a free version with optional upgrades, while a trial provides temporary access to the full product with the expectation of payment for continued premium features after a specified period.
The free trial model is based on giving users a limited time period to access the full or partial features of your app for free, and then requiring them to pay a subscription or a one-time fee to continue using it. This way, you can showcase the value and quality of your app and persuade users to convert into paying customers. The free trial model works well for apps that have a high retention rate, a strong customer relationship, and a high switching cost.
You can use both freemium and free trial model strategies for your app at the same time. The smart combination of these two models will help boost the Pay rate for your app
Seeing from what I have researched, the Free Trial Model works much better if you can progressively disclose to your users all of the features that your app offers through the 3/7 day free trial period, while the Freemium is much better for a "one service" type of app like Heartbeat Monitor, Flashlight, PDF Converter and so on...
The freemium model has many advantages for mobile app developers, such as lowering the barrier to entry for potential users and creating a viral effect. It also allows you to segment your market and target different customer needs and preferences with different pricing plans and options, as well as collect data and feedback from your users. This enables you to optimize your app accordingly.
If your audience is a certain demographic (those who are not into their careers), a freemium model would be beneficial. Lots of students I know started using Spotify for free. Then, they realized they hated the ads and eventually turned into paying customers. There are students out there that literally do not make a lot of money but will literally figure out how to save money just to pay Spotify so that they can listen to ad-free music. This model works and works well! If your product has merit, it can help convert non-premium users.
You can use freemium if your app has a niche - it means few users know about it and have a need or even know how to use it. Using freemium will help users experience and get acquainted with the app to know what your app really does before deciding whether they want to engage with your app or not.
It allows the users to try the app, encouraging adoption and familiarity. Free offerings act as a powerful marketing tool, it can attract potential paying customers through positive user experiences. A larger user base can provide valuable feedback for refining the mobile app.
Large market players such as YouTube and Spotify use freemium business models. These models help businesses attract users who cannot afford to pay for services up front and retain user engagement by allowing users to use free features for an extended period of time. Another strategy used by these companies to increase revenue is to conceal premium features behind paywalls, which encourage users to purchase subscriptions; occasionally, they offer users a trial that requires payment information, deceiving some users into purchasing a subscription. Games include an in-app purchase system that allows users to level up and accomplish objectives even though they are free to play. Kind of freemium
The free trial model has several advantages for mobile app developers, such as creating a sense of urgency and scarcity, building trust and credibility, reducing the risk of churn and refunds, and allowing you to test different pricing strategies and offers. This model encourages users to enjoy your app within a limited time frame, while also giving them the chance to experience the quality and value of your app before paying for it. Additionally, users are more likely to stick with your app after making a purchase decision. As a result, you can measure the impact of different pricing strategies on conversion rates.
Applications suitable for this strategy are usually applications where the user already has some knowledge about the application. The feature that I personally like most about free trial is that I can have interesting pricing strategies and optimize the in-app experience when users start trial
When deciding which monetization model is better for your app, it is important to consider factors such as your target audience, app category, competitors, goals, and resources. Generally speaking, if your app has a large and diverse market potential, a high viral potential, and a low cost of service with a clear value proposition, the freemium model is best. On the other hand, if your app has a niche and loyal market potential, a high retention potential, a high cost of service, and a strong customer relationship, the free trial model is preferable. Ultimately, it is important to experiment with different models and variations and track key performance indicators such as downloads, retention, engagement, conversion, revenue, and customer lifetime value.
You can use both freemium and free trial model strategies for your app at the same time. The smart combination of these two models will help boost the Pay rate for your app
The freemium model works better for app that provide just one service like Flashlight or PDF Converter type apps, while Free Trial works better when it comes to apps that progressively disclose their features and have a rich content library which allows the users to gradually unpack each layer of the app "onion".
Limited-Time Access in Free Trials Free trial models provide users with full access to all features for a limited period, typically ranging from a few days to a month. During this trial period, users can experience the app's complete functionality. However, once the trial period expires, users are required to subscribe or purchase a license to retain access to the features. Free trials are effective for giving users a taste of the app's capabilities before committing to a paid subscription.
Freemium and free trial are not mutually exclusive. They are often used together as steps in the selling funnel. Think of Freemium as what pushes users to download the app and the free trials what drives them further to test (and maybe auto subscribe) to a full service.
Here's another different english ?? The freemium model offers a constant free basic version to users with essential premium upgrades, whereas the free trial model provides temporary full access with the goal of converting customers to paying customers once the trial period expires.
In addition to the above two models, there is a pretty good strategy model according to personal experience that allows users to pay at an extremely preferential price in the first period and return to normal price in the following periods. That model will give users a feeling of curiosity and want to experience the app at a super cheap price and also bring profit to the developer.