Maximize Conversions with the Right Subscription Strategy

You had a great idea for an app. You found a real-world use case with a real market need where a digital product solves a problem or makes a painful process easier. After spending money developing it, the question remains: how will you make money from your app?

In product development, this is called monetizing an app. It is simply getting customers to give you their money in exchange for your digital product.

In today’s market, app development is never truly finished. This is why the tech industry has standardized subscription models for apps. Subscription models benefit customers by allowing them to pay a smaller but recurrent fee while the company funds continued product development.

But convincing users to give you, a newer company, their hard-earned money for something they don’t know can be challenging. That’s why letting users try before they buy is a win-win scenario. In this article, I will share how we can let users try your products, guiding them toward a subscription purchase.

Monetization strategies are crucial to your product's success. However, this conversation should only be started after you have a clear business strategy.?

Try-before-you-buy strategies

The Time-Limited Trial Approach

Time-limited trials provide users full access to all features for a specified period. This approach lets users experience the product's full value upfront, creating urgency to convert before the trial ends.

This model supplements businesses where the cost of high-priced products needs to convince users that they can cover their important use cases and that they are the best way to do so. Giving users reduced-functionality versions of the features might not be enough to convince them that you are the best solution and justify your price.

This model also allows users to create “habits” of solving their use cases with your product, which makes switching costs should they abandon the product once the trial ends.

?? Real-World Examples:

• Monday.com
• Adobe Creative Cloud

? Pros:

• Users experience the whole value proposition
• Creates urgency with a defined trial period
• Establish a clear conversion point for conversion

? Cons:

• Higher initial barrier to adoption
• Limited evaluation period
• Potential trial abuse via multiple accounts
• It creates friction by requiring entering a credit card upfront.

Freemium approach.

In this model, basic features are free. The core idea is to provide a limited set of features for free while reserving more advanced or premium features behind a paid subscription. A freemium model aims to maximize the user base by providing a functional, free option. This free version is a hook to introduce users to the product's value. The goal is to demonstrate enough value in the free version to motivate users to upgrade.

The success of a freemium model depends on how you structure the free and paid tiers.?

It is a hugely popular approach, especially for consumer-facing apps. Apps with broad consumer appeal, like communication tools and content platforms, often benefit from a freemium approach to kickstart user acquisition.?

Your business model may have a value proposition dependent on users' app usage, such as social networks or collaboration tools. The more people join, the more valuable it becomes. A Freemium model reduces the barriers to entry and makes it more beneficial for your users.

?? Real-World Examples:

• Spotify
• Youtube
• Notion

? Pros:

• Lower barrier to entry (no credit card required)?
• Unlimited time for users to build habits
• Organic word-of-mouth growth
• A clear distinction between free and premium features

? Cons:

• Risk of users remaining in the free tier indefinitely
• Complexity in management product tiers
• Requires careful balancing of free/paid features
• It may require more marketing to showcase premium value

What The Data Says

• B2B Applications: Time-limited trials typically show higher conversion rates (10-30%) compared to freemium models (1-5%)*
• Consumer Apps: Freemium models can be more effective, with successful apps converting 2-5% of free users**
• Professional Tools: Hybrid approaches combining limited features with a trial period yield promising results*

Monetization success often aligns with the app's category. Time-limited trials show higher conversion rates in professional/business tools, where users can quickly evaluate ROI. ASFreemium models are more suited to consumer apps that benefit from habit-building and a broad user base.

*According to an Interactroduct survey: https://www.inturact.com/blog/saas-conversion-rate

**According to the article Making “Freemium” Work

By Vineet Kumar published on Harvard Business Review Magazine: https://hbr.org/2014/05/making-freemium-work

Which Approach Is Best For My Product?

Consider time-limited trials if your app:

• It is a professional tool that requires significant user investment
• Has a complex setup process
• Provides immediate, measurable value
• Targets: business users or professionals

Consider Freemium If Your App Is:

• A social or collaborative platform
• Benefits from network effects
• Builds value over time
• It has distinct feature tiers

The key to driving conversions is not just choosing between these approaches but also implementing them in alignment with your value proposition, delivering a great user experience, and strategically gating features.?

Remember, these strategies aren’t set in stone; many successful products combine elements of both approaches. Before starting work on a product or concept, conducting a strong analysis and understanding of the business, the value proposition, and the users' needs is key to partnering with a team that offers tech skills and a deep understanding of product goals.