freemium: what's hot? what's not?

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Freemium What’s Hot? What’s Not? Wix Developers Meetup, Parisoma, San Francisco, December 18 th , 2013 ANGELA HEY, TECHVISER @AMHEY ANGELAHEY.COM @TECHVISER TECHVISER.COM [email protected] 1

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A presentation on what works and doesn't work for Freemium apps. This presentation was developed for Wix developers. Wix is a website development platform that uses an HTML5 editor. The company recently had an IPO and is expanding its App Market to business applications.

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Page 1: Freemium: What's Hot? What's Not?

1

FreemiumWhat’s Hot? What’s Not?Wix Developers Meetup, Parisoma, San Francisco, December 18th, 2013

ANGELA HEY, TECHVISER

@AMHEY ANGEL AHEY.COM

@TECHVISER TECHVISER.COM

[email protected]

Page 2: Freemium: What's Hot? What's Not?

2

What’s Hot? What’s Not?

What Is Freemium?

Why Offer Freemium

Pricing?

What Do You Price?

How Much Do You Charge?

Which Designs Work Well?

How Will You Fund Your Business?

Page 3: Freemium: What's Hot? What's Not?

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What Is Freemium Pricing?

Free +

Premium

Source Price Chart: www.eventscream.com/blog/pricing

Page 4: Freemium: What's Hot? What's Not?

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Is Freemium Good For You?

If a company segments the market and

understands who will pay, why waste

resources on freeloaders?

Get traction with free users, when there are

millions we’ll give you a term sheet

Page 5: Freemium: What's Hot? What's Not?

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Freemium - Pros

JanFe

bM

arApr

May

Jun JulAug

Sep

Oct NovDec

0

5000

10000

15000

20000

25000

Fast User Acquisition

Free Paying - Pricing Tier 1Paying - Pricing Tier 2

‘000

s of

Use

rs

Free Users Promote

Gain Market Share Fast

Fast User Feedback

Meaningful Analytics

Qualified Paid Users

Page 6: Freemium: What's Hot? What's Not?

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Freemium - Cons Soaring Costs

Wasted Sales & Marketing Resources

Capital Requirements Dilute Founder Equity

Percentage of Users

Free Paying - Pricing Tier 1Paying - Pricing Tier 2

Page 7: Freemium: What's Hot? What's Not?

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Users Might Think… Buggy: “How Can They Even Charge For This?” Unsubscribe: “I Need To Delete This Upgrading To Premium” Crap: “This is very clunky!” Mailing: “All emails are getting sent to spam folders and not

even delivered to Outlook.com!!!!” Common Ninja on Facebook: “Both Wix's app and Ninja

websites are separated, meaning, if you're premium in one of them is not necessarily that you're premium in the other one. Those are also 2 different accounts.”

Source: Wix App Market, Common Ninja’s Facebook Page

Page 8: Freemium: What's Hot? What's Not?

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The Right PriceWHAT WILL USERS PAY FOR?

Page 10: Freemium: What's Hot? What's Not?

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Charge For Quantity Userso Contactso Simultaneous Users

Systemo Bandwidtho File Storage

Resourceso Pictureso Files Uploaded

Timeo Real Time Updateso Length Of Audio/Video

FinancialoMaximum Transaction AmountoMaximum TransferredoMaximum Stored

Page 11: Freemium: What's Hot? What's Not?

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Charge For Design Customizationo Designer templateso User can edit CSS fileso Choice of colorso Choice of headers, backgrounds

Globalizationo Languageso Culture aware graphicso Foreign currency support

Brandingo User logoo Remove software developer logo

Advertisingo Remove ads

Enterprise Saleso Make it their product - White label

Page 12: Freemium: What's Hot? What's Not?

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Charge For Interfaces Import and Export Social Media Integration Message Routing Format Conversion

Source: Jorge Calvo - SensationalFix.com Flat Icons © SensationalFix

Page 13: Freemium: What's Hot? What's Not?

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Charge For Reports And Stats

Reportso User Reportso Admin Reportso Automatic Reportso Messageso Emails, RSS Feedso Newsletters

Charts, Graphso Social Networkso Interest Networks Hoto Trends

Statso Analyticso User Cohort Analysiso Forecasts, Predictionso Segmentation

Page 14: Freemium: What's Hot? What's Not?

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Charge For Timeliness

Page 15: Freemium: What's Hot? What's Not?

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Charge For Attracting Users Coupons Gift Cards Developer Advertises Customer Site

Featured Site, Site Of The Month Integration With Ad Network

Affiliates Affiliate Component For Website Developer Attracts Affiliates Who Can

Market User’s Site

Link Bait Humorous Web Elements Personalized Links

Source: Coupons.com

Page 16: Freemium: What's Hot? What's Not?

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Average Price $6.73/Month

0%

10%

20%

30%

40%

50%

60%

Wix Market Users (Sample Size 60 Apps)

Source: Wix App Market and Techviser

Page 17: Freemium: What's Hot? What's Not?

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DesignWHAT MAKES A GOOD DESIGN?

(REALIZING WIX APP MARKET HAS STANDARD DESIGN)

Page 18: Freemium: What's Hot? What's Not?

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Do You Display Free Option?

Source: 123ContactForm.com

Page 19: Freemium: What's Hot? What's Not?

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Most Expensive On Left

HOT• Put Free Version On Right• Free Trial

NOT HOT• Showing Free Version• Enterprise Likes Price Too

Source: Bookfresh

Page 20: Freemium: What's Hot? What's Not?

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Increase Sales, Free On Right

Source: Wufoo.com – form building app

Hot

Page 21: Freemium: What's Hot? What's Not?

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Maybe You Don’t Display Free

Hot

Page 22: Freemium: What's Hot? What's Not?

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Annual or Monthly Fee?

Source: Ecwid

HOT• Showing Best Value• Annual Plan For Business

NOT HOT• Poor Contrast• Repetitive Wording• Lowest Cost On Left

Page 23: Freemium: What's Hot? What's Not?

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Pictures?

etc., etc., etc., etc., etc.

NOT HOT• Pictures Confuse• Too Many Checklists• Most Features In All Versions• Price At Bottom Of Long Table

Source: Pnyxe

Page 24: Freemium: What's Hot? What's Not?

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HOT• 4 Tiers• Colors• Premium Image –

No Bronze

NOT HOT• Too Long• Headings Waste

Rows• Too Many Features

and Categories

Less IsMore

Page 25: Freemium: What's Hot? What's Not?

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Simple – Call To Action

HOT• Concise• Common Features

Below• Clear Differences

NOT HOT• Color• “Please”…weak?

Source: Maverick.appforma.com – Maverick an Appforma Ltd. Brand

Page 26: Freemium: What's Hot? What's Not?

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Live Agent Hot

Page 27: Freemium: What's Hot? What's Not?

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Free Trial

HOT• Free Trial• No Credit Card For Trial

NOT HOT• Poor Contrast• Features Hard To Read –

Crossed Out

Page 28: Freemium: What's Hot? What's Not?

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Example - MailChimp

Source: MailChimp

HOT• Simplicity

Page 29: Freemium: What's Hot? What's Not?

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Example – Google Apps

Source: Google

HOT• $5 Not $4.99• $50/Year – Discount• Vault – Security

NOT• Free for non-profits

and education, buried in FAQ

Page 30: Freemium: What's Hot? What's Not?

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Example - Wix

HOT• Lower priced options

on right• No free option

shown• Clear feature list

NOT• Too much space for

prices• Gift voucher buried

Page 31: Freemium: What's Hot? What's Not?

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Wix App Market – Features

Source: Wix Marketplace

• Wix Pricing Is Different From Company Website• Oversized – Users Have To Scroll

Page 32: Freemium: What's Hot? What's Not?

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Wix App MarketDesign

Source: Wix App Market

HOT• Uniform View For All Apps• Simple• Colors

NOT HOT• User Has To Scroll• Only One Pricing Level• No Annual Fee At Top

Page 33: Freemium: What's Hot? What's Not?

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Feature Diffs – Top or Bottom?BOTTOM NOT TOP HOT

Source: Wix App Market

Page 34: Freemium: What's Hot? What's Not?

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Funding SourcesOTHER PLACES TO GET MONEY

Page 35: Freemium: What's Hot? What's Not?

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Other Revenue and Asset Sources Goods Affiliate Programs Data Corporate Customers Channel Partners Adverts

Code – Open Source Artwork

Page 36: Freemium: What's Hot? What's Not?

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Trend – In App Purchases

Amazon Appstore Apple iPhone Apple iPad Google Play0

5

10

15

20

Number of Apps In Top 20 With In-App Purchases

Free Paid Top Grossing

App Stores

Num

ber o

f App

s Out

Of 2

0

HOT• Despite HTML5

Growth Apps Are Still Hot

Page 37: Freemium: What's Hot? What's Not?

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Can You Afford Free?

HOT• Free Entry Level

Experience

Page 38: Freemium: What's Hot? What's Not?

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Dropbox Evernote HootSuite (+$3M debt)

LinkedIn Pandora SurveyMonkey (+$450M debt)

Angel and Pre-VC 1.2 9 NaN NaN NaN NaN

Series A 6 6.5 1.9 4.7 1.5 65

Series B 250 10 185 10 7.8 450

Series C NaN 70 NaN 12.8 12 NaN

Series D NaN 91.3 NaN 53 35 NaN

Other NaN 63.8 NaN 119.5 NaN NaN

50

150

250

350

450

550

Angel and Pre-VC Series A Series B Series C Series D Other

$M F

undi

ng

Source: Crunchbase and Techviser – note some venture rounds were addedto a Series Round if they came in between rounds

HOT• Capital EfficiencyRARE• Big VC Rounds

Is It Worth Chasing Venture Funding?

Page 39: Freemium: What's Hot? What's Not?

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Take Aways

Set Goals

Identify And Test Items To Monetize

Quality Design

Validate Funding Sources