The strategy is implemented for products which do not need any complementariness. The product should be independent form other external market products. The pricing technique works better only when the potential is viral and actively promoted.Early-mover in finding ways to exploit free, you can position yourself advantageously.
Info metrics
Freemium is creating Happy-to-Pay customers across various categories, and expanding the market for Experience goods. If it can’t ‘sell’ for free, can it sell? [2]. 37%respondents who experienced a Freemium security product were willing to pay for it. New age games attracted a conversion of 26%. 35% respondents willing to pay for data back-up. Movies reached 57% conversion. It is the most profitable model in mobile technology market. Mobile apps generally are made as two separate apps free and premium. Freemium games have contributed approximately 80% of mobile market.
User’s behavioral economics on Freemium:
In 2013, Mobiles are the best partners to cater entertainment and the life channel for serving of life-changing opportunities. Entertainment narrating in brand experience is getting immersive. The most common example would be mobile applications which cater to the increasingly dynamic consumer expectations. Thus mobile services are going gaga as they are fast in catching up with the desires of the customers. During the basic configuration phase of Freemium, user is well engaged in the entertainment. With such immense engagement producers allow themselves in connecting with more relevant audience bringing a better brand impact affecting the consumer choice to incline towards brands that cater and share same values as theirs.
The scenario is best depicted in mobile applications which are designed in tier structure with in-app purchases. Mobile games like Candy Crush Saga, Temple run or Angry Birds tempts users in making in-app purchases (advanced configuration stage) where the brands start making revenue. Boosts and extra lives in a game can also be purchased. Major drawbacks of the strategy in ‘in-app purchase’ are that the developers are levied with the task of constantly convincing the players to make in-app purchases.
Freemium app model offers the product free of charge, while requiring charges for advanced features, functionality or virtual goods.This model moves away from the practice of posting in-app advertisements and pay-per-download model. Apps with no cap on in-app purchases could have the customers end up paying more than the actual value. Without engaging gameplay, users won’t feel motivated to buy. The more addicting the game, more likely is the app to generate in-app purchases.
In-app purchases are to be designed in a more tailored way to cater to the users. Deep down we all are still children who crave for attention and love to be rewarded. Using this craving for as an advantage the developer could design the purchases which nudge the gamers from buying the purchases which keep the alacrity of the game or entertainment going on. There by the ARPU (Average revenue per user) increases with number of users or frequency of utility.
In the past 10 years this disruptive pricing strategy has been growing. It was previously used when the subscription for the product was uncertain. It was introduced with frugal costs per user and no marketing budgets. But by understanding the user’s conversion and the banking users all the while, now Freemium can improve the conversion through rapid iteration and superior user interfaces and experiences surprising the users constantly. Thus making they stick to the product.
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PARADIGM Nourishing the Intellect