The business model for an app seller has been pretty simple of late- You offer a free demo version, get people hooked on it and wanting more, and offer the pro version that showcases everything you have to offer for a price after your dedicated followers are hooked. Maybe you even put a few ads in the most annoying possible spot and offer to get rid of them with the full edition. You charge what you think an appropriate price should be, and your audience chomps at the bit. Simple, right? Not so much. Instapaper (an app that allows you to save web pages to read for later) creator Marco Arment recently pulled his free ‘read later’ app, as Audrey Watters from Read Write Web reports. He’ll be charging $4.99 for his service, which already has a strong reputation.But, more importantly, he’s among the first founders of a successful app to pull the free version after having success with it. What are the benefits and risks for making such a move?
No More Mooching. A large percentage of all app users use the free versions, and turn a blind eye to what the pro, plus, or deluxe versions have to offer. Many people would rather not have an app at all than have to pay for it, so that portion of the user base would be gone. The only users of the app would be the dedicated participants that have proven how much they care about the app. There’s value in that, especially if the company has a reputation to uphold.
No Pandering to Advertisers. Why is HBO able to create such groundbreaking material each year, without having to show a rerun of Wipeout every other night? They don’t have the need to neuter their material in order to make ad agencies happy, so they can be bolder. Not needing to have advertisements for the app to exist could have the same effect for each company.
Starting a New Brand. For a company like Instapaper, which has built a reputation based on their work, getting rid of a free app may work wonders. But for a startup with no incoming money and no way to showcase the app for free, this could be a death knell. It’s a mighty tall order to ask someone to pay for something that they’ve never used before and know nothing about. What a free app is, above all else, is advertising. It’s the free piece of teriyaki chicken at the food court. It’s the easiest way to lure people to where you are and keep them there. Without the ability to offer something for free, the app that a business is offering can quickly become enmeshed with all of the other faceless apps that aren’t able to appeal to a mass population.
This is a case of the rich getting richer and everyone else staying the same. It’s also a case of reaching a threshold, passing it, and being able to dictate your future with ease. For a startup app company to be able to withhold from offering a free app, they must pass a tipping point of profitability and brand recognition where it won’t hurt the team name to get rid of the freebies. Where that point is depends on the companies, and after awhile it turns from a matter of “if” into a matter of “when”. The true test of success is how clearly the business can identify when they can make such a leap. If it’s too early, the enterprise will dissolve into the abyss of still unknown apps. If it’s too late, the company will lose out on money to be had. For the most part, free apps remain a necessity for small businesses, but eventually, each startup must make their own decision of when to pull the trigger. And missing isn’t an option.