By Barry Burd

An Android mobile app with a paid-only revenue model is rare indeed. By one count, there were ten times as many free apps as paid apps in 2013. So, should your app be free or paid?

In the freemium revenue model, one useful version of your app serves as advertising for an even more useful version. This form of advertising has several advantages over more traditional advertising modes.

  • The advertising is well-targeted.

    People who install your free version are potential buyers for your paid version.

  • It directly demonstrates your app’s benefits.

    Instead of reading about your app, or hearing about your app, users experience your app.

  • It’s repetitive without being annoying.

    A potential customer probably uses the free version on a regular basis.

  • It can be inexpensive.

    You incur an expense when you create the app, and you have to create the app anyway. But after you’ve published the app, the marginal cost of each free download is almost nothing. (This assumes that you don’t offer services for each active user. Yes, the free users might find bugs, and fixing the bugs takes your time and effort. But the effort you spend fixing these bugs doesn’t count as an advertising expense. You’d be fixing these bugs no matter who found them.)

  • It enhances your reputation.

    This one is a “biggie.” With conventional advertising, you can come off as a snake oil salesman. But with a free version of your app, you’re a benevolent developer (a benevolent developer who might occasionally ask for well-deserved remuneration). Think back to the last few times you upgraded from free to premium.

As with several other revenue models, the main question is “how much?” In the freemium model, which parts of your app do you give away for free? Which parts do you keep for the paid version? As usual, there’s no prepackaged answer. But there are some general strategies:

  • Divide your users into two categories — the high-rollers and the not-so-high-rollers.

    The high-rollers might be the corporate users; the others are individuals. The high-rollers need premium features and have the resources to pay for those features. The others don’t. Which features of your app appeal primarily to the high-rollers? Put those features in the premium version.

  • If you don’t incur a cost each time someone uses a particular feature, give that feature away for free. If you incur an ongoing cost, charge for that feature.

    An app on a phone or a tablet can do only so much work. Maybe, to implement certain features, your app ships work out to a server. Access to the server costs money, and the amount of money depends on the workload. The more people use these costly features, the more revenue you must have. (Otherwise, you’ll go broke.) So tie the price of the app to the use of these features. The app’s premium version includes these costly features; the app’s free version doesn’t.

  • If volume usage is relevant for your app, create a soft paywall.

    A hard paywall is an all-or-nothing restriction on the use of a resource. But with a soft paywall, users get 500 wha’cha’ma’call’its for free each month. Users who need more than 500 wha’cha’ma’call’its each month buy a recurring subscription. You can change the number when you see the need. But when you do, be aware of the impression you make on your existing users (both the free users and the paid users).

  • Advertise or nag in the free version.

    If the previous approaches are like carrots, this approach is like a stick. With this approach, you entice users to pay for your app by putting something undesirable in the free version. Unfortunately, Android has no emitUnpleasantOdor method. So, for the undesirable feature, most developers advertise or nag.

    Nagging involves displaying a pop-up alert box reminding the user to buy the retail version. You decide how often you want the pop-up to appear, and what the user must do in order to dismiss it.

    The advertising option has a few advantages over the nagging option. For one thing, advertising can be unobtrusive. (Who ever heard of unobtrusive nagging?) When advertising is unobtrusive, users tend not to associate it with the app or with the developer. So, with advertising, your image remains largely untarnished. And let’s not forget — advertising can bring you some revenue while you wait for users to purchase your app’s full version.

  • (Not recommended) In the free app, include only enough functionality to demonstrate the paid app’s usefulness.

    Apps that involve saving data tend to use this strategy. With the free version, you put the app through its paces. You examine the results to see the how effectively the app does its job, but you can’t save the results. The user is disappointed because, in the final analysis, the free app is nothing but a tease.

    With this approach, you undermine some of the freemium model’s advantages. For one thing, you lose the repetition advantage. A potential user tries your app once to find out if it’s worth buying. Months later, when the need for your app arises in a more serious context, the user has forgotten about your app and finds another app in its place.

    More importantly, this approach ignores the benefits of customer loyalty. Instead of impressing users with your generosity, you annoy users with your stinginess. You lead a user to the brink of success. But then, at the last minute, you confront the user with a mean-spirited roadblock. Whether you think of your app this way or not isn’t relevant. What’s relevant is that users feel this way.

    If you have a killer app, and all you need to do is assure users that your app can perform its supposedly herculean tasks, then this approach is for you. Otherwise, you should avoid using it.

For most apps, the percentage of free-version users who become paid-version users is in the single digits. But that’s okay, because free users aren’t “deadbeat” users. Free users form an important part of your marketing ecosystem. They help spread the word about your app. If your app has any social aspects, the more users you have (free or paid), the better. And if anyone checks your app’s usage statistics, free users count. So, by all means, give the free users access to your app’s essential features.