It has become clear that Apple has been slowly moving toward subscription-based pricing models for its software products over the last couple of years. Subscription-based models offer users access to always-current content or services within an app on an on-going basis. While the users get consistently updated software products, app developers receive a steady, reliable revenue stream as well.
While shifting an app’s pricing model to subscriptions is not “rocket surgery” as they say, it can be challenging to implement subscriptions in a way that benefits both the customer and the business. I want to offer some best practices to app publishers that might be implementing a subscription model for the first time.
There is an ongoing debate in the app world between free vs paid apps. Throw subscription apps into the mix and it gets even more complicated. Not only must an app be attractive enough to pay for once, but it also needs to be compelling enough for a customer to continue paying on an ongoing basis.
This means developers need to consistently demonstrate value to their customers. Updates and support for new iOS/Android releases, new features or functionalities, and other innovative functionality additions show customers that their ongoing financial investment is not wasted. How many people would subscribe to Netflix if they stopped adding movies? What if Netflix constantly added movies but didn’t communicate it to their customers? Creating value over time and communicating that value to your customers is the key to keeping them engaged.
In the app world, user tolerance for bugs is lowest when paying a subscription. Stay on top of the quality of new features when driving improvements to the app. It should go without saying that your app must be responsive, high-performing, and function at an exceptional level of dependability. Continuous regression testing is crucial to catch bugs early. If peak levels of app usage may cause customer interruptions, customer service skills are key to remediating any issue brought to your attention. The faster customers get answers to any complaints, the greater the chance they remain loyal.
Pricing models are the kind of thing that tends to attract a lot of attention in enterprise companies. Generally, when multiple stakeholders design a customer-facing feature, more people means a more complex feature. Your pricing model should be as simple as you can possibly make it. For most companies this means a flat, monthly rate for all customers. Higher-priced products will often offer a reduced price on yearly subscriptions and some apps have multiple value tiers. With complex pricing, you risk losing the trust of your customers when you want to continue building it as you work to turn paying customers into brand advocates.
This sounds like a no-brainer, but keep in mind this still the most common mistake in enterprise app development. The user experience (UX) has to be smooth as customers navigate through your app. Many companies try to “innovate” basic features like login screens and navigation when that energy is best spent on the product itself. As the saying goes: “UX is like a joke. If you have to explain it, it's not that good.”
“Generally, when multiple stakeholders design a customer-facing feature, more people means a more complex feature. Your pricing model should be as simple as you can possibly make it.”
Hallway testing should be part of every app development process at some point, using the least technical users you could find. Most app developers will have fairly technical colleagues give feedback on usability. Non-technical users will relate to the look-and-feel, enjoyment or dissatisfaction, and functionality within the app. If a subscriber can’t find what they need easily without much thinking, your app runs the risk of failing.
Disclaimer: I am about to share some personal opinions in this section.
One thing subscribers expect is what I call the Unwritten Rule of Internet Media. It goes like this: I will either put up with ads or pay a subscription fee to enjoy content, but not both.
Now Netflix, to their credit follows this rule, but Hulu on the other hand shows ads with their subscription model (Hulu is a joint venture of Disney and Comcast). I see this as a division between old-world media companies and digital-native ones. Cable television companies prospered for years because they charged customers for the sale of content and charged advertisers for ads. Companies like Netflix, Pandora, and YouTube are proving the idea that customers will pay a fee to eliminate ads. My advice is to be aware of the customer expectation that paid-subscription apps should not have ads.
If we looked at things from the point of view of “What pricing model will get me the most revenue-per-customer and the highest customer satisfaction?”, subscription models are by far the best way to sell apps. While this model was popularized by SaaS companies, it is easily the best way to grow a steady revenue stream while continuously providing new value to your app to keep your subscribers renewing consistently on an ongoing basis.
Nami, of course, is your best way to help make that happen. We are committed to helping you grow app revenue, with the smartest way to sell subscriptions. Sign up for free today.
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