Today there are many choices when it comes to make money on the web.
- In-app payments – There are many examples to an application that is free but let you add features with in-app payments. A good example is a game that is free, but offers additional levels or virtual goods for a certain price.
- One-time charge – You charge a fixed price for your application. It could be before the user tries it or after a period of ‘testing’.
- Subscription – There could be monthly or yearly subscription models. Users will pay as they go. Many SMB applications are working this way.
- Freemium – In this pricing strategy we can use each of the previous options. The advantage in it is that we are offering a limited trial version of our app so users could ‘test before they buy’ and offer a ‘pro version’ for those who wish to buy the full application.
- Ads – There are many options and we will cover it in the future.
Let’s take a closer look at each option and see when and how to use it.
It’s common to see apps that offer the user to use them for free but give options that the user can pay.
- A charting app that give the options to buy more shapes, tools, features etc’.
- A CRM that offer certain capabilities for a price. The basic options of collecting and managing your contacts will be free, but if you wish to send emails they might charge you for that.
- A game that let you advance more quickly if you buy certain improvements. For example: a ‘magic’ power that give you the ability to pass a difficult stage.
There are few options to create this ability: PayPal, MozPay and others. You can also use Google Wallet for Digital Goods to sell digital and virtual goods within your web app. This service communicates with the Google Wallet servers and handles all of the financial transactions, including charging the buyer and distributing the proceeds to you.
In order to sell digital goods, you’ll need to:
- Create a Google Wallet Merchant account.
- Create the items you wish to sell via the Developer Dashboard in the Chrome Web Store.
- Include the appropriate buy.js file in your package. The buy.js provides all the functions that you will need to the buy flow. The main two functions are:
- google.payments.inapp.getSkuDetails – returns a list of all active digital goods available from the Chrome Web Store available for purchase by the user, including the product ID (SKU), title, description, and price.
- google.payments.inapp.getPurchases – returns an array of all the items purchased by the user.
- Wire up the sales flow.
(!) Note: See Payments: Regions, fees and tiers for more information about fees and locations where you can sell your digital goods.
It’s a simple one time transaction. The user will pay and only then, she could ‘open’ the app and start using it. There are several providers that offer developers an efficient ways to charge users. On way, is by using the Chrome Web Store Payments. The main advantage with this solution is that the developer keeps 95% for herself. For example, if you charge $1.99, you’ll receive $1.89 and Google will receive $0.1 (which is 5% if I did the math right).
If you wish to learn more on Chrome Web Store Payments: Regions, Fees, and Tiers for details.
To sell physical goods on web apps and mobile apps that run on browsers, you can use Instant Buy for web. You’ll keep your existing payment processor and optimize your payment flow with Google Wallet. Here is a good tutorial that will take you through all the steps.
With subscription models users enjoy the freedom to ‘pay as they use’. In other words, as long as the user feels they gain value from your app/service they will pay. It’s a good way to let user ‘test’ before they pay.
How to suggests subscription plans
In the example below, you can see a way to suggest users the options you have and direct them to the most common (or profitable) option.
It’s important to pay attention to:
- Give users the flexibility to change programs when their needs are changing.
- It’s good to have a limited set of options. There are many studies that shows that too many options are not helpful.
- In some cases it’s make sense to allow users to ‘pay only on what they use’. For example: a virtual machine on Google compute engine will charge you only on the time that you actually used it.
It’s not too hard to guess from where this word came. In the word “freemium”, we have the combination of two business models: “free” and “premium”. In this pricing strategy we offer our web app for “free” but charge for some “premium” features. You can use this strategy with in-app payments, subscription or one-time charge that you enforce after a certain period.
There are many successful web app that use this strategy. The critical success factor is the trust and comfort we give our users with this option. They know that in case they won’t feel the web app is useful they can stop the payments.
There are many examples on the web that offer a freemium model. Gmail, Evernote, Dropbox, Linkedin and others, are all working with this strategy. The easy part is that you allow users to start using your app for free. Later, after certain threshold, you ask them to convert to your payment model. The payment model could be a subscription or one-time charge.
Challenges and opportunities
- “You can’t manage what you don’t measure”
- On direct sales site (e.g. Amazon, Etsy, Fiverr etc’) you need to measure each funnel in order to improve it. A good way to do it will be with Google Analytics Goals. You will want to add a monetary value to your Goals.
- Make sure your users are happy with the checkout process.
- It should be a fast and easy as possible.
- “One-click” is a great way to put smiles on your user’s face.
- Focus – If you are doing one specific thing extremely well, you have a better chance of be profitable.
- Publishers that their web apps contain content (e.g. reviews, articles) could use Ads and/or affiliate links. The Ads should provide real value to users in order to do the right job and not interfere with the experience.
Shana Tova to you and yours!