Waiting for Mobile Apps Payoff

The free to fee move always seems to cause customer backlash. Should we even call them customers if they were not paying to begin with? Be it the problem American Red Cross faced with World War II veterans, social network platform (remember ning?), or an astrologer telling fortunes of millions the move from free to fee results in some kind of backlash.

Here is what the astrologer did to her pricing,

Miller had recently refreshed her iPhone app and added a subscription priced from 99 cents a day to $50 for the year.

Want your daily fortune told?  Wouldn’t you think 99 cents is worth it? But here is how most of the  readers (not customers) reacted,

The astrologer tried to defend her price increase. She tried using the cost argument,

All $50 does not go to me.

In addition to paying to upgrade her mobile applications — a process she said cost six figures — she said she also had to pay for researchers and editors

You got a great deal for a long time

All these are indeed true. Yes she had to share the price she charges with Apple, with App developers, with editors. But those are her costs and not a concern to her readers. She can  charge for content only if readers felt they are getting differentiated value they cannot get otherwise.

In this case I am not going to comment on astrology or daily horoscope, let us just say there exists a segment that likes it, believes it and values it. However they have multiple options with almost no differentiation. Even if this is indeed unique content, the initial reference price of $0 makes it hard for them to swallow the $50 price tag. May be she should have foretold them about the impending pricing change.

Clearly freemium is not the solution for most save the lucky few. What is really the solution?  Segmentation, targeting, positioning and pricing, like another premium content creator featured in the same astrologer story did,

“Instead of chasing the highest number of eyeballs, we will chase and deliver the most valuable news.”

“To succeed,” she continued, “we need to write articles that deliver value worth paying for. That’s why we’re a subscription publication.”

The lure of millions of users and the wishful thinking of doing something with them once they are inside your tent – like facebook, twitter, Dropbox, Evernote  did – is alluring. But to succeed it is about targeting the right segment, delivering value  that is worth paying for and claiming your fair share of the value delivered.