Goodbye Freemium
YoCutie is now 100% Free. Our “Freemium” time is over. There are many reasons why we have chosen this path, some of which i would like to share with you in this article.
History
YoCutie is a dating app, which can be compared to the famous Tinder. It’s about giving “Yo’s“ to others and getting them back to create a match. Then, you can chat and meet each other. A good system that is easy to use, just like it should be. Besides the typical match options nearly every dating app offers, we also have videos for the iOS Version.
We started with an iOS app only. Our web app and the Android app followed one year later.
When we launched YoCutie in September 2013 the online dating app market was already pretty saturated. However, we tried it and YoCutie had an overall solid start. However, we never got the hype and traction that YoCutie needed to make it a really big success.
YoCutie has been developed by myself and two external developers. My wife does the support and community management.
My goal was always to make a really unique dating app. My goals for the app were as follows:
- It should be very easy to use.
- Just about all the services should be free.
- It should offer only one in-app purchase, which would be the premium package.
YoCutie was free to install from the beginning. We started with a Premium Package for about 3$ per month (yeah, really cheap). Later, we changed it to about 7$ per month.
Without even realizing it, over time this setup smoothly transformed into something very similar to what the competition had to offer.
Current Stats
YoCutie has now more than 200,000 users. Every day between 5,000 and 10,000 Yo’s are sent. We have about 500 organic installs per day which lead to 400 registrations. Compared to our stats six months before we have now three times more installs per day. We are growing. But too slow for my taste.
Freemium Business
So YoCutie was a typical so called “Freemium App” which means offer it for free, then cut the user in features or limit him somehow and try to make cash that way.
Nowadays, a lot of app developers and especially game developers work this way and the frustration with this technique is rising among the app user base. Games for example, don’t feel like games anymore and it’s not rare to read user reviews that say things like “pay to win”.
So, why do we app developers use in-app purchases so much? Because you can make a lot of money that way. You can grow very easily because your app is supposed to be free and then you make money with 1–5% of you users with expensive in app purchases. The real truth is even worse, because most games and apps make most of there money with so called „whales“. These are customers that spend like 30.000$ a year for in app purchases, coins and whatever.
Still not getting what Freemium is about? Maybe South Park can help you.
Marketing $$$
These days it seems that it’s all about marketing and advertising. Even more, I would say it’s all about marketing $$$. And I don’t like it because I‘m a developer. Sure, I know how to run Adwords and Facebook campaigns. I know the difference between CPI and CPA. But my knowledge is limited and so is my marketing budget.
But here are some insights:
- Our Facebook ads have done pretty well. We reached an CPI (Cost per Install) of about 1,40$ for German and US users
- With Adwords we had about 1,80$ for German and US users.
- Reaching women to install YoCutie was about 70% more expensive
Pretty expensive, right? But not uncommon. In fact, when talking to other app developers they often told me that they are even paying more, especially those working with dating apps. CPIs of $3 are nothing spectacular for them.
ROI
Let’s talk about ROI (Return on Investment). At the end, beside the fun of building and running an app, i also want to build a sustainable business.
Here is very simple and even optimistic calculation for the LTR (Lifetime Revenue) we need to make to get at least more money in than we are spending for the user acquisition.
- We have a 1,50$ CPI
- Let’s assume 40% is organic traffic, so we are paying in fact 0,9$ per user install
- 25% from ads, which is a lot but achievable, but then then we have 0,675$ left
- So for 100 users we have to make 67,5$ or 0,675$ per user with in-app purchases
- Let’s assume 2% users that pay (in fact it’s less, but it could be achieved)
- We charged 7$ per month and for dating apps and websites you can hold your user about 3 months. Otherwise your dating app sucks. So its 3 months x 7$ = 21$ per user. Now Apple and Google also want their money (30%), so we have at the end roundabout 15$ for us per paying user.
- Remember 2% are paying only, so we have 100 * 0,02 * 15 = 30 USD income for 100 users
- So we have a difference of 30$ — 67,5$ = -37,5$ for 100 user or -0,375$ per user
To summarize: It never worked well for us. Our CPI increased over time and i am pretty sure that our acquisition costs can not stay at 1,50$ per install if we really want to scale. The more you spend for ads the more does your organic install rate go down, because it’s hard to get 40% organic installs when “buying” 10.000 installs via ads.
Now you could argue that the online dating market is oversaturated but I personally feel that nearly every app market is pretty much saturated and everybody is fighting for the user and paying more and more to get him in.
I don’t want to play this game anymore.
Going Free
We tried to keep our app affordable and not limit our users too much. Our limitations had been: You could give 30 Yos per day (10 in the beginning) and you could not ignore others. Besides that we had shown ads to non-premium users. That’s it. The problem was: we never made really much money with it. It was maybe enough to pay our server costs and and the office. But it was never a working business model for us. The problem in addition to the monetization was, you guessed it, marketing.
About 40% of our users however, did really find us on the iOS App Store and the Google Play Store. THIS IS really working well. Because users love apps and because the app stores are great for users to discover apps, we thought, “Why should we as developers concentrate so much on advertising? Why not put all our focus and efforts in developing and delivering the best possible app experience?“
So, one month ago we made YoCutie really free without any upgrades that the user can buy anymore. We are cutting our advertising costs mostly and focusing on the app itself. If it is good enough it will make its way growing with organic installs. If not, we have to make it better or develop something completely different. Oh, did I mention that we also destroyed all our existing active premium subscriptions? Yes, that was on purpose.
Conclusion
In a perfect world, most apps would cost money before you can even use them, even dating apps. Or they would cost after a free demo time period.
That said, as developers and publishers, it should still always be our goal that our apps give the user the best experience and not limit them when it’s not needed.
YoCutie is now really 100% free.
Don’t get me wrong. There is absolutely enough reason that some apps offer in-app purchases. From a users perspective though, I also like real games that I have to pay for and I like to use apps that are completely free because I don’t see any reason to pay for them. I’m also not saying that I will never do an app anymore that offers in app purchases. But for YoCutie, the Freemium game is over.
As for the marketing part, there is still enough reason to advertise. We will continue paying for ads. The difference is our marketing budget will be 10% of what it was before.
And last but not least, we are going to monetize the same way companies like Google and Facebook are making their money: Ads.
Goodbye Freemium.
Links: Free Dating App
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