On the podcast: How developers can launch and optimize their app listings on the Google Play Store. A conversation from Google I/O 2024 with Sarah Karam, director of Apps Partnerships at Google.

Key Takeaways:

There are now more ways to optimize revenue with Google Play Commerce, such as installment subscriptions and automatically adjusted local pricing. 

On Android, the leading apps diversify their monetization. Instead of offering just subscriptions, for example, they offer IAPs to cater for diverse user preferences. Tipping, for example, has seen huge growth. 

The leading Android apps also adjust their overall approach to cater for the huge and diverse user base. Just replicating your iOS strategy will only serve a small fraction of potential customers. How can you serve someone on a $200 phone as well as a $2000 one? 

“The consumer rarely buys what you think you sell” and understanding this can lead to secondary product-market fit, unlocking new growth. Stop thinking about your app in terms of the feature(s) it offers and more about what problem it solves. 

About Guest

👨‍💻 Director of Google’s Apps Partnerships team.

🤖 Sarah is passionate about helping developers succeed on Google Play Store and the Android ecosystem.

👋 LinkedIn

Resources

Google Play Academy

Guidelines to Getting Featured on Google Play

Guides to Help Grow Your Business on Google Play

Google I/O 2024 Keynote

Engage SDK

Custom Store Listings

Google Play business community on X

Android Developer YouTube Channel

Episode Highlights:

[3:57] Feature presentation: Getting your app featured on the Google Play Store can be great, but it isn’t the most important thing (and you still need to market your app to take advantage of being featured).

[8:46] Proactive engagement: Google’s newly announced Engage SDK (currently in developer preview) will surface apps at relevant times for users in the context they’re most likely to engage.

[13:53] Easier ways to pay (and get paid): New commerce options — including newly accepted forms of payment, installment payments, and student and senior plans — allow Android developers to serve more users around the world.

[23:37] Custom is key: Google Play Store listings can now be customized by the keywords users searched to find the app.

[29:38] Diversifying payments: Apps that offer in-app payments (IAP) in addition to subscriptions tend to perform better than apps that offer subscriptions alone.

[31:54] iOS =/= Android: To take full advantage of the Play Store, developers need to think about the diverse devices, budgets, and preferences of the 2.5 billion Android users around the world.

[34:40] Baby steps: Small experiments (like offering a paid 7-day pass instead of a free trial) can help you determine what works best for your app and tailor your offerings for diverse markets.

[45:00] Penny for your app?: Tipping is a surprisingly effective way of letting users pay for your product.

On the podcast: How the Microsoft 365 team optimizes their apps for the app stores and the top paywall optimization tips for enterprise apps and start-ups. Part 2 of our conversation with Ramit Arora.

Key Takeaways:

💼 Use jobs-to-be-done to inform your app store optimization (ASO) keywords strategy. Optimize for keywords that align with what your potential audience is hoping to accomplish. To discover what these keywords are, use the same user research that informs your product roadmap. 

🔐 Use Apple Search Ads (ASA) to unearth highly profitable keywords for ASO. A mistake that some apps make is to rank for keywords that are easy to rank for, not for ones that will drive revenue. Use ASA to discover which keywords are driving subscription growth, not just downloads and engagement. 

💲 High-impact paywall experiments that work for Microsoft will probably work for you. These include making the more expensive (family) plan the default option, anchoring the price of yearly plans to the monthly equivalent (emphasizing value), and ensuring that free trial offers use the word “free” on the CTA button itself. 

About Guest:

👨‍💻 Product Manager on the Microsoft 365 (Office) Mobile and Mac team.

🚀 An expert in subscription management, growth, and monetization strategy, Ramit leads the apps like a start-up.

👋 LinkedIn

Episode Highlights:

[3:31] Choosing key keywords: Don’t go after keywords simply because they’re easy to rank for — select keywords that will actually drive value for your business.

[8:54] The golden ratio: Even Microsoft has to balance their LTV vs. CAC.

[10:58] Android vs. iOS: Right now, it’s more difficult to monetize on Android, but it’s a promising market.

[13:01] Testing, 123: Microsoft optimizes paywalls with friendly CTAs and GIFs that show (rather than tell) the value proposition.

[15:55] Premium presentation: Simple changes like switching the order of subscription options on your paywall can result in a lift in conversions and revenue.

On the podcast: Microsoft 365 app monetization and optimization, and how Microsoft is building successful apps–recorded live in Vegas at the Mobile Apps Unlocked (MAU) conference.

Key Takeaways:

📱 The App Store advantage: Microsoft's data reinforces that the App Store, despite the fees attached, offers significant advantages. The seamless experience from things such as pre-attached payment methods results in a conversion rate from trial to paid that is five times higher than on other direct channels.

🚀 On the App Store, think like a startup (even if you’re not): Despite Microsoft’s strong brand, success in the App Store requires the agility and innovation of a startup. The platform's democratic nature allows new startups to challenge established companies. Continual innovation is essential and you need to be at the top of your game with ASO.

🔗 Bundling apps can mean better retention: Combining multiple apps into a single subscription can boost user retention by meeting a variety of needs. Even if a use case is one-off, there will be other use cases met by other apps. This strategy generally involves developing a wide range of features rather than focusing deeply on a single application.

🧠 Integrate AI thoughtfully: When integrating AI, it's important to consider if it genuinely enhances the tasks users perform and brings a desktop-level experience to mobile devices. This ensures the technology is both practical and user-focused, and not simply jumping on the bandwagon. 

⚖️ As you scale, prioritization never becomes any less important: As the number of monthly active users grows, you need to think bigger and bigger in terms of impact. Focus on optimizations that affect large user groups. Simple improvements in app reliability, performance, and the purchase process can often impact the largest number of users.

About Guest

👨‍💻 Product Manager on the Microsoft 365 (Office) Mobile and Mac team.

🚀 An expert in subscription management, growth, and monetization strategy, Ramit leads the apps like a start-up.

👋 LinkedIn

Episode Highlights

[1:14] From desktop to mobile: Microsoft is famous for its desktop software, but it’s increasingly prioritizing its mobile apps to keep up with consumer trends.

[3:09] Paying by phone: Users prefer to make purchases using their mobile device — trial-to-paid conversion rates are nearly 5x higher on mobile than other channels.

[4:56] The start-up mindset: Think like a start-up to stay agile against the competition in the app stores.

[6:21] Value they can’t refuse: To retain users over the long term, Microsoft bundles multiple products and features into a single cost-effective app.

[8:22] Staying ahead of the curve: The key to becoming and staying a leading app? Neutralize the competition, differentiate, and incubate.

[17:19] Lighting up the small screen: Apps like Photoroom and Microsoft Copilot are using AI to make tasks historically done on a desktop easy on a mobile device.

[21:09] You can’t do it all: Prioritize the app optimizations and features that will have the biggest impact on your business.

On the podcast:The importance of passion for the product you’re working on, how to differentiate in a crowded market, and why achieving the ‘viable’ in Minimum Viable Product is harder than ever.

Key Takeaways:

📉 Ad-based revenue models too often lead to a degraded user experience. For ad-supported products, the real customer is the advertiser, not the end user. This causes a conflict between doing what’s going to create the best product and what’s going to drive the most advertising revenue. 

🚀 The bar for what makes a “viable” MVP is always getting higher. While no app first ships as a fully-formed 1.0, it’s now rarely viable to launch an app as a barebones MVP (minimum viable product). There are just too many apps offering too much competition to not offer a compelling reason for a user to switch. 

🔍 The “Jobs to Be Done” (JTBD) framework allows you to dig deeper than surface-level features. Gathering user feedback is essential, but users rarely request what they truly want. JTBD demands going deeper than feature requests by addressing the underlying need that the user wants to fulfill. 

❓ To get to the root cause of a user problem, ask the “five whys”. When a user makes a request, get into the habit of asking “Why?”. The more times you ask, the more clarity you’ll have on what you actually need to build, giving you jobs-to-be-done that can best meet the needs of your users. 

🌀How to capitalize on “black swan events”. Adaptability and swift action are key to managing unexpected high-impact events. It's essential to pivot from past decisions without being anchored by sunk costs and to act and ship quickly to capture new opportunities.

About Guest:

👨‍💻 Seasoned Internet entrepreneur with over 25 years of experience building groundbreaking apps.

🌿Formerly an early employee at Mint, Val had a vision for a better, more user-centered financial health app.

💡“Try to pick a problem that you want to work on for 10 years — even if it were to fail. That’s how I feel. Even if Monarch were to fail, I would feel good that we moved the ball forward, we did something, we helped people along the way.”

👋 LinkedIn

Episode Highlights:

[7:54] Ads vs. subscriptions: Why subscriptions (not an ad-supported model) were Val’s first choice for Monarch.

[9:12] The real MVP: In today’s subscription app world, the bar for a minimal viable product has gone way up.

[13:46] Just ship it (or don’t?): Getting customer feedback during the design phase may take more time up front, but it means identifying your users’ key “jobs to be done” in fewer product iterations.

[23:10] The five “whys”: Ask yourself… what is your app really selling?

[24:56] Disappoint-Mint: How Val went from the Mint team to creating Monarch — and what happened when Mint shut down.

[34:17] Modern marketing: Talking to potential users on forums like Reddit can be an effective way to build trust and win fans.

[36:31] The butterfly effect: What’s next for the Monarch team and business.

[38:02] On a mission: Val and the Monarch team are passionate about helping users improve their financial health.

On the podcast: The past, present, and future of Meta ads, tactics to scale subscription apps on Meta, and why you should probably exclude younger audiences in your targeting.

Key Takeaways:

⍰  Why Meta Ads? Its vast reach and precision targeting make Meta the best platform for discovery. Ads seamlessly integrate with organic content, providing a native experience for users and transparency for advertisers.

📈 Simplify for efficiency. Kick off with broad targeting within a consolidated account structure. As your understanding and budget deepens, become more targeted with tailored ad variations. 

🎯 Strategic targeting tips. To elevate conversion rates early on, sidestep users under 25 or 30 and prefer manual campaign setups. This initial focus enhances control, paving the way for more automated refinement later on.

🧘 Navigating SKAN with patience. Prioritize trial events and give the data time to crystallize into actionable insights. Rushed evaluations can deceive; allowing at least a week can provide a more accurate picture of your campaign's impact.

🦾 Harness creative diversity and precise placements. Scaling up means evolving your creative approach to suit distinct audience behaviors across Meta's diverse platforms. Meticulously analyzing demographic and placement data ensures your ads resonate more profoundly with your target audience. 

🖥️ Tips for better ads. Study native content and competitors to design ads similar to what users already see. Test new creatives in separate campaigns to protect your main campaign’s performance.

About Guest

👨‍💻 Independent consultant who helps subscription apps unlock Meta as their primary growth channel.

📈 Marcus has over a decade of experience with a background in both gaming and consumer tech, working with companies like Forge of Empires, Blinkist, and Tandem. You can also find him on LinkedIn sharing practical advice on Meta Ads, Web2App, optimizing paywalls, and improving user onboarding.

💡 “Don’t target too narrow. These algorithms usually need a lot of reach so they can use the data to find the right audience for you. If you apply a ton of targeting restrictions on top, then usually you pay a premium for targeting more granularly while performance is not necessarily better.”

👋  LinkedIn

Episode Highlights

[9:18] Before and after: How Meta ad marketing changed after Apple’s App Tracking Transparency (ATT).

[17:56] Working within limits: The pros and (multiple) cons of SKAN 3.

[20:36] Into the Meta-verse: Why subscription apps are uniquely situated to benefit from Meta ads.

[23:40] (Best) practice makes perfect: How to optimize Meta ad campaigns to find the right audiences and maximize ROI.

[32:56] Right on target: Unlock your app’s advertising potential with more advanced creative and placement strategies.

[35:06] The other half of the equation: Ads are just the beginning of the customer journey — make sure your entire funnel is a seamless and compelling experience for potential users.

[48:25] Get creative: For the best ad performance and ROI, create ad content that matches what your users are looking for on social platforms.

[52:13] The future is bright: Upcoming developments like SKAN 4 and Meta’s Aggregated Event Measurement (AEM) should make creating and analyzing Meta ads easier.

On the podcast: The many failures of his recent app launch, the surprising results of his first-ever A/B test, and the many reasons why you shouldn’t plan a big app launch.

Top Takeaways:

🔄 Continuous evolution over big bangs: For subscription apps, frequent updates create enduring value, outpacing the impact of sparse, major launches. This steady stream of enhancements keeps your app relevant and signals relentless improvement to your audience.

🌱 Opt for flexible launches: Avoid putting all your hopes in one major launch. A strategy that includes multiple, smaller launches allows for adaptability and maintains your app's presence against the backdrop of an unpredictable news cycle.

📰 Press is unpredictable: Understand that media coverage does not guarantee app success. The broad reach may not always align with your target audience and many factors are outside of your control. Keep swinging, though, as some hits will indeed make a substantial impact — just keep your expectations in check. 

💰 Adopt value-based pricing: Pricing should reflect what customers value in your app, not just the costs to provide it. Value-based pricing doesn't necessarily mean charging more, it just means charging the perceived value. Users don’t care about the costs of providing a service.

🔍 A/B testing insights depend on the nature of the cohort. The origin of your app's users — e.g. via launch events or organic growth — plays a crucial role in interpreting A/B test results. What did or didn’t work for one group isn’t necessarily applicable for the next — so test and draw conclusions appropriately. 

About Guest:

👨‍💻 Growth advocate at RevenueCat and indie developer of apps like Launch Center Pro and Weather Up.

🍎 Although he’s neither a designer nor a developer, David has been building the kinds of thoughtful, intuitive apps he wants to use since the App Store first launched in 2008.

💡 “The tough thing about getting attention is you do have to do something unique… and that’s the trade-off. The calculus for me was, ‘Let’s wait and try to make a big splash with all these things.’ But really, we could have already launched the widget, and just adding interaction would have gotten attention.”

👋  LinkedIn | Twitter

Episode Highlights:

[11:04] Just ship it: Don’t try to release a ton of new features at once — you’ll get more attention and benefits by releasing incremental updates.

[23:11] Failure to launch: What’s the worst that can happen on your app launch day? A major Apple announcement!

[32:09] Riding the wave: Offering a launch-day sale on your app is a great way to increase conversions when you release a major update.

[36:16] The value of value-based pricing: Set your app’s price based on your target customer’s perceived value of your solution, not your idea of how much it’s worth and costs to run.

[42:54] Dog-fooding the ’cat: David used several RevenueCat features (like Paywalls and Experiments) to set up and monitor the results of the Weather Up 3.0 launch.

On the podcast: RevenueCat’s 2024 State of Subscription Apps report, the state of the app industry more broadly, and why a slight drop in renewals in 2023 isn’t as bad as it may seem.

Key insights:

📈 Optimize conversion rates: With a 1.7% average conversion rate from downloads to paying subscribers, there's a wide gap indicating room for improvement. North America shows higher conversions, spotlighting the need for regional price optimization.

🗓️ Persistence pays off: The top 5% of apps outearn the bottom quartile by 200 times a year post-launch. If year one is tough, consider pivoting or trying a new approach.

🗺️ Strategic focus is key: North America leads in app revenue, but don't overlook markets like South Korea, Japan, and India. Choosing the right platform and regional focus is crucial.

💲 Retention is crucial: A 14% drop in subscriber retention highlights the need for apps to focus on retaining users who truly value their service. It's vital to distinguish between loyal users and those less engaged.

📱 Reactivation grows with scale: While over 10% of churned subscribers resubscribe, reactivation becomes significantly more impactful as your app grows. Early on, prioritize acquisition and retention over win-back campaigns.

About Guests 

🎙️David Barnard is Growth Advocate at RevenueCat and host of this very podcast.

👋🏼David’s LinkedIn

💻Jacob Eiting is the CEO of RevenueCat, a self-proclaimed computer person, and often co-hosts this podcast with David. 

👋🏼Jacob’s LinkedIn

Links & Resources

Check out RevenueCat online

Episode Highlights 

[1:31] Weathering the storm: After several years of turmoil in the subscription app industry, things finally started to settle down in 2023 — and app businesses are thriving.

[7:12] The business of intelligence: AI technology leapt forward in 2023, and mobile AI apps saw big wins.

[14:07] Stop guessing, start acting: The benchmarks in the 2023 State of Subscription Apps report can help you make data-driven strategic decisions.

[17:37] The state of the (app) union: Five key takeaways from the report that identify industry trends, potential pitfalls, and emerging opportunities.

[38:44] First impressions matter: Most trial starts occur within 24 hours, so make sure your user onboarding experience is compelling.

On the podcast: How to build a content marketing flywheel, the importance of content that’s inherently valuable, and why you shouldn’t give up on content marketing even if your early attempts only get a few views.

🛠️ Validate your app idea with minimal resources. Use a simple mock-up and some way to drive paid or organic traffic to gauge interest before development. Fares Ksebati tested demand for an app that didn’t exist by collecting emails via a basic website. This lean approach confirmed interest with over 200 sign-ups, showcasing an effective, low-cost validation method.

🌱 Startup accelerators: a selective boost for early ventures. For newcomers like Fares, accelerators are goldmines for skills in customer discovery and networking. They're most valuable for startups without a solid network or those aligned with the accelerator's focus. While they sharpen your pitch and connect you with mentors, their benefits may wane as your business matures. Choose one that fits your app's niche for the best impact.

🏃‍♂️ Content marketing is a marathon, not a sprint. Fares’s journey with MySwimPro underscores that content marketing requires patience and passion. Initially focusing on answering common swimming questions, the strategy wasn't about quick wins but building trust and brand over time. Early content may not drive immediate app usage spikes, but it lays the foundation for brand recognition and credibility. 

💸 Great content transcends user acquisition and unlocks direct monetization. Establishing a significant online presence, particularly on platforms like YouTube, offers dual benefits: attracting new users and generating revenue through ads and brand partnerships. This strategy highlights the power of creating engaging, value-driven content that not only draws in subscribers but also opens additional revenue streams.

🔍 The biggest mistake when experimenting with paid acquisition is not having the right analytics in place. Success in paid acquisition hinges on robust analytics for tracking campaign effectiveness and the ability to quickly adjust strategies. Without confidence in attribution and the ability to iterate quickly, budgets can be wasted on ineffective ads and you won’t be able to scale.

💬 Effective value communication eases the shift from free to paid subscriptions. Transitioning users from free to premium features necessitates a clear demonstration of added benefits. While consumers are increasingly willing to pay for software, that comes with higher expectations. But it’s important to remember that some users will always complain about price, regardless of cost, while some will always be willing to pay for the most premium subscription. Getting pricing right is a constant balance of qualitative user psychology with data-driven insight. 

About Guest:

👨‍💻 Co-Founder and CEO of MySwimPro, an app that provides personalized workouts and training plans for swimmers.

🏊 An accomplished swimmer himself, Fares created MySwimPro to help swimmers of all skill levels improve their performance — even if they don’t have a team or coach.

💡 “With content marketing, you have to do one of three things: You have to either educate people, entertain them, or inspire them. Now, if you're really good at any one of those, that's great. But if you're amazing, you can do multiple at the same time.”

👋  LinkedIn

Links & Resources:

• Connect with Fares on Twitter
• Check out MySwimPro
• Watch MySwimPro on YouTube

Episode Highlights:

[3:41] Fake it ‘til you make it: In 2014, Fares validated the idea for MySwimPro by driving traffic to a website for an app that didn’t exist yet.

[10:07] Don’t reinvent the wheel: Use tools that already exist (like Google and YouTube) to find what potential users are searching for and get the word out about your app.

[19:38] Changing the channel: Your app should have a presence on the social channels that best fit the brand and marketing acquisition funnel you’re trying to build.

[23:59] Content marketing pays off (literally): Monetize your marketing content with ads and brand partnerships for an additional revenue stream.

[30:33] Start simple: These days, making great marketing content is easier than ever — all you need is a smartphone and an inexpensive microphone.

[42:12] The price is… wrong?: Some of your users are willing to pay more than what you’re charging, and developing new pricing packages can unlock more revenue.

On 25th January, Apple published its guidance on how it would comply with the EU’s Digital Markets Act (DMA). The response, in keeping with Apple’s response to other demands for reforms, effectively disincentivizes most apps from taking advantage of the changes. The changes are complex and confusing, and the answer to whether apps should make changes isn’t completely black-and-white. 

To help developers navigate these changes, we pulled together an “emergency” episode featuring RevenueCat’s CEO Jacob Eiting and Head of Product Jens-Fabian Goetzmann, Runway CEO Gabriel Savit, and Nico Wittenborn, founder of Adjacent. 

Here are the discussion’s key takeaways:

📲 The DMA Reforms How App Stores Work in the EU — The DMA mandates that app stores, like Apple's, cannot enforce the use of first-party app stores or in-app payment systems in the EU. Android already supports third-party app stores (sideloading), so Google’s focus has been on offering alternative payments via “user-choice billing”. For Apple, which does not support sideloading, the EU reforms have needed to be much more significant.   

🔓 Apple Releases Opt-In New Business Terms — Apple’s response was to introduce an optional new set of business terms with a dizzying number of changes to fees and choices for developers. By opting-in, developers unlock new ways to distribute their app and charge users, but doing so comes with changes to and additions to fees paid to Apple. The changes are complex enough that developers have to analyze the implications very carefully.  

🌀Fee Structure of the New Terms is a Complex Maze — Apple's new terms introduce a convoluted fee structure, where reduced commissions are coupled with the Core Technology Fee (CTF), where developers pay €0.50 for the first annual install over a 1M threshold. The CTF includes not just first-time installs, but first annual re-installs and updates from first and third-party app stores as well. This install fee effectively means that any high volume low average revenue per user (ARPU) app is likely to lose out by accepting the new terms. 

🛑 Third-party App Stores Unviable for All but the Biggest Players — The new terms aren’t so rosy for potential new “marketplace apps”, either. New app stores will not be exempt from the CTF, making the first 3M downloads of the marketplace app itself cost the operator €1M — €0.50 per install over the 1M download threshold. And then apps within that marketplace also have to pay the CTF fee. This means that opening a third-party app store is unviable except for the very biggest attempts or for stores that have a high-charge per install (e.g. a game marketplace where users pay a relatively high one-off fee per game).     

🔍 There Might Be Strategic Opportunities, but They Remain to Be Seen — Yes, most apps seem to be better off sticking with the original terms. But there might be opportunities for niche apps. For example, apps that have a low volume of installs but high ARPU (by having a costly yearly subscription, for example) might be able to absorb the CTF, even considering yearly updates. An additional as-yet unexplored change is that Apple has introduced 600 new APIs, meaning that there’s an opening for new third-party applications and integrations.   

About Guests

📱Gabriel Savit is CEO of Runway, a release platform for iOS and Android apps. Find Gabriel on X and on LinkedIn.

💲Nico Wittenborn is Founder of Adjacent, an early-stage VC firm. Find Nico on X and on LinkedIn.

😺Jens-Fabian Goetzmann is Head of Product at RevenueCat

Links & Resources

• These aren’t the only concessions Apple has recently had to make. Earlier this month, the Supreme Court ordered that Apple needed to allow developers to link to alternative payment methods in the US. Read more about what those changes mean.
• On the RevenueCat blog, we’ve written up an overview of this podcast and included additional details that weren’t covered on the podcast and/or have come to light since the recording.

Episode Highlights

[2:31] What is the Digital Markets Act (DMA)? It’s a series of directives set by the EU that aim to limit the dominance of large tech platforms, dubbed “gatekeepers” (of which Apple and Google are a part), and provide more choices to developers and end-users.  

[10:34] The principal decision that developers need to make in response to Apple’s changes is: do we switch to the new terms or remain on the old? Right now, there is no indication that it’s a two-way door. 

[13:34] When opting into the new terms, there are effectively four separate models: stay distributing through the App Store using Apple’s IAPs; stay distributing through the App Store but use alternative payment providers; distribute instead on a third-party marketplace using alternative payments; or distribute on both the App Store and third-party marketplaces. 

[15:47] The Core Technology Fee (CTF), in the new terms, charges developers €0.50 per first annual app install on installs above the 1M threshold. This includes first annual reinstalls and updates, and it’s the CTF that is fundamentally making the economics of new terms unviable for most developers. 

[30:24] Why haven’t third-party marketplaces taken off on Android? It’s probably down to the size of the opportunity. Most apps, even if they’re multiplatform, make most of their money on iOS. Now that the possibility of third-party marketplaces is available on the most profitable platform, it suddenly becomes worth looking into.

[41:41] There are instances where creating a third-party marketplace would be financially beneficial, such as a premium game distribution platform — higher-priced games ($20+) would negate the disadvantages shown by the CTF. 

[47:03] Unless things change, 99% of developers should probably not switch to the new terms. At best, it’s a bad idea, at worst it’s a huge distraction with the risk of owing Apple more in fees than revenue generated. There is a small subset of apps that could benefit, but those apps know who they are, and they’ll find a way to test the waters and mitigate the risk involved.  

[52:48] Another opportunity is the 600 new APIs that Apple is making available. It’s too early to say what that opportunity will look like, but there are likely to be some innovative third-party applications to come out of it.  

On the podcast: The strategic pitfalls in modeling Total Addressable Market, how freemium should work, and why Surfline’s current success was actually 38 years in the making.

Key Takeaways:

🎯SAM not TAM — The total addressable market (TAM) provides an overview of the market's potential size, but it's too general for strategic purposes. The serviceable addressable market (SAM) more accurately reflects the market portion you can realistically capture.

$ Understanding Price Sensitivity — Price sensitivity involves three key elements: Purchasing power (your market's ability to buy), commitment (likelihood of investing in your app), and value proposition (the value your app offers).

⚖️The Freemium Balance — Success in freemium models hinges on balancing increased conversions with retaining free users. If prioritizing one over the other becomes necessary, focus on retention to allow time for app improvements.

📈Growing Freemium Conversion Rates — A small percentage of free users convert to premium. The strength of freemium lies in its potential for increased conversion rates as your app improves and retains free users over time.

🤝Monetizing Through Partnerships — For free users, displaying ads can monetize the audience that may not convert. For premium users, focus on partnerships offering exclusive deals or benefits to enhance value and average revenue per user (ARPU).

About Guest:

👨‍💻 Vice President of Strategy, Business Development, and Analytics at Surfline, an app that provides surfers updates on current wave conditions.

🏄 An avid surfer himself, Paul joined the Surfline team because he was passionate about the product.

💡 “The biggest issue that I see with most companies that are going out to market and putting together their commercial strategy is they'll use TAM and they'll model everything off of that… But in reality… it's really important to figure out what the serviceable addressable market is.”

👋  LinkedIn
🏄‍♂️ Check out Surfline

Episode Highlights:

[4:11] The 38-year-old startup: Surfline was originally founded as a 1-800 phone number in 1985 and added consumer subscriptions in 2001 (before Netflix did!).

[5:57] When TAM fails: Total addressable market (TAM) is an unrealistic number for modeling the number of users you’re likely to get — instead, calculate the serviceable addressable market (SAM).

[14:46] Different approaches to TAM: You can calculate TAM from the top down or bottom up, whichever makes more sense for your business.

[19:04] The formula for price sensitivity: To effectively price your app, you need to understand (1) your users’ purchasing power, (2) your users’ level of commitment, and (3) the strength of your value proposition.

[24:40] Keeping the “free” in freemium: Remember to balance conversions with free user retention — it’s much easier to convert existing free users than it is to acquire brand-new users.

[37:48] Ads for all: Consider partnering with relevant brands to provide special offers to further monetize your paid subscribers.