Instapaper and App Store business models

Instapaper ditches free

One of the challenges of building your own app business is the lack of real sales data. Apple only provide headline figures and while the sales lists are useful, you have to rely on the generosity of other developers to release their share their sales figures and wisdom.

Instapaper’s Marco Ament did just that with a fascinating insight into how the well established freemium model isn’t always the best model. He describes his experiment as follows:

Last fall, I conducted an experiment: I quietly removed Instapaper Free from the App Store for three days, leaving only the full, $4.99 Instapaper app. Not only did sales increase incrementally, but nobody seemed to notice.

On March 12, knowing I was heading into very strong sales from the iPad 2’s launch, I pulled Free again, this time for a month. Again, nobody noticed, and sales increased (although it’s hard to say which portion of the increase, if any, is attributable to Free’s absence, since most of it is from the iPad 2’s launch).

This break went so well that I pushed the return date back by another month. I may keep it out indefinitely, effectively discontinuing Instapaper Free.

Conventional wisdom is that you publish a free, lite, version of your paid app to allow people to sample the content and then upsell them to your premium app. And it works well, particularly in gaming, as students of Angry Birds will tell you.

However, for a bookmarking tool like Instapaper – a simple tool to save web pages for reading later – offering a stripped down version may have had a detrimental effect. The limited functionality may actually put people off buying the full paid app, as the user experience is more negative which then leads to bad reviews.

And there is another version of the app to support which requires more dev time. Indeed many of those ‘free’ customers are unlikely to pay for anything (although many others will which is the game you play).

Instapaper’s experiment went against conventional wisdom and proved a success.

Of course as the developer says it may not be for everyone. For others offering a time-limited or article-limited trial of the full feature set may be a better course of action, for others conventional freemium wisdom works fine. Other less well known apps need the extra awareness of a free app.

That said, it’s an all too rare insight into an experiment and great food for thought for other developers considering how best to manage and monetise their apps.

Instapaper is available here and no, it’s not free!