If you are in business as a developer, particularly a mobile developer – odds are you are fairly young (30’ish) and working in a fairly young company. One or both of you will be around for a while. You depend upon results – sales revenue to keep your company going and to keep food on your table. A little bit of consideration for the long-term, a bit of strategic planning, can go a long way for you. While we continue to focus on the subscription service model for premium apps, more or less the same consideration applies to all internet models, and even some brick-n-mortar business models, too.
Product vs. People. Some companies are so focused on their products that they ignore the market – that is the people serviced by those products. The US automotive industry is a particularly good example of this – effectively a bail out worth $60 Billion across Ford, GM and Chrysler, continuing to produce vehicles that people weren’t buying, long after they stopped buying. Fundamentally, the people who buy your product are more important than your products – without them, you will be out of business. It is that simple as we live in a world where your competition is one click away.
It pays to be in tune with your customer’s interests. This extends directly to your “potential customer’s interests”, too. The competitive reciprocal is that you can also be just one click away from your competition.
Mailing Lists. When you have a digital product, software or mobile apps, which requires or actively encourages registration you get a direct line to your customer. With this you can run a newsletter or offer monthly specials. Whether you release a new app once every quarter or once every other year, your customer mailings are likely to be of much greater value than you realize. The point here is that you are not limited to promoting your own apps. Between reseller or commission arrangements with other developers, businesses or affiliate programs – you have several additional options for revenue. The main issue is to focus only on things that will be of interest to your customers.
Segmenting your mailing lists. You don’t want to lump all of your email addresses into one huge mailing list. The rise of crowdfunding has underscored just how important it is to do your best to segment all of your customers into sub-groups for more personalized and customized marketing – because it does have much better conversion rates.
As discussed previously (here and here), the Opera Mobile Store Subscription Service is able to reach customers using specific mobile carriers in specific countries, in specific languages. You have a direct mail channel plus the social networking channels, but what else?
Community volunteers, affiliates and even interns – Taking everything just one step further involves finding just one person, more if you like, willing to volunteer in representing your company in their market area. This is especially relevant where language barriers are involved. If you wanted to be especially creative, your business could go so far as to develop an internship program to attract college students. This can be tied to a commission program, monthly stipend, or any of a variety of compensation models. Such community based efforts help develop long-term relationships.
Growth – There is a major difference between getting the maximum for your product vs. getting the maximum for your business. The production cost of a digital product is very nearly the same whether you only sell one copy or millions (compared to physical products). Within a digital environment, volume of distribution trumps product price in every case but one — knowingly producing a bad app.
The world’s population is growing, more people are using mobile devices, more apps are developed, more apps are downloaded. Virtually every prong of analysis substantiates that mobile is growing – even if the rate of growth fluctuates.
Per the Law of 72, if mobile is growing at 8% annually, the number of mobile users will double in 9 years!
Income expressed in purchasing power parity for most developing markets is doing the same thing!
The developer that is best able to understand what this means and applies to it won’t have to worry about the price of an individual copy of their app.
Now that it has been tried, tested and vetted, I can discuss Opera Mobile Store’s Subscription Service available exclusively to developers with premium (paid) apps. A lot of this goes hand in hand with the past few weeks of posts relating to global mobile.
In summary, Opera Mobile Store’s subscription service is an “All You Can Eat” model tested and proven to work in emerging markets. Our findings indicate that developers generate over times more revenue via our subscription model compared to individual sales in developing markets. There are a few reasons for that and I will get into them shortly.
The subscription service is carried by Mobile Carriers to offer to their paying mobile users. We worked with a few early adopters and are now actively expanding our carrier base. In this regard, both mobile carriers and Opera Mobile Store are constantly engaging to reach more subscribers and to improve the performance of the Subscription Service.
The mobile carriers effectively function as the retailer, Opera Mobile Store is the distributor and the App Developer can be likened to the manufacturer. Each receives a portion of the sales revenue. App developer revenue share is based upon the number of their apps downloaded in relation to the total downloads. Pulling some numbers out of the air – if you had apps that generated 20,000 of 500,000 downloads, you would receive a 4% share of the total developer revenue. If the total revenue was just $100,000, you would receive $4,000.
Economy of Scale - The first thing that any developer will point out is that the price for each download is lower than what you would get through individual sales. Yes – but the primary dynamic is Volume, with digital products all revenue accrues to your bottom line and profitability.
Recurring Opportunity – Two points to make here. First, as this is a subscription service, there is no barrier for subscribers to download and try your premium app. If they don’t try it this week, they may try it next week. Second, mobile apps are not just about generating sales, but reaching customers. So, when customers register their product with you, you then have the means to promote your next release.
Emerging Markets & Price Segmentation – Most premium apps do not sell well in emerging markets because few developers apply to price segmentation. If you aren’t familiar with this term, please take a look at Wikipedia’s entry on the Big Mac Index. Companies like McDonalds that do apply to price segmentation sell their products for different prices in different locations taking into consideration a wide range of factors, including purchasing power parity, logistical factors, wages, etc. So, the Big Mac that sells for roughly $2.30 in Ukraine might sell for nearly $10 in Norway.
Multiple Points of Presence – The more places you are, the greater your reach, the more people are likely to try your app. Better than this, you will have mobile carriers promoting your apps along with others to all of their customers.
Low Maintenance – Perhaps the best part of the program is that the only thing you need to do is add your product to the service to establish a short-to-medium term recurring revenue.
Offsetting the Paywall – The one thing that I think is best about the subscription service is that you are able to reach paying customers who may not have a credit card, Paypal account, or access to other financial services to purchase your app. Presently, aside from issues of price segmentation, this is what I believe to be the #1 barrier. It is a barrier that is gradually coming down, for one, the mobile carrier brings it down for you in this program.
If you would like more information about the Opera Mobile Store Subscription Program – please write us for our PowerPoint Presentation and to talk with a member of our team.