For indie developers, the dream is often to grow one’s own business. In recent months, I made changes in my Ambie app to help achieve this goal and so far, things have grown beyond my expectations. But this journey wasn’t smooth. In this post, I want to share what I learned along the way.
Before the growth
Last year, Ambie’s business model was as follows:
- Ambie is a content-driven product, where the content are sounds and videos
- Many sounds were provided for free, but premium access was needed for some sounds and videos.
- Premium access was obtained with a monthly subscription
- No option to preview premium content
This approach was working well, but it was slow. Ambie only had a handful of new subscribers per month. I needed to find ways to increase revenue.
Experimentation
I tried a couple things to grow revenue. First, I had this hypothesis:
- Users will be more likely to acquire Ambie+ if they had a temporary preview
There are several ways to implement this experiment. I decided to go with a “Free weekly” sound rotation. Each week, one premium sound will be available to download for free. When the week ends, the sound will require Ambie+ to keep playing.
A second experiment I tried had this hypothesis:
- Revenue will grow if sounds can be acquired individually.
To accomplish this, I built a way to buy each sound. This was effectively changing the business model away from just the Ambie+ premium tier. With this approach, users can either get the monthly Ambie+ subscription or they can acquire sounds individually.
Results
Both of these experiments failed.
Based on telemetry data. The month of the “free weekly” led to 40% drop in new subscribers. Meanwhile, the ability to buy individual sounds led to no sales for 2 weeks. Even more telling, telemetry suggested no one even tried to click on the purchase button for sounds.
From the first experiment, I learned about the idea of giving away too many things for free. My theory is that by giving away premium sounds for free on a temporary and weekly basis, people felt they didn’t have to get Ambie+ at all. They could just wait and try out sounds. So the lesson was to be careful what features are being given away for free, because it might lead to long term losses.
From the second experiment, I speculate that people had decision paralysis. If you were going to choose specific sounds to purchase, a cascade of decisions have to come together:
- Which one should you buy?
- Which one is worth your money?
- To determine which one is worth it, can I preview it to make a better decision?
Altogether, the purchase process was no longer impulsive. Users were unknowingly asked to think carefully, and I speculate that led to lost sales. So the lesson here was not to overburden customers. Depending on the product, a simpler purchase experience may be available.
What finally worked
Combining the lessons from previous experiments, I decided to try a new option for Ambie+ that was more straightforward: a one-time purchase for lifetime access. This new purchase option led to +1000% revenue YoY. Most interestingly, this new purchase option had no affect with new subscribers. Ambie is getting the same number of new monthly subscribers as before, while getting a massive boost in revenue due to the new lifetime purchase option.
I know what you’re saying, “I could have told you that.”
A one-time purchase option was obvious, but I was hoping to avoid this route. Subscriptions are a reliable way to grow revenue. The tech industry has proven this with Office 365, Xbox Game Pass, and Apple One. So adding a one-time lifetime purchase option seemed like a move against contemporary trends.
However, the reality is that Ambie is not a behemoth like Office, Xbox, or Apple. It doesn’t provide the same level of service as these products. People are willing to have long term commitments to Office 365 because you get a lot of value. It’s the same with other large brands. But Ambie+? What does it offer compared to tech giants? It seems a lot harder to convince people to subscribe to an indie developer’s app. My theory is that a one-time purchase option removes the mental burden that comes along with a monthly subscription. It’s more impulsive and it requires no long term commitment.
In summary
Lessons in a nutshell:
- Subscriptions are great, but it requires more to convince customers to commit. Find ways to make your subscription more valuable to overcome the mental commitment threshold.
- Providing premium sound for free led to a 40% drop in new subscribers. Be careful about giving out premium features/content for free since it might affect your revenue in the long term.
- Depending on your app, providing numerous pieces of content/features as individual purchases may lead to decision paralysis.
- The most successful business model for Ambie has been providing two purchase options: a low-cost monthly subscription or a high-cost one-time purchase for lifetime access. People have choice while things stay simple for the customer.
I hope these insights and lessons can help some folks out there. And as always, you can reach me on twitter at kid_jenius if you have any questions.
> Daniel
