New App - So Why Not A New Business Model?
/Business models are a funny thing. A lot of people tend to assume they are a constant and any change is bad. I used to think this way.
When my partner Alice and I released Gus on the Go, we used a business model that we felt was the equivalent of taking the moral high road. We were convinced that parents hated apps with In-App Purchases (IAPs), apps that linked to external content, and apps that had advertising. Our proof? Reading forum after forum of parents saying exactly that. This resulted in us using a business model that revolved around having a premium app with no further monetization or sharing options.
Was this wrong? Not necessarily. Not necessarily for our apps nor for the time we released them. Would we do something different today? Glad you asked!
While applying to a couple of startup accelerators[1], Alice and I were forced to think about our business model for Gus 1 and what we may or may not do differently for Gus 2. The application process really helped us focus the concept for the new app. There were a couple of difficulties brought about by our Gus 1 business model:
- Premium apps, despite being what parents “want”, still have a very high a barrier of entry. This is reflected in app buying habits of parents we have talked to and witnessed firsthand.
- With premium apps lacking IAPs, we are forced to always find new customers as we have nothing further to offer existing customer. Finding new customers takes more effort than selling to existing customers.
- We do not know who our customers are, if they do not contact us directly. They are all technically Apple’s or Google’s or Amazon’s customers. Not ours.
With this in mind, we developed our app idea and business model in parallel.
Ch-ch-ch-ch-changes
For those of you who have read my previous posts, you know that we are not afraid of changes and experimentation.
We wanted to have an app that would be independent from the content (read: language lessons). The app’s purpose should be to deliver new lessons to the student. This would allow us to focus on creating new content for the app each month[2]. Our tag line was originally, The language learning app that grows with your child’s proficiency.
To sustain the content development, we could either charge per lesson or offer a subscription service once our lesson library was large enough to justify it. As a side effect, this would also shift our company’s priorities from shipping new apps to shipping new content.
This business model addresses concerns 1 and 2 mentioned earlier. We currently do not have a solution for number 3. And we are ok with that.
Following Through
Last week[3], we released Stories by Gus on the Go with this completely different[4] business model. Stories is a free language learning app targeted toward kids (but also used by adults). The app is broken up into story packs. Each story pack contains a lesson to introduce the student to new linguistic concepts (words and grammar), a review, a simple and familiar story, and a game to reinforce the learned concepts. The app includes two story packs and a further two are available for purchase via IAPs. In the future, we plan to release more story packs. Sometimes free and sometimes paid.
The hope is that we can build a healthy business using this new model.
Where Do We Go From Here?
Every time I type this header, I hear Dave Mustaine’s voice in my head.
In a few weeks, I plan on reporting on how Gus 2 downloads and sales are doing. Until then, feel free to ask questions or start a conversation with me on Twitter. I’m @yonomitt. I’ll post there when I write more.
Have a nice day,
Yono
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See my Gus on the Go: Year Three post for more details. ↩
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For example. This is not a hard schedule. ↩
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February 2, 2016 to be exact ↩
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Different for us ↩