21 June 2016

When free isn’t

My Money Matters |

The age of the smartphone is all but ubiquitous, and as the technology for powerful pocket processors becomes cheaper and more readily available to nearly everyone, we are also entering into the age of the app.

Apps have no doubt been a revelation, optimising processes in our daily lives and providing quick, seamless solutions to nearly every modern day problem. We have apps that help us become better chefs, better workers, and better lovers. We love our apps and with good reason. However, we’ve all experienced that somewhat annoying phenomenon, in which our favourite app suddenly prompts us to pay to unlock a premium feature, be it a greater selection of recipes, more lives in our favourite game or, quite cheekily, the ability to simply continue using the app at all.

This is what is known as the Freemium software model and it is a steadily growing trend in apps and other software.


The term itself is a witty combination of the words ‘free’ and ‘premium’, which sum up the essence of how it works. The Freemium model is a monetisation strategy for apps and other software that entices the customer to download the software on the basis of it being entirely free to do so. It’s extremely effective, as often just seeing anything other than ‘free’ in a download link is enough to put us off, a curious phenomenon that has arisen from the inherent entitlement of the modern day consumer (but that’s a subject for another day).

Once you download the software to your device and start using it, provided that it’s adding some value, joy or excitement to your life, you will already start to form an affinity with that software, perhaps even becoming reliant on the more useful lifestyle apps. The Freemium proposition usually only kicks in after a period of time, when you reach a certain milestone or you want to extend the app’s functionality. You might install your free fitness app and go for a long run, after which you’re given a very useful breakdown of how far you ran, how many calories you burnt etc. But then you’re given a greyed-out set of options to share your achievement on Facebook or get a detailed analysis of your workout and training profile for your next run. It’s really tempting, but to unlock these functions you need to go premium. Surely that wasn’t what you signed up for when you downloaded the free app?

Many people enjoy playing games on their smartphones and there are some fantastic time-wasters out there that provide hours of fun and, quite often, frustration. Freemium games are extremely effective at parting customers from their cash. You may have sunk weeks into training and arming your gallant knight, slaying all the nasty foes you encounter along the way, until one day you’re attacked by a dragon straight out of Westeros, you can only watch as the beast roasts your hero in the blink of an eye. As you stare in disbelief at the smoking pile of ash that was your beloved character, the game offers you a glimmer of hope, proclaiming that you can buy ten extra lives for R100. You usually won’t be forced to buy the extra lives, though. You’ll have the option to buy more lives, or wait until your character is revived in 24 real-time hours. The Freemium model relies on your burning desire to get right back into the action, who has the time to sit and wait? And what’s R100 in the grand scheme of things?

Navigating the Freemium landscape

To completely demonise the Freemium model would be unfair. It can be a very valuable proposition and an entirely fair model to monetise on a piece of software that took a lot of hard work and passion to create. However, many of the more unscrupulous developers out there aim to abuse their customer’s sense of reliance and trust in their software. Many app users can be suckered in by Freemium software and end up paying thousands of Rands over months of use for an app that could easily have just come with a once-off price tag of R50.

We’ve identified 3 top tips to help you to get the most out of Freemium software and ensure that you don’t end up spending much more than the actual value of what you’re getting.

  1. Separate the free from the Freemium

The modern consumer has a tendency to rush into a purchase or download without really doing any research or taking the time to understand what they’re signing up for. Before you download any app or software, it’s a good idea to do your homework. If you’re looking for a particular type of app, find out which are the best options in that category and once you’ve identified your target, be thorough in finding out how its pricing structure works. If it says it’s free to download, go into the app description and read the fine print. A sure sign that it’s a freemium app is the descriptor that says ‘in-app purchases’. Once you know whether the app is entirely free or Freemium, you can make a more informed decision about whether you want to download it or not. And if you do download a Freemium app you can at least use it with caution to ensure you don’t end up spending recklessly over time.

  1. Use a budgeted approach

If you’ve decided to download a freemium app and you feel that you would be willing to pay for certain features within the app, it’s a good idea to plan accordingly. The first step is to make sure you understand how the payments within the app work. Do they ask for a once-off payment to upgrade to the premium version? Is it a monthly subscription? Or are you going to be paying a small amount every so often for little enhancements or benefits of a finite amount or usage period? You should ensure that you’re aware of how you’re going to be charged and value that you’re getting for what you’re paying. Only once you understand this can you make informed, conscious decisions about how to budget for these payments and avoid spending recklessly.

  1. Change your mindset about paying for apps

Many of us have the entrenched belief that getting something for free is always better value than paying for something, no matter how low the price. This translates to our app downloading behaviour and we are far more willing, in general, to download an app that is free than one that has a price tag. With the advent of the Freemium model, it might be time for us to reassess the way we look at paying for apps. As mentioned above, a Freemium app to the reckless user can end up costing thousands of Rands, where one could feasibly have paid a small once-off amount upfront for an app that may have more numerous and better features. Again, it’s always advisable to do your research when looking for a new app. Weigh up your options and compare the features and value that various apps offer in relation to their price, instead of just overlooking those apps that you need to pay for upfront. Paying for an app at the start might just end up saving you a lot of money, and sanity!

Ultimately Freemium apps can offer tremendous value and many of them can be used for years without ever having to pay a cent. However, the pitfalls of Freemium software are undeniable and often very difficult to spot for the uninformed user. The onus is on you to ensure you know what you’re getting yourself into when downloading freemium software and making sure you use it responsibly.

Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.

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