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14 - Freemium Business Model Implementation

Executive Summary

This document details the Freemium business model for the Fotospiel tenant app, combining free access with in-app purchases for event credits. The model prioritizes user acquisition through a free app download while monetizing through value-driven upgrades. Key metrics: 5-10% conversion rate, ARPU €10-15, scalable to 100k+ users.

Model Analysis

Model A: Paid App (€4.99) with Free First Event

Pros:

  • Higher paying user conversion (20-30% retention)
  • Premium perception for professional users
  • Stable revenue from app sales (70% net after store fees)
  • No freeloader problem

Cons:

  • Lower acquisition (<5% download conversion)
  • High churn if first event doesn't impress
  • Slower scaling, higher marketing costs per install (€2-5)

Model B: Free App with In-App Purchases (Recommended Base)

Pros:

  • 10x more downloads, viral potential
  • Low acquisition costs (€0.50-1 per install)
  • Flexible pricing (starter €4.99, pro €9.99)
  • Better App Store ranking for free apps

Cons:

  • 80-95% freeloader rate
  • Complex IAP setup and testing
  • Requires strong onboarding to drive conversions

Hybrid Freemium Recommendation

Core Strategy: Free app with limited first event (50 photos, basic features), unlimited upgrades via IAP credits/subscriptions.

Pricing Structure:

  • Free Tier: 1 basic event (50 photos, standard tasks, no custom branding)
  • Consumable Credits:
    • Starter Pack: €4.99 for 5 events (100 photos each)
    • Pro Pack: €14.99 for 20 events (unlimited photos)
  • Subscriptions:
    • Pro Unlimited: €4.99/month (all features, unlimited events)
    • Agency: €19.99/month (multi-tenant, analytics, white-label)
  • Non-Consumables: Lifetime Unlimited: €49.99 (one-time purchase)

Expected Metrics:

  • Downloads: 50k/year
  • Conversion: 5-8% (2,500-4,000 paying users)
  • ARPU: €12 (mix of one-time + recurring)
  • Annual Revenue: €30,000-48,000 (after 30% store fees)

User Acquisition Strategy

App Store Optimization (ASO)

  • Keywords: "Event Foto App", "Hochzeit Galerie", "Party Foto Sharing", "Event Planner kostenlos"
  • Screenshots: 5-6 screens showing value (event creation, photo upload, QR sharing)
  • Description: 4,000 chars emphasizing "Free start, upgrade anytime"
  • App Preview Video: 30s demo of creating/sharing first event

Marketing Channels

  • Paid Ads: Facebook/Instagram targeting wedding planners (€1-2/install)
  • Organic: Wedding forums, photographer communities, local event groups
  • Partnerships: Affiliate program for event agencies (20% commission)
  • Content Marketing: Blog posts "How to create digital photo galleries for events"

Retention & Re-engagement

  • Push Notifications: "Your event ends soon - extend for €2.99" (opt-in only)
  • Email Marketing: Post-event surveys with upgrade offers
  • In-App Messaging: Contextual upgrade prompts after value demonstration

Conversion Optimization

Onboarding Funnel

  1. Download → First Launch: 90% completion target
  2. Onboarding Wizard → First Event: 80% completion
  3. First Event Success → Upgrade Prompt: 10% conversion
  4. Repeat Usage → Subscription: 20% of one-time buyers

A/B Testing Plan

  • CTA Text: "Get Started Free" vs "Create First Event"
  • Pricing Display: Static prices vs dynamic local currency
  • Upgrade Timing: After first photo upload vs after event sharing
  • Tools: Firebase Remote Config + RevenueCat Experiments

Technical Requirements

Frontend (React/Capacitor)

  • IAP Integration: RevenueCat SDK for cross-platform purchases
  • State Management: Context API for credits, React Query for API sync
  • Offline Support: Capacitor Storage for temporary event data
  • Analytics: Firebase for funnel tracking, RevenueCat for purchase events

Backend API Extensions

  • Credit Management: /api/v1/tenant/credits endpoints
  • Purchase Validation: Webhook receiver from RevenueCat
  • Event Limiting: Middleware checking credit balance before creation
  • Subscription Sync: Real-time updates via WebSockets (optional)

Database Schema Additions

-- tenant_credits table
CREATE TABLE tenant_credits (
  tenant_id VARCHAR(255) PRIMARY KEY,
  balance INTEGER DEFAULT 1, -- 1 free event
  total_purchased INTEGER DEFAULT 0,
  subscription_active BOOLEAN DEFAULT FALSE,
  subscription_tier VARCHAR(50),
  last_sync TIMESTAMP DEFAULT CURRENT_TIMESTAMP,
  created_at TIMESTAMP DEFAULT CURRENT_TIMESTAMP
);

-- purchase_history table
CREATE TABLE purchase_history (
  id VARCHAR(255) PRIMARY KEY,
  tenant_id VARCHAR(255) NOT NULL,
  package_id VARCHAR(255) NOT NULL,
  credits_added INTEGER,
  price DECIMAL(10,2),
  currency VARCHAR(3),
  platform VARCHAR(50), -- 'ios' or 'android'
  transaction_id VARCHAR(255),
  purchased_at TIMESTAMP DEFAULT CURRENT_TIMESTAMP,
  FOREIGN KEY (tenant_id) REFERENCES tenants(id)
);

Risk Mitigation

Store Compliance

  • No Paywalls Before Value: First event creation always free
  • Clear Descriptions: App Store screenshots show free tier capabilities
  • Receipt Validation: All purchases server-side verified
  • Refund Policy: 14-day money-back for subscriptions

Technical Risks

  • IAP Failures: Fallback to manual credit allocation via support
  • Sync Issues: Offline-first approach, sync on reconnect
  • Store Rejections: Beta testing with TestFlight/Internal Testing
  • Revenue Recognition: Use RevenueCat for proper accounting

Business Risks

  • Low Conversion: Monthly A/B testing and user surveys
  • Churn: Re-engagement campaigns for inactive users
  • Competition: Regular competitor analysis and feature updates
  • Platform Changes: Monitor Apple/Google policy updates

Launch Timeline

Phase 1: MVP (4 weeks)

  • Week 1: RevenueCat integration, basic credit system
  • Week 2: IAP store page, purchase flow
  • Week 3: Backend endpoints, database schema
  • Week 4: Testing, beta distribution

Phase 2: Optimization (Ongoing)

  • Month 1: A/B testing of upgrade prompts
  • Month 2: Push notifications, email marketing
  • Month 3: Subscription model introduction
  • Quarterly: Feature updates based on user feedback

Success Metrics

Acquisition

  • Downloads: 10k in first 3 months
  • Cost per Install: <€1.50
  • App Store Rating: >4.5 stars

Conversion

  • Free → Paid: 5% within 30 days
  • First Event → Upgrade: 15% conversion
  • Average Order Value: €8-12

Retention

  • Day 1 Retention: >40%
  • Day 7 Retention: >25%
  • Monthly Active Users: 20% of downloads

Revenue

  • Month 1 Revenue: €1,000-2,000
  • ARPU: €0.50-1.00 overall
  • LTV >3x acquisition cost

This Freemium model balances user acquisition with sustainable revenue growth, leveraging the event-based nature of the app for recurring purchases while maintaining an accessible entry point.

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