Kachingle Premium for PC and Web App Vendors - Turbocharged Freemium Conversions

Kachingle Premium
Turbocharged Freemium Conversions

Vendor Presentation on SlideShare

For a webinar or private presentation visit
www.kachinglepremium.com
and fill out the contact form

www.kachingle.com | fred.dewey@kachingle.com | 650.376.0170
19 March 2012 1

Kachingle Premium: What is it?

• A Bundle of complementary, non-competitive 20 Premium
apps
We do for the Freemium space what cable TV did for
Premium Movie channels – but with 21st century flexibility!
• The Bundle sells for an irresistible, fixed monthly fee of $5
per month
• At KP Subscriber‟s option, sign-ups can be automatically
shared on Facebook and Twitter
• Intuitive vendor dashboard allows for transparent, real-time
auditing
• Revenues are shared amongst app vendors based on KP
subscriber access
powered by: Kachingle‟s patent-pending micropayment technology

19 March 2012 2

Virtual Bundling – not your Grandparents‟ bundles!

20th century fixed bundling (e.g. cable TV channels) was
• Comprised of defined inflexible packages
• Not usage based revenue
• Producers had no choice of marketing partners
• Subscribers had no choice of channels

21st century virtual bundling (invented by Kachingle) is
• Real-time flexible packages created uniquely by each subscriber on
demand
• Usage based revenue
• Producers select their marketing partners
• Subscribers effortlessly build-their-own packages
Photo courtesy (http://creativecommons.org/licenses/by/2.0/deed.en) of Flickr user ghostdad
http://www.flickr.com/photos/ghostdad/2335241259

19 March 2012 3

Kachingle Premium

How Subscribers Benefit How Vendors Benefit
Incredible Value 2x - 5x Revenue Uplift

Immediate Access Larger User Base

Fixed Monthly Charge Increased Retention
App Usage = Revenue
Discover Other Apps
Subscriber Evangelism
Social Media Friendly
Virtual Partnering
Virtual Bundling
Easy API Integration

Product Bundling Network Effect Social Media Virality Micropayment Platform

19 March 2012 4

Example – Avira and Kachingle Premium

19 March 2012 5

Effect of Kachingle Premium Across Bundle

Current With KP

170M Total Unique Users 170M Total Unique Users

1.7M Paying Users 6.7M Paying Users

$13.5M Total Monthly Revenue $30.1M Total Monthly Revenue

19 March 2012 6

The Bottom Line

• Kachingle solves the Freemium conversion problem
o By taking advantage of bundling, a proven marketing
strategy
o Subscribers get more value and rapid access to premium
offerings
o KP vendors get more revenue and a much larger user
bases to co-market to with the KP Partners
• Simple, secure integration with your existing system with our
API
• How much revenue uplift can Kachingle Premium get you…?

19 March 2012 7

Revenue Model Overview
• Predicts revenue uplift for any app vendor that joins KP
• Sophisticated model considers:
o User base overlap across vendors joining bundle
o Number of apps used per user; days/month app is used
o Vendor‟s current premium price and conversion rate
o Vendor‟s KP sign up rate from its own user base
o Cannibalization rate of vendor‟s current premium offering
o Network effect – use of vendor app by all KP subscribers
• The following slides show KP revenue impact on
o Entire 20 vendor bundle with 170M unique users pre-KP
o Representative small, medium and large vendors
• Entire model available to any app vendor considering KP

19 March 2012 8

Revenue Model – Medium Vendor

19 March 2012 9

Revenue Model – Small Vendor

19 March 2012 10

Revenue Model – Large Vendor

19 March 2012 11

Model Inputs: 20 Vendors, 195M non-unique users

Inputs Medium Small Large
Vendor Vendor Vendor

% of total users using only 1 app, pre-KP 80% 80% 80%
Entire Bundle

Avg. # of apps used by multi-app users, pre-KP 3 3 3

Average KP conversion rate across bundle 4% 4% 4%

Average % of apps used per KP subscriber 20% 20% 20%

Average % of days/month app is used 50% 50% 50%

Number of free users pre-KP 9,900,000 9,900 49,500,000

Number of 1st level premium users pre-KP 100,000 100 500,000
Vendor Specific

Average days/month vendor app is used 15 15 15

Vendor KP Sign-up rate 4% 4% 4%

Cannibalization rate of 1st level premium 90% 90% 90%

% of other KP subscribers that will use app 10% 0.2% 35%

Net $/month from current premium user $4.00 $4.00 $4.00

19 March 2012 12

Next Steps

• Secure your category in the Kachingle Premium bundle

• Choose your Premium version to offer

• Select your virtual marketing partners

• Integrate Kachingle Premium into your site with our easy to use API

• Include the Kachingle Premium option at your web site

• Issue joint press release with Kachingle and the other Premium
partners

19 March 2012 13

BONUS SLIDES

19 March 2012 15

Want more revenue and paying customers?

4x 4x

Conversion Rate Uplift
Revenue Uplift

3x 3x

2x 2x

1x 1x

19 March 2012 16

Freemium is not working for all vendors because of…
 Fierce Competition
The free version needs to be so extraordinary that there is not enough incentive
for most users to upgrade to Premium

 Low Conversion Rates
At ~ 1-2%, Average Revenue Per User (ARPU) is too low for sustainability

 High Churn Rates
Low Premium user retention requires a continuous stream of new users

 Free Users don’t upgrade to premium version because:
 too much trouble to upgrade right at that moment while the user is busy doing real task
 too expensive
 the premium capabilities they need are not worth the premium price
 total cost of all the Premium apps they would use is too expensive
 occasional users don‟t want to pay full price
 too hard to keep track of multiple subscriptions and credit card charges

19 March 2012 17

Freemium Best Practices
• Offer a base-level product people want to rave about. Virality drives
success.
• Prompt user-to-user recruitment with a product that‟s more beneficial when
shared with others.
• Make offering scalable so serving each new user gets incrementally less
expensive.
• Offer a premium-level product that provides meaningful value otherwise
difficult to obtain, realizing that many businesses succeed with only single-
digit free-to-paid conversion rates.
• Commit to ongoing user interaction in order to adapt and improve offerings,
promote usage, inspire evangelism and prompt premium-level purchases.
• Provide users with a reason and easy way to spread the word, recruit new
users and grow your audience into one that advertisers and others are
willing to pay to reach.

Great advice – but is it actually working?
Schenck, Barbara Findlay. “Freemium: Is the Price Right for Your Company?” Entrepreneur Magazine. February 2011. <http://www.entrepreneur.com/article/218107#> [accessed January 10, 2012].

19 March 2012 18

What If …
• More of your free users started paying you?

• Other app vendors are promoting your app?

• Your users could easily promote you via social media?

• Your users could upgrade to premium with One Click (no
carts, no forms, no hassle)

• Your user retention rate increased?

Which of these are most important to you?

19 March 2012 19

How Kachingle Premium Works
• Kachingle places vendor‟s app into the Kachingle Premium Bundle

• Vendor offers users the Kachingle Premium Bundle

• Current Kachingle Premium Subscribers accept with „single-click‟

• A user‟s „purchase‟ is automatically posted to their social media
sites, i.e. “I just signed up for Premium __________”

• Subscriber access is tracked for each app in the Bundle

• Payouts are made in accordance to user usage

• Monthly, vendor payouts are made via PayPal

19 March 2012 20

Vendor Selection
• with 100 Million users is already onboard
o Avira is a leading, worldwide supplier of anti-virus &
security solutions for professional and private use
• Criteria:
o Must be one of the top Vendors in their category
o Fits into the “Power User” app space
o Has Freemium offering

19 March 2012 21

Why Kachingle?
• Kachingle‟s proven micropayment and back-end technology already exists!
• 3 years of engineering work building Kachingle Anything, a usage-based
donation platform, that has been working flawlessly for 2 years
• Top notch experienced team that has been together at Kachingle and other
companies for years
• Founders have deep billing, banking, and payment processing in their DNA
(BofA, Portal Software)
• Very fast time-to-market
• Anchor tenant – Avira – brings 100M free users to the table
• Usage-based algorithm for the “fair” distribution of revenues
• Patent pending for our usage-based micropayments technology
• Compelling, high-value, user proposition with the flat monthly fee, social
recognition, and hassle-free signup
• Special business relationship with PayPal

19 March 2012 22

Partnership with PayPal
 Micropayments are strategic for PayPal
 They love our approach and understand the Kachingle
Premium value proposition
 PayPal has supported us in the following ways:
 Special pricing on transaction and processing fees
 Featured Kachingle in their ad campaign (see below)
 Direct access to their customer base
 Immediate access to engineering support

19 March 2012 23

Kachingle Premium for PC and Web App Vendors - Turbocharged Freemium Conversions

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