The question of which business model to choose for your app is something Scale Venture Partners considered, so we did some direct research with the students at the University Venture Fund in Utah. We looked at the top 400 apps over a six-month period. The research netted several interesting conclusions about business models, pricing and the impact of the iPad.
What we found was that freemium works best when the mobile app is an extension of the web app. The web app can then serve as an up-sell opportunity for the company. Most successful business-productivity apps employ this strategy. Popular examples include Box, DocuSign (full disclosure: ScaleVP has invested in both companies), Dropbox and Expensify.
Read more of Kate’s thoughts making money on apps at The Accelerators, a WSJ blog of startup mentors discussing strategies and challenges of creating a new business.