The first step towards monetization 🤑



Welcome back to my weekly newsletter. This is going to be a series of blogs covering how we came up with the idea of Calm Sleep, scaled it to over a million users in less than a year with less than a $1,000 total investment. 🌱


I’m Akshay Pruthi, an entrepreneur who loves to build products from the ground up. Over the past 6 years, I have built multiple products from scratch and scaled them to millions of users. This is my attempt to share our most important lessons from building one of those apps: Calm Sleep. 🤗


Note - Calm Sleep is my side hustle that I started with Ankur Warikoo, Anurag Dalia, and a team of 3.


Every week I will publish an article about a different problem we faced while building Calm Sleep. Last week, we discussed how to launch a referral program.

This week, I am going to discuss how we approached monetizing our user base.


The Research

It was important for us to know where our competitors were placed when it comes to monetization.

We observed that most of our competitor apps were paid. Users were paying for:

  1. The content, be it sleep sounds, stories or meditations.

  2. The artist that helps them sleep.

  3. Sleep tracking tools.


We brainstormed and decided to go for a wild experiment.

“Pay what you want”


Pay what you want (or PWYW, also referred to as "Value-for-Value model") is a pricing strategy where buyers pay their desired amount for a given commodity. A minimum (floor) price may be set, and/or a suggested price may be indicated as guidance for the buyer.


Why did we decide to go with the PWYW model?

  1. We wanted to convey confidence, essentially telling the users that we were so sure you would like our product that you would want to pay for it.

  2. We wanted to offer a sense of ownership to our users. This way the users weigh the value they have gotten from the product, and pay an appropriate price.

  3. It’s an easy way to test the waters so as to figure out where our users are placed when it comes to payment.

  4. It also gave us greater room for experimentation.

  5. Lastly, it generates word of mouth and invites more people to try the app.


We were aware of the drawbacks associated with this model. Many dishonest customers could walk away without paying anything, or underpay significantly. Some customers may be honest but still feel confused about what the appropriate price is and end up not paying.


We decided to give it a try with a twist. Instead of asking users to enter a value of their choice, we gave three choices to our users. We asked our users to support us by paying in the form of a coffee, a subway, or a meal. As the entire narrative was about paying what you want, we wanted to keep cheaper options, to begin with. We nudged them by showing how many supporters had supported by paying for each option.


We launched this pop-up in the second session of the users who updated their app to this version.


On Day 2 of 100% rollout, we started seeing people opting for subscriptions! 😋

The rush you get when you see bootstrapped company hitting it’s first subscription 😅


We celebrated yet again! 🤩

With the first experiment towards monetization, we saw 198 subscriptions in total over a period of 3 weeks.

This included 21 cancellations.


Frankly, we couldn’t make much out of this data. So we decided to do another experiment.

We decided to launch a payment banner upfront. On each of the tabs, we launched a banner (as in the image below). If the user clicked on support, that would open the payment options, if the user clicked on cross, we would show a “support us” button on top right.


Data insights:

  1. “Support Us” banner shown to click ratio: 4%

  2. 46% of the users were canceling the banner through the cross button

  3. “Support Us” button on top right click through: 2.5%

  4. Payment hour: Predominantly at their sleep time

  5. Maximum conversions took place on Mondays!

We knew the potential was much more. So we decided to create a list of experiments we could perform to increase the funnel.


Following is the list that we created:


Experiment 1:

Change the copy. Evoke emotions. Give confidence.


Experiment 2:

Launch a feedback pop-up asking users what they were comfortable with?


Copy:

Right now, the Calm Sleep app is 100% free. If we had to sustain ourselves financially and needed your help, how could you help us?

  1. Will pay later

  2. Don’t intend to ever pay

  3. Need some extra features for me to pay


Experiment 3:

Create sleep expert personas for sounds/meditations/stories and when they are playing, have a big “thank XXX” CTA on the player


Experiment 4:

Lock 80% of the sounds/stories/meditations, to be opened at a one time payment of $2.99


Experiment 5:

Referral at 25% off


Experiment 6:

Flat fee of $4.99 and a chart that shows other top apps and compares it.

Calm

Headspace

And more if possible


Experiment 7:

Show the payment banner only to old users who value the product.


Over the next few weeks, I am going to talk about each of these experiments and how they played out 🤫


If you like it, Buy me a coffee here

I publish weekly blogs where I share everything I learn.
Subscribe below to stay updated! 👇🏽

Thanks for submitting!