The assumption I am testing is “Would ads on the free version encourage you to upgrade?” This is incredibly important to know because to maximize money, we need to know the difference between having only revenue from the paid users versus potentially having fewer paid users but also gaining revenue from the free users.
Test Card
Hypothesis: We believe that artists using an app wouldn’t want ads blocking their view when drawing, so more paid users will emerge if we disable ads for paid users and provide a nice bundle of brushes with the purchase. We will know we have validated this when we see an increase in paid users by over 5% in the next month. [Critical low]
Test: To verify that, we will survey artists in a quick Google Form, asking whether seeing ads on their screen while drawing virtually encourages them to upgrade to the paid version. [test cost low and data reliability medium]
Metric: We will measure the percentage of students who are encouraged to buy a paid bundle to remove ads on our app. [time required low]
Criteria: We are right if we see an increase of 5% in the amount of paid users. For instance, if our current transfer rate of paid to unpaid users is 10%, then we expect to see 10.5% of users respond yes to the survey.
Learning Card
Hypothesis: We believed that people would be encouraged to buy the bundle to remove ads and receive the bundle.
Observation: From the market research, about 43% of customers would buy the premium version to eliminate ads, while 70% of customers would buy the premium version to obtain additional features. [data reliability medium]
Learning and Insights: From this, we learned that there is a baseline interest in removing ads in a freemium product. The overall interest is more in obtaining better brushes with the package; however, ads are part of the factor too. In addition, just by seeing the ads, they are more reminded to buy the premium bundle, allowing us to obtain more paid customers. [action required needed]
Decisions and Actions: Our assumption was validated and it encourages people to buy the bundles. Therefore, we will move forward with this idea with great certainty that it will be successful. We would assess via further tests how much ads would be acceptable to include in the free app to make enough revenue from the free users, while also nudging them to paid users without the fear of them being offboarded. We will begin incorporating it into our app with small trial runs of this to test whether artists and customers would want this feature and closely measure the metrics involved with user base amounts and conversion rates from free to paid.
