Which Business Model is Better: Subscription or Charge based on Usage?
I am thinking about two different business models for my app. It would be great if you could share your thoughts and advice:
Background
I am working on an app called Habit Rewards. The idea is to motivate users to build lasting habits with financial commitments.
Business Model 1: $30 monthly subscription and users earn $1 per day
- How it works: users commit their habits with a subscription and earn $1 each day if they complete all habits.
- Subscription fee: $30 per month ($28 per month as a promotion), $365 per year ($315 per year as a promotion), $999 lifetime.
- I validated the idea with this business model and received tens of signups.
- Need to handle how the users can withdraw money from the app, globally.
- Website: https://habitrewards.framer.ai/
Business Model 2: charge the days the user failed at the beginning of a new month.
- How it works: the app withholds $1 from the user's credit card; the user earns back $1 after completing all habits of the day; otherwise $1 will be accumulated and charged at the start of the next month.
- I have launched the app with this business model, but the sign-ups grow very slowly (3-4 per day).
- Website: https://habitrewards.me/
App Store takes a 30% cut for subscriptions if I have to use in-app purchases. If App Store allows me to charge with Stripe, Stripe takes about 3-4% cut.
The ideal case of both business models is to ask the user for a credit card and charge automatically each month.
Your thoughts and advice are highly appreciated!
