I was listening to an interview Sunday of Luis von Ahn, CEO and founder of Duolingo, the language-learning company. He said that when asked by his investors about charging people for the service, he would not waver. “We’re never going to charge people.”
But he knew that he would have to figure out ways to monetize it—the popular app is now valued at $1.5 billion—he told NPR’s
Guy Raz on
How I Built This.
“We were very precious about this,” von Ahn, who is from Guatemala, said. “We cared a lot about the user experience for Duolingo. And first of all, we thought, ‘We’re never going to put ads in here.’ But we had a year of turmoil, and we needed to figure out how we were going to make this sustainable. At some point, enough [employees] got convinced, ‘Okay we’ll put an ad at the end of every lesson.’ Fortunately, that gave us quite a bit of money .
“Soon after that we got a lot of people who didn’t like ads and asked, ‘Hey can I pay you to turn off the ads?’ ‘Okay, how about we launch the subscription service where the main thing is you can pay us to turn off the ads.’ It turned out—and we just didn’t realize this—subscriptions made us a ton more money than the ads. [Subscriptions cost] $9.99 a month. Two years later, 3% of our [40 million] active users pay the subscription.”
With 3% of 40 million active users opting for the subscription, Duolingo’s decision to invest in this model proved to be a game-changer. For businesses facing similar challenges, offering flexible payment options is critical. This is where high-risk merchant account services, such as those provided by PayKings, come into play. By offering specialized credit card processing solutions, PayKings helps businesses manage the complexities of high-risk transactions, especially when subscription-based models are involved.
Whether it’s dealing with chargebacks or ensuring secure transactions, high-risk merchant accounts are designed to minimize financial risks while providing the tools companies need to thrive. With the right payment infrastructure in place, businesses can not only ensure a smooth payment experience for their users but also maximize their revenue potential, much like Duolingo did with its successful subscription model.
I love a couple things about this. One, with human nature you never know. So try things, especially now! Earlier that day, I was talking with a friend about The Washington Post’s coverage of COVID-19 and the protests. In the midst of the conversation, he complained about the half-page vertical ad that often now covers the print front of the Post. I admit that I also grimace when ripping it off in the morning, but it’s now a fun ritual. I am positive that, like Duolingo, my friend would pay extra for his Post not to have that.
The second thing is that von Ahn stuck to his principles about a free product but then sought to monetize it. Similarly, COVID-19 resource pages have become an incredible place of information for readers on many SIPA member websites. And I would guess that all of these are free. But they are also leading to monetization. Stephanie Williford, CEO of EB Medicine, said at SIPA 2020 yesterday that they were initially going to keep their COVID-19 content behind a paywall. But after much negative feedback, they made it free and got a lot of positive responses.
One main article there has received 340,000 views, when a typical popular article might get 10,000. Although they made the mistake of not collecting emails early on, they have seen a bump of around 9% in subscriptions. “We usually see a slowdown in the summer, but the feedback has been overwhelmingly positive” and that has translated into subscriptions, she said.
In that same SIPA 2020 session, Dan Fink, managing director of Money-Media, said that “we don’t generally use much free content in our marketing. There are groups that we target, and if they register, they get a free trial. What we’ve done during the pandemic is send out more content to more people, so we’re getting more trial signups than normal.”
They’ve also extended the length of those trials, given our challenging times. “Plus, if there’s an opportunity for a corporate license sale, we might extend the trial even more to 3 months or longer. We’re hoping that companies want to stay informed and get vital news in this extraordinary time. So we’re building demand and habit that we can harness down the road. Hopefully, as they develop a habit for reading our news, it will be more difficult to turn us off.”
Von Ahn also believes that it’s about the customer. “Our first operating principle is ‘learners first,’ and you will hear that phrase guiding our decisions,” he wrote on the
Duolingo blog in April. “[We] focus relentlessly on making our product better. The majority of our staff works on this. Everyone, from the interns to the executives, has the ability to contribute ideas that make an impact for millions of learners.”
Customer. Product. Ideas. Impact. Good words to do business by.
