With the switch of a button, Tinder, the hottest dating app around, skyrocketed from not grossing to top grossing with revenue of $3M in less than a quarter. Why and how? read below.
The top grossing dating market
If you monitor the top grossing charts obsessively like I do, you may have noticed that there are constantly at least five dating apps in the top 50. This makes the dating market the most lucrative vertical after games. The main reason is that dating apps are notoriously known for putting their users in hot states, prone to purchase.
The model is simple: Users can browse through other users’ profiles as much as they like. but messaging those users cost a subscription fee. It’s like showing Moses the promised land and a minute before he sets foot in it, asking him for $19.90. (He would have taken this deal).
The model behind creating a successful hot state is:
- Understand what your users want (dates)
- Show it to them (hot profiles)
- Let them build their desire (browse through profiles)
- Prevent them from getting it (charge for a message).
Tinder, a completely free service up until recently, joined the top grossing tier armed with tons of users and data. Determined to make things differently, Tinder is not charging for messages but for premium features built around hot states.
- Hot state #1: Limited swipes per day
This model has been proved to work for top grossing casual games, so why not for Tinder? Addicted users in the middle of a swiping spree are prone to pay when stopped. A classic “on a whim” purchase.
Just like Candy Crush, Tinder has an “energy/lives system”.
- Hot state #2: Undo!
This premium feature lets the users “undo” passed swipes. It relies heavily on “loss aversion”, people’s tendency to do as much as possible to avoid loss. On the user’s mind, a hasty left swipe might have sent the love of his life into Tinder’s oblivion. The pain settles in. If only there was a pain killer… Ah! Undo. for $9.99. Small price to pay for an eternity of loving relationship.
Swiped pass on the love of your life? We can take care of that.
- Hot state #3: passport
The passport feature lets users find matches in their destination of choice before actually getting there. Pretty awesome for travelers who want to set the ground before landing. Most likely that these potential matches are skewed towards one night stands rather than long time relationships. In other words, would users pay for sex while traveling? Top grossing chart says yes.
So far it seems that Tinder’s plan of making revenue on in-app purchases pays off. They claim to have 10 more premium features under their belt ready for launch.
Put your product designer’s hat on and try to predict, what will those features be? How can Tinder milk their users even more? Write it down in the comments.
going subscription closed off a lot of options for them though. it’s hard to selectively monetize users at whatever their varied max pay propensity would have been – it’s all flat rate unless they introduce subscription “and other stuff that’s not included” which feels a bit double-dippy.
They have been experimenting with segmenting users (older age group pays more), and non-paying users might get ads. They can introduce a soft currency system that enables users to pay allegedly less.. Maybe it’ll end up as flat rate but at least it’s a recurring revenue. So much better than the “sometimes we charge” WhatsApp model
maybe they could introduce a “fever mode” where you get double matches as long as you keep on swiping… and spending.
Tinder is genius, period. Swipe action, Facebook profile link to curb in fake profiles, and free messages have made Tinder into the “this is how dating happens in 2015” app. All my single friends use it, there’s tons of real users everywhere.
I tried another app and it was almost comically bad – there were lots of obviously fake profiles on there, and not only that, but to message such a fake profile I was asked for an absurd amount of money. I’ve never deleted an app faster from my phone. Tinder did it right, or at least, good enough.
Yup. I have to agree 🙂