Feb 2, 2017

Snap learns the power of 'free'

Among the many charts and secrets contained in Snap's IPO filing is one interesting graph that shows what happens when a paid feature becomes free. Snap's lesson: People use it more.

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Reproduced from Snapchat's IPO filing

Context: Snapchat introduced "lenses," animated overlays for decorating selfies, in September 2015 and a couple of months later, opened up a "store" where users could purchase additional ones. But by January 2016, the company dropped the store idea and all lenses became free.

As the graph above, reproduced for the company's IPO filing, shows, people used the lenses less when a fee was added, and significantly more when they all became free again. As Snap puts it:

"We also learned something exciting about building new products: if we built more Creative Tools and made them available to everyone for free, our users would create more Snaps and spend more time on Snapchat.
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