The common perception is that Indian users won't pay for digital products and services. However, several consumer tech companies are now successfully monetizing through innovative approaches beyond just advertising. At the recent ‘New Era of Consumer Monetization’ Kickstarter, founders of three such companies - Rohit Choudhary (Seekho), Prashant Sachan (Sri Mandir), and Sanidhya Narain (Dashtoon) - shared their experiences and insights on what works when it comes to monetizing consumer apps in India.

Key Highlights

1. Trust Before Transactions: Build user trust through free value demonstration before pushing monetization.
2. Experiment Early: Don't wait for perfection - Seekho turned a runway crisis into opportunity by testing paid features early
3. Flexible Monetization Models: Consider hybrid approaches combining subscriptions and microtransactions.
4. Look Beyond Metros: Challenge assumptions about paying users. Premium users often come from unexpected demographics
5. Focus on Recovery Period: Rather than just CAC or LTV in isolation, optimize for faster payback periods to enable sustainable growth through reinvestment in marketing.
6. Think Stable State: Plan for long-term sustainability by defining what a stable, loyal user base looks like for your category
7. AI as an Enabler: Leverage AI thoughtfully to reduce costs and improve user experience while maintaining necessary human elements.

Finding The Right Monetization Model

When and how should you start monetizing?

The journey to monetization often involves experimentation and sometimes, necessity becomes the mother of innovation. Seekho, for instance, started as a free platform for two years before switching to a subscription model - driven partly by necessity when they had just one month of runway left. The move proved successful, with the platform able to cover employee salaries through revenue in the very first month of monetization.

Prashant from AppsForBharat, which operates the Sri Mandir app, emphasizes that the choice of monetization model should be guided by understanding what users are already paying for in the offline world. After experimenting with various approaches including subscriptions and gamification elements, they discovered that users were willing to pay for digital access to temples and religious services - something they were already doing offline through relatives and intermediaries.

The Subscription vs Microtransactions Debate

The choice between subscription and microtransaction models isn't straightforward, as each has its own merits. Sanidhya from Dashtoon explains their initial choice of microtransactions over subscriptions was driven by several factors. The lower entry barrier made it easier to build trust with small ticket sizes, while giving users the flexibility to increase spending based on their engagement. This model also enabled faster revenue generation to fund their marketing experiments.

However, microtransactions come with their own challenges. Over time, users become aware of their total spending and may experience sticker shock, leading to churn. The model tends to retain only power users in the long term, necessitating an eventual transition of high-value users to subscription plans. This insight has led many companies to adopt hybrid models that combine both approaches.

Optimizing Your Chosen Model

The Art of Improving Conversion Rates

Seekho's journey offers valuable lessons in optimizing subscription metrics. They began with high-priced annual subscriptions but quickly realized the need to lower entry barriers. By transitioning to monthly subscriptions and introducing lower first-month prices, they managed to improve conversion rates dramatically from 2% to 12-13%.

Measuring Product-Market Fit in Monetization

When it comes to validating product-market fit through monetization, the founders emphasize looking beyond simple revenue metrics. The economics-led metrics include the recovery period of marketing spend and the ratio of CAC to lifetime value. However, equally important are retention metrics, particularly the M3/M6 retention rates and understanding where retention begins to flatten - typically between months 6 and 12.

Rohit from Seekho draws an interesting parallel with Netflix to explain the concept of stable state user base. While rapid growth is important in early stages, what matters in the long run is reaching a significant absolute number of loyal users who stick around. Even mature platforms like Netflix may not show dramatic growth numbers today, but they maintain a substantial stable user base with predictable churn and growth patterns. This "stable state" becomes a key PMF indicator - it's about having enough users who find ongoing value in your product to create a sustainable business. The metric varies by category and business model, but founders should think early about what this stable state looks like for their product and what retention numbers they need to hit to achieve it.

Building Trust and Value

The Trust Factor in Monetization

For platforms dealing with sensitive services like Sri Mandir, building trust becomes paramount. Their comprehensive approach includes providing video evidence of temple offerings, securing official temple certifications, establishing physical presence at partner temples, and leveraging word-of-mouth from satisfied users. This multi-faceted strategy helps overcome the inherent skepticism around digital religious services.

Communicating Value to Users

The founders stress that successful monetization hinges on clear value communication. This involves more than just articulating benefits - it requires transparency in pricing, strong customer support, and leveraging social proof through existing users. Most importantly, platforms need to demonstrate tangible value before pushing monetization.

Understanding Your Audience

Breaking Stereotypes About Indian Users

The discussion revealed several surprising insights about who pays for digital products in India. Sri Mandir found that 35% of their paying users come from top metro cities, with 25% of demand originating from outside India. Perhaps most surprisingly, around 50% of their users are under 35 years old. These statistics challenge common assumptions about the demographics of premium users.

Finding and Serving Your Core Users

The founders advocate for a data-driven approach to identifying core users. Rather than starting with preconceived notions, they recommend using performance marketing to understand user segments and letting the data guide targeting decisions. Testing different hooks helps identify what resonates with users, allowing platforms to focus on solving specific use cases for specific segments.

The AI Impact on Monetization

The role of AI in monetization extends far beyond automation. For content platforms like Seekho, AI enables more creators to produce content while reducing production costs, though human oversight remains crucial for maintaining quality. Sri Mandir leverages AI for process automation and quality control in their offerings, while Dashtoon uses it to enhance user experience through personalization and improved discovery features.

Looking Ahead

The success of these platforms demonstrates that Indian users will indeed pay for digital products that deliver clear value. However, the path to successful monetization requires careful consideration of user behavior and category dynamics, continuous optimization based on data, and most importantly, building trust with users. Whether through subscriptions, microtransactions, or hybrid models, the key lies in aligning monetization strategies with user needs while maintaining a focus on long-term sustainability.

The experiences shared by these founders offer valuable blueprints for others building consumer tech products in India. While each platform's journey is unique, the fundamental principles of understanding user behavior, building trust, and delivering clear value remain constant across successful monetization strategies.