GTM Sauce

Duolingo · B2C · language learning app

Make paid features free when a test shows they earn little

Took a small revenue hit on purpose to grow free users

Mixedword-of-mouthpricing

What they did

A/B tested giving Explain My Answer (an LLM-based Max feature explaining your specific mistake) free vs keeping it in Max. Revenue impact was small, and LLM costs had fallen with better caching, so it moved to free. Practice Hub was also moved from Super to free. Rationale: free users are the word-of-mouth engine; big trade-offs are signed off by senior leaders including the CEO.

What happened

Some revenue loss, accepted deliberately to add value for free users; long-term effect not measured.

In their words

Why Your Free Users Are Your Real Growth Engine – Cem Kansu, Duolingo CPO

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Cem KansuSo let me talk about actually two features that we, one of them we just did and we are about to do. So Practice Hub I talked about. We have realized that number one, as a goal, we would like to provide more value to our free users because free users, there's the missionary reason why.

Cem KansuWe want to teach more people, but there's the business reason, which is free users are our marketing engine. Duolingo grows as an entire user base and as a business through word of mouth. Word of mouth is much stronger if your free product is stronger because you might or might not pay, irrelevant.

Cem KansuIf you're using Duolingo, you tell your friends about Duolingo and say, "This is awesome. I'm learning Spanish." They try it, they do the same. So that's how Duolingo really grows. That's the majority of our growth engine and that growth engine, of course, gets stronger if we can provide more value to free users.

David BarnardHow did you determine that?

Cem KansuWe tested it. We tested giving it for free and compared it to a B condition or a control condition where it is part of Max. The impact, well, there was impact, but we decided to reduce our revenue, but rather provide value for our free users because we believe that's the right thing to do in the long term.

Cem KansuAnd there's one more reason, which is when we first introduced this feature, it was financially impossible for us to make it free because it uses LLM calls to explain basic... What it does for the record is you give an answer, you answered something, and we basically use LLMs to describe to you what you got wrong for your specific answer.

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Tags: freemium, free-tier, llm-costs, long-term