Mobile App Pricing Models: What To Charge For Your App

With your app on its way to be launched you certainly struggle with one of the most common challenges for every developer. What will be the price for your app? Because, let’s admit it, we all want to see a return on our investments when it comes to evaluating our own app. And if we don’t ask for too much it would be great if our creation will generate some revenue.

What To Charge For Your App

There are many variables to consider when you are about to set the price for your work.

  • Target Market Analysis: The first ones you should contact are your users. Are they willing to pay for an app or they will try it only if you make it free? You can use one of the channels available for asking customers their feedback.
  • Competitor Analysis: The next step is to take a look at your competitors. What are their prices? What is the users’ opinion about them? For this, you can simply go to the app store and search for prices and reviews.

  • Setting User Expectations: It is very important to reach users’ expectations. Everybody wants to pay the least possible. If the app is not free, a price of less than $1 would be affordable. Other apps cost double or more. But if you set a high price and users consider that the app doesn’t worth the money be ready for a wave of bad reviews, which will have an awful influence over your entire business.

 

Mobile App Pricing Models

Let’s see what options you have when you decide how to monetize your app.

1. Free Model

Free apps are the ones offered for free for the people who are willing to download them. As you can guess, the advantage is that a lot of people will try your app since it costs nothing. The downside is that your revenue must come from other sources.

Free To Premium

Also called Freemium it seems to be the most reasonable model because users are encouraged to download the app for free and while they get absorbed into the action they will be able to pay for premium features. Be careful that the basic version to be valuable enough for convincing users to pay for more. You can find some great ideas for that in the image above.

In-App Advertising

Running ads inside the app is the solution to sustained revenue. We discuss every now and then about the most popular ad formats of the moment. It is your call to choose the one suitable for your app. Keep in mind though, even if users are used to ads in a free app it is better to stay away from annoying types.

In-App Purchases

A great sum of your revenue can come from products sold within the app. As you can see in-app purchases are expected to be the leader this year in terms of revenue generators.

Subscription Model

You can generate continuous profit if you create a product for which users are willing to pay each month or they agree to use it for a specific cost an entire year.

2. Paid Model

If you choose the paid model you will receive money just once for your app and you have to keep in mind that the prices continue to fall. There are two reasons for that. The first one is the fierce competition in mobile markets. The second motive would be the increasing number of methods which help developers to earn their revenue without asking for money when users want to install their app.

What Should Be Considered?

Let’s see some factors which can influence your decision.

  • Product Cost: First of all, how much it costs to develop and promote an app like yours? Maybe a recent study made by Digital Media Research will help you calculate.

  • Ongoing Demand: Does your app solve a problem? If users consider it essential for their living they will pay the price.
  • Actual Value: How much is your app really worth? Beware of blind love.
  • Competition: Look at the solution chosen by other developers. Was a successful one?

 

Actionable Tips

With the number of free apps, it is very hard to convince potential users to pay for yours. However, there are certain directions which can help you with your decision.

  1. Begin with a higher price, reduce over time. It is better to start with a bigger price but doesn’t get greedy. This is the most dangerous situation. Because you are the one who created it you risk raising the price too much.
  2. Underpricing competitors is a good option. As a solution for the above issue, you can go with a lower price than the rest of the apps similar to the one you offer.
  3. Go free periodically. But how can you attract new users since there are so many free alternatives? The answer is to adopt the paid – to – free technique for a limited period of time. Users will be interested in downloading a paid app at zero cost. This is a good chance to increase your user base if you make sure that you announce the media. When people will see how many users already downloaded your app they will be convinced to pay the price.

Free Versus Paid Debate

A continuing dilemma is what to choose between free and paid, but there isn’t an answer that fits all cases. Each app is different and it is necessary to think about a solution for your specific situation.

  • App Genre Determines: It depends on your app type. With games, the freemium model is more suitable because it is natural for users to start with the simplest level and while they advance and they pass several levels, their engagement is higher and they are willing to spend their money on more complex stages.

  • Target Market Determines: On the other hand, if you own an app which proves its importance for the target audience you can ask for a fixed fee for downloading it.
  • User Tendency Analysis: If your users are not ready to pay for your app the price you consider, then you need to work on other sections and to convince them that you offer an amazing app which will change their lives. Before that, make sure that you really have such an app.

 

FINAL THOUGHTS

Even if we didn’t give you a general solution for setting the right price for your app, we draw some points for helping you to select the right path. After we provided all the elements you need for finding a suitable pricing model it is your turn to analyze your situation and to take the best decision.