Free apps vs Paid apps

Everyday app stores get bombarded with hundreds of mobile applications, which includes both free and paid apps. During the announcement of Apple’s FY Q4 2014 results, CEO Tim Cook announced that Apple’s cumulative App Store downloads have now topped 85 billion up from 60 billion around a year ago. And, they are just behind the competitor Google having 1.4 million apps in play store whereas Apple store has roughly 1.2 million apps. So, with these statistics we can assume the increasing importance or call it trend of mobile apps in our life. Now the biggest question for app develops and marketers is that Should they provide their app under free, freemium, paid or paidmium plan?

Pricing strategy stats

Going by the statistics of different pricing strategies of mobile apps, freemium takes the cake for generating highest revenue. And why not? It is free to download with in-app purchases. The biggest benefit of this plan is that it let’s the user to make up his mind whether he wants to access the paid features of your app or not. Second, it also helps you to adjudge the stickiness of your app. You can get a clear picture about the worthiness of your app. Based on which you can make your app feature and performance rich.

So should you invest in freemium?

“Freemium is the general consumer expectation and proven model for entertainment, games, lifestyle, and content-focused applications. The data shows that paid apps—often complemented with in-app purchases—still dominate in business, productivity, and utility apps. Despite what app developers have hoped for and tried, unless you receive venture funding, I haven’t seen freemium work for the second grouping of apps.” – Ken Yarmosh, CEO and founder of Savvy apps

Statistics here shows that people are ready to spend enough money to install an app if the niche suits them. From the figure, take navigation apps. Such apps are becoming incumbent part of human life and 55% revenue is generated by paid apps. And that’s not enough. People go for in app purchases in paid apps. So, this is a complete myth that people are reluctant to download apps that ask for money.

Few considerations before adopting pricing strategy

Having a mobile application seems like a fashion for every industry; be it ecommerce store, newstand, gaming, music, entertainment, medical, home decor and furnishing or culinary. Number of downloads and revenue generation largely depends on necessity. Eg. medical apps are gaining much importance as you get hands on information available with just one tap. On the other hand, TV apps are still trying to make their space in smartphones. So, if you have developed an application which is really a ‘must have’ to survive on the planet, it will surely catch potential user’s attention, provided you are promoting it in the right way. So based on how much dependency a user can have on your app, pricing strategy should be. For higher dependency apps, you may go for freemium to paidmium model.

Demographics of target audience
To whom are you targeting? Students? Working professional? House wives? Old age people? Males? Females? Country they are residing? Access to technology? These all things has to be analyzed before deciding the pricing strategy of your app. You must understand whether your target is capable of paying money to download the app, like children. Or is your app building enough stickiness among people like housewives or old age people to pay at different stages of app usage?

In this statistics you can clearly see that people are tend to pay for games who are in the age 25-34 as at this age, user becomes financially independent and psychologically trusts easily. Whereas, very young engagers cannot pay money, despite of spending good time over gaming apps.

time vs money spent on appsNiche competitiveness
Would anyone pay hefty money for downloading an app which already have similar free apps available in the app store? No. In a competitive niche, one must have to set competitive pricing models. On the other hand, if your app has something extraordinary to offer then let the user pay the price.

Usability of an app can make or break your revenue goals. There is no doubt that app developed by you will serve its purpose but you have to put information in much easier way. Always remember, app stores have an important section where people review your app. If you are providing information and features in best possible, positive review will instigate people to pay for your app. Being a developer, you can rate the usability and basis on this you can choose the pricing strategy.
Does price range matters in no. of downloads?

pie chart

This pie chart clearly shows that apps which are easy to buy have maximum number of downloads. And, this is very natural. People won’t risk high amount of money. What if app worth $20 doesn’t suits to the requirement of user, that would just attract negative reviews for the app. In case of confusion about price range of your app, you may go for split testing for price range. This would clear the price related haze.

In the end, all I can say that generating revenue from an app is not eating a pie. Whether you are generating revenue from app or from in app advertising, you have to increase your user base at any cost. With right app development and app store optimization practices, your goals can be achieved.