How Much Should I Charge for My Mobile App? (Part 3)

Over the last two weeks we’ve been taking a look at mobile app pricing.  Last week we discussed pricing of paid apps.  Since it appears that the days when you could put a $1,000 price tag on a perfectly useless mobile app – and dupe eight people into downloading it – are, alas, over, this week we’ll consider what’s quickly becoming the most attractive, if counterintuitive, option for monetization:  giving your mobile app away for free.

There are a great many advantages to doing so.  For one, you eliminate even the possibility of buyer’s remorse.  You also tap into a revenue stream that, while less precise than that of paid apps, continues to generate profits as long as the app is being used (as one industry expert put it, “Do the math; recurring revenue will make you way more than $4.99”).  But most importantly, you open up a massive consumer base: free apps outperform paid apps by a factor of at least ten to one (and as much as fifty to one) in every region where mobile apps are sold.

Free apps don’t come with any revenue guarantees, of course, and you’ll need to be very careful about incorporating your monetization model into the architecture of the mobile app.  For example, if you offer a “freemium” or “lite” version of your app in order to persuade users to download a paid version, your free app needs to be good enough to whet the appetite, but not so good that the paid version becomes unnecessary, and it’s a very fine line.

Should you choose to adopt the in-app purchase model, you’ll need to make sure that your customers don’t feel as though they’ve suffered a bait-and-switch; in-app purchases should only enhance the user’s app experience, not define it.  And lastly, if you decide to monetize with ad revenue, make sure the ads are effective without being obtrusive.

If you choose to monetize your app through any of these methods, make sure you incorporate that aspect of the business model when you undertake your beta testing.  Your testers should experience precisely what your customers will experience, and if they have any feedback concerning the placement or frequency of ads, the cost and features in your in-app purchases, or the usefulness of your “lite” version, you need to take those evaluations to heart.

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