Choosing the right platform for your app (IV): pricing model

After you’ve decided to develop a native app you must take a time to decide wich pricing model best suits to your app. We are going to analyze wich are the key factors to decide the model. Is your app download going to be free in the app markets or is the user going to pay for it? This is the key question and there’s not a magic answer. It’s all about your business model, there are plenty of models available for getting money out of your app: you can ask for a price to download the app (premium), you can give it for free, you can give the user a free version but they must pay for specific uses or extras (freemium), you can try to monetize your app with ads… Let’s take a look to each model:

Free

Over 90% of the apps in the market are for free, that means that you must be sure of your added value before you ask for money in the app markets. With the free model you’re likely to have more users but no incomes directly from the app…

This should be treated separately, but sometimes people just launch a free app and asks for donations. If your app solves an issue, users may give you a tip just to encourage you to continue with your work, just to say thank you or maybe because they want you to launch a new, better version.

Premium

Paid apps. Simplifying to the maximum, you can say that the only people that are used to pay for an app are the iPhone/iPad users. Android, Windows Phone and Blackberry users are not willing to pay for downloading an app, so if you want to charge for the download, your only option seems to be iOs with its App Store.  Sometimes developers launch a free version at the same time they launch the Premium version with added value, but you must be sure that what you offer is a great hook for users, otherwise you may never return your investment.

freemium vs premium

Freemium

If you want people to pay for your app, but you are open to give the user the chance to try it for free, then you should go with the Freemium model. If you only charge the user for extra content or features (that’s called In-App purchase), you’re giving the chance for them to see the benefits of your app, try it for free and if it satisfies their needs, then they’ll pay and spread the word about your great app. Nowadays it seems the best option to get money from your app because the revenue generated by freemium apps continues to grow (this data on the image on the right is only comparing January and June 2011. Freemium apps revenue is growing each month).

Advertising

This could be used in all of the above categories, but people who pay for an app, usually don’t want to be disturbed by ads while they’re browsing through the application. Ads are normally used for monetizing free apps, but mobile advertising is growing each day and you have some new formats as Rich Media and content ads that may increase significantly your click through rate and also your profit! There are plenty of ad platforms, make sure you choose the one that fits perfectly with your app content.

 

Related Posts

The application lifecycle

Choosing the right platform for your app (III): single or multiplatform

Choosing the right platform for your app (II): Native or web-app

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