The mobile app development industry is currently at its best pace. The increasing use of smartphones and ease of availability of the internet has led to an exponential rise in the application development industry. Most of us have our eyes glued to our phones almost all the time. A few years back, mobile phones were limited to calls and texts, but with time, the real purpose of using a mobile phone has undergone a lot of changes.
Today, we all are profoundly dependent on our smartphones for most of our tasks. From the time we wake up with the help of an alarm application to skimming the world of online news, from going to the office with the help of an on-demand taxi booking app to ordering food via a food delivery app, we rely on numerous mobile applications throughout the day and this is why there is such tremendous growth and demand for mobile app development solutions in the market. Applications today, have become a dominating force in the world and are influencing our lifestyle.
In this article, we will focus on how to choose the appropriate mobile app pricing strategy for your mobile app development solution as it is one of the most crucial and extremely arduous steps in the entire mobile app development cycle. For a large-scale enterprise, the concerns may be different, whereas the start-up app development process revolves around a slightly different concept.
Launching the mobile app is an important aspect of digitization, however, the pricing strategy should not be overlooked. Before we elaborate on the strategy in detail, let’s discuss a few simple questions.
What Is Pricing Strategy?
Pricing strategy or model refers to the different approaches you can use to monetize your mobile app. The pricing strategy helps you to get a better position on the app store and make money from the app. The pricing strategy also decides the success of the application. If you are unable to decide on the pricing strategy yourself, you may take the help of any mobile app development company as they have a team that can give you a clear picture of all the aspects and will let you know about all the pros and cons for each strategy.
Types of Mobile App Pricing Strategy and Statistics
Before you finalize any strategy for your mobile app, you should know about the various types of app monetizing strategies.
The mobile app pricing strategies are of four types:
We will be learning about each of these types in detail:
Who does not love to have anything for free? On google play store around 2,475,000 apps are free, and on iTunes 90 percent of the total apps available are free. A free application offers all of its services without charging a penny. If you are looking to attract lots of users, the free version would best.
The free applications come as a sweet surprise for users when all you hear these days is ‘there is nothing that comes for free’. Now, if the app is free, how do the owners earn? Well, the main source of income from the Free app is via advertisements. Companies offer free apps to increase customer retention and communication.
Let’s have a look at some of the advantages and disadvantages of this Free pricing model:
● A great model for marketing a business, establishing a brand image, and increasing customer retention. Users do not need to pay, so the apps have a higher number of downloads. Advertisements generate good money. Some prominent examples of free apps that are doing exemplary well are Facebook, Instagram, etc.
● The money that you can earn from these advertisements is directly proportional to the number of downloads. So, to earn well you need a good number of users. But generally, users are not so much pleased with apps that are stuffed with Ads.
The word Freemium has derived its meaning from the words ‘free’ and ‘premium’. This means that a Freemium app offers free as well as premium services. While downloading some of the apps from the app store you might have seen some apps that are free for the basic features but if you need to avail of advanced features you need to pay. These apps are based on the Freemium pricing model.
The freemium apps are free for users to download and install. It is one of the most reasonable pricing models. This model gets good engagement due to its free features. If users love its free features, they can opt for even better features via a paid model. This pricing model is highly used these days, though these apps are a bit tricky to think and develop. You need to be judicious while offering free and paid features and that’s why you need to hire app developers having immense experience in developing these types of apps.
Some prominent apps using this feature are PicsArt, Canva, and NYTimes. Make sure that the free features are lucrative enough to holds users. Also, ensure that the features offered in the premium version are helpful and valuable enough so that users are encouraged to keep using the premium version.
Here are some of the advantages and disadvantages of the Freemium model:
● A Freemium app offers several monetization options. You can earn well via advertisements as well as subscription models. The app is free to download and install, so has a good number of downloads.
● It is difficult to develop such kinds of apps. If free features are not satisfactory enough, it may irritate users and result in bad reviews. This will, in turn, result in fewer downloads, reducing customer retention.
Approximately 213,000 apps on the Google play store are paid. In 2018 paid applications brought owners almost $30 billion in terms of revenue. The Paid pricing model application charges users for downloading the apps. Users need to pay before downloading and using the app. Paid applications have rich-features. These apps usually have a single monetization approach, and that is via users’ download. Since users are not always ready to pay, you need to be top in every aspect to have a greater number of downloads.
The expectation of users is higher from paid apps. Paid apps have better customer loyalty. If you are a company looking for customer engagement and publicity, this model is not for you. Some examples of paid apps working well are HotSchedules on the Apple App Store, TouchRetouch, and Lara Croft Go, etc., on the Android Play Store.
Here are a few advantages and disadvantages to the Paid model:
● The application has top-notch features and the app owner can immediately get paid. The app ensures users’ loyalty. If people love the app, they will rate your app highly.
● You need to be effective in advertising your app and attracting users, otherwise, users may not be willing to pay and will end up not using the app. Also, the mobile app development cost for these apps can be high as business owners tend to have all the best features in their apps, and to develop these kinds of apps takes time thereby increasing the cost. Also, since users have higher expectations you need to be very prudent with the whole design and development of the app.
Paidmium, the single word for ‘paid’ and ‘freemium’, which suggests that the app offers a mixture of paid and freemium features. Since it has the features of a paid app so the users need to pay, to download and install the app. The app offers some customized features as well, but users need to pay extra to use such features. Paidmium or Paymium is not a very popular or widely accepted model.
The app needs to have features that are exceptionally well and useful and not many mobile app developers suggest this model. This pricing model is mostly used for music apps, etc. Some top apps using this model are Ultimate Guitar Tabs and Chords, and Minecraft. The app Ultimate Guitar Tabs and Chords has more than 10 million downloads on the Google Play Store with 4.3 ratings.
Here are a few advantages and disadvantages of opting for Paidmium apps:
● Paidmium apps have excellent features and ensure higher payments. It offers immediate payment as well as consecutive payments. You get loyal and committed users.
● The app is pricey, so has very few downloads. It is not recommended if you are wishing to get an app for publicity. The content should be the best in its field in order to attract uses and compel them to pay for the app. You need to meet users’ expectations.
Tips for Choosing the Best Mobile App Pricing Model
After having looked at the different pricing models, let us now elaborate on some tips to choose the best pricing strategy for your mobile app. All the successful apps in the above-mentioned examples are some exemplary results of selecting an apt pricing model.
However, the selection of a pricing model demands analytical thinking, so do not make a choice based on your gut feeling or popularity. You must be well versed with your target audience and the specific purpose of your app. The next important step is to analyze your competitors’ apps and understand to which extent you would have to go to accomplish your goals.
Some tips that could help you are:
1. Market Research
Before fixing the pricing strategy, conducting rigorous market research is very important. But the question is what to research about? Research your competitor’s app, know the features that they have provided, and compare it with your features. The content should match the pricing strategy. If you are launching the app, irrespective of the features you provide you should not be charging more than $1.99. You can charge more later, but wait till the time a good number of people start liking your app.
Research to know your target audience. Your target audience will help you in deciding the price strategy. If you are catering to exclusive targets who are okay with going for paid apps, you should consider Freemium, Paid, or Paidmium. If you are developing an app whose objective is to reach the masses, go for a Free app. You can also ask your mobile app development company for their suggestions since they are into this business, they can help you in eliminating the models based on your requirements and business goals.
2. Price Should Be Payable by Users
The price should be feasible for all customers. Market research will help you to find out the price range that users can easily afford to pay. The value of the product is of utmost importance. People usually analyze and compare a lot of things before spending money on them. Make sure your app tops all the aspects and is worth the amount users are paying for. If your app has a greater value, you just need good marketing skills to convince users to pay for it.
3. When Should You Go for Free
You should opt for the Free model if you are designing an app to increase customer retention or for publicity. This model fits best if you want to target a larger audience. If you want an app that redirects users to the next step, you should go for a Free model and get started with your development work. Also, if you are targeting to let the audience know about your product more on a larger scale, the free pricing model is for you.
4. When Should You Go For Paid
The Paid version is recommended if you offer highly useful features and already have a great fanbase in the market. The market knows your product and the quality of service. If you have a good reputation and you know that the users will need your product and will pay for it, you should go for the Paid version. The Paid version is not at all recommended if you are new to the market. You might have heard that the Paid version is usually for the gaming niche but that is not completely true. If you have designed medical apps, legal apps, or business apps, you can go for the paid version. A word of caution, do not put pricey features that users will not be able to pay for.
5. When Should You Opt for Paidmium
Since Paidmium is not much popular today, think thrice before opting for Paidmium apps. Paidmium price strategy is usually recommended by experts if you are unique in your service and have very few or almost negligible competitors. The app should be unique and rank at the topmost position in the features that it contains. Do not go for this model just for the sake of money, you might fail miserably!
6. When Should You Go for Freemium
If your app has amazing features but users do not know much about the app, go for the Freemium model. Let users know about your app and get connected to its various features. Though this model is highly competitive, it is the most reasonable as well. Make sure the features that you provide are beneficial to the users. You can remind users to opt for a subscription to use better features.
Freemium options are great for apps offering designing features, workout helps, and much more. This is the most used model currently. You just need to be sure that the additional features that you are offering are worth paying for by your customers and you must hire mobile app developers who are highly skilled and proficient in the work they do so that the outcome can attract users and convince them to pay money for the premium features.
How much Should I Charge My Customers for the App?
We suppose, by now, you would have selected the pricing model you want. So, what next? If you are opting for a Free model, you can jump to the conclusion. But if you are thinking of going for Freemium, Paid, or Paidmium, you need to decide on how much you should charge your customers. Let us help you.
Theoretically analyze and set aside the highest price till which you can go. No matter how many great features you are offering, if your app is new in the market and you do not have an already built reputation, you need to start with a lower price range, for example, between $0.99 to $1.99. After a few months of trials and discounts, you can charge more for your app. Do not forget to tell users beforehand.
Setting up a pricing strategy for a mobile app is difficult yet important. But, if you know how to deal with and assess the market, you can farewell. Here, we have provided all the information that you might need to select your pricing model. We have described different pricing models, their advantages and disadvantages, and the strategy to find out which model will suit you the best so that you can earn maximum on your app.