Bring Your Wallet and a Good Attitude – Pricing Out Mobile App

February 09, 2020

One very key aspect of developing a mobile app is also one of the 4 fundamental P’s of Marketing – Pricing! Once you’ve developed an app, how do you price it so that it becomes a rage among your target audience? What kind of pricing should you take – skimming, penetration, cost plus or mark-up? Confused? Well, it is a tough choice and the marketing jargons don’t make life any easier. Fret not, we’re here to simplify the concept of Mobile App pricing for you, so that YOU can then make the right choice for your app.

This method is called going “Freemium” This really is as simple as it sounds – giving the user a taste of the app by providing them with a free lite version with the option to upgrade to a premium version with enhanced functionalities.

Let’s start with the basics. The first dilemma is to figure out how much to charge for an app AFTER considering the cost of developing the app and promoting it and then comparing that cost to how much the average consumer is willing to pay for the app.

The average selling price of apps in today’s market is on a big-time decline, mainly because of the increased competition which gives the consumer more options that are cheaper or even free in some cases. Nowadays you can either make your customer download the app for free and then give them the option of a premium upgrade, rather than charging them to download. Fair enough.

This method is called going “Freemium” This really is as simple as it sounds – giving the user a taste of the app by providing them with a free lite version with the option to upgrade to a premium version with enhanced functionalities. This strategy works on the idea that the user will love the application so much that they don’t mind paying money to continue using it. This works well for gaming apps that start at a basic level and only allow the users to take it to the next level after they upgrade to the premium version. It also works well for music streaming apps such as Spotify that allow offline downloads, ad-free streaming etc. among the added benefits of upgrading to the premium versions.

IAPs – In App Purchases are another very popular way of pricing apps that go well with Freemium. This model has been pretty successful especially in the last 2-3 years when the demand for music, video and dating apps has hit the roof. What you basically offer the consumer here is a virtual currency in the game or extra added features that he can pay for and use in his free app. For example, if you have a gaming app that’s free, you can offer extra guns or unlock special locations at a particular price.

Studies have shown that paid apps with the IAP option had a considerable increase in revenue over the last two years.

This also works very well for dating apps, with Tinder being the perfect example with functionalities like ‘Tinder Plus’ and ‘Super Likes’ that give people a higher chance of matching with someone through these paid services.

In app advertising is a concept that isn’t alien to any app developer, and it’s definitely an effective way of making revenue, but you need to make sure that it’s the correct model for your business. The good thing about advertising is that from one user, you’ll only get paid once for an app download but you can continue making revenue off In-app advertising – depending on how you use it.

There’s a whole range of opportunities right from small to big banners, pop ups and many others but you need to balance out your ad portfolio so that the user experience isn’t negatively affected and the app doesn’t suffer, but you continue to make money!

The last route that you could take is very basic but has definitely worked for its share of app developers. This is the basic paid app where you charge your customer a fee straight up at the time of download, and offer them a few services in return.

Netflix is a great example of this, although the app is free, the services are paid for online. Another combination that the app developer can do is either release a paid version with no in-app purchases, or a paid version that isn’t too expensive but also has the option of In-app purchases to enhance the user experience.

Still unsure of how to price your app? We’ll guide you along! For all expert help in mobile app development and promotion, please feel free to reach out to us.

To conclude, your app should be priced keeping in mind your goals, your cost of development and promotions and the amount you think your consumer will be willing to pay to utilize the service you have to offer. If it’s a perfect fit with the right balance, you’ll do really well.


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