5 Ways to decide the Right Pricing Strategy for your Mobile App
An ample amount of time and effort is spent on planning, design, and development of a mobile app, however, one thing that is often overlooked by appreneurs is deciding the right pricing strategy for their mobile app. There’s no denying that providing value to the end-users should be the primary goal behind any app development, but having an appropriate app pricing strategy is an equally important aspect. It plays a crucial role in determining the success of your mobile app.
Sure, there is some risk involved because if the app’s price is high, users may not install the application, and if it is kept low, app owners may not receive the expected ROI. Thus, if correct strategies aren’t applied, it may result in app failure. To help you tackle all the associated challenges, we have compiled a list of a few important strategies that would prove helpful in deciding your mobile app pricing. But before we begin, let’s understand what exactly is a mobile app pricing strategy.
In terms of a mobile app, the pricing strategy is how you generate money or revenue through the application. There are millions of apps available on the app store, and thousands are pushed every month, with each having a business model of its own.
Pricing a mobile app may not seem a difficult task to deal with but one should know that the types of pricing models have evolved and it’s important that you pick one that fits well with your app model.
If you are expecting a good ROI, make sure that you are clear about the pricing strategy even before the mobile app development starts. There are many factors involved that altogether form the right pricing strategy for your mobile app which will learn later in this article. Before that, let’s take a look at the types of mobile app pricing strategies.
1. Free
Be it any kind of business, consumers are always drawn towards the “free” tag and the same goes for mobile apps as well. Apple Store and Google Play Store are flooded with free apps. As the term suggests, such apps are free to download with advertisements being the primary source of income. These apps help attract users and grow the customer base.
Based on your application’s purpose, there are two kinds of free pricing strategies- one is a completely free strategy that is used when you already have a well-established product or service. The objective of such apps is not to make money right from the app but to redirect prospects to other revenue streams. To understand better, take examples of apps that offer features like discount coupons and promo codes, persuading users to take some action.
The other is the in-app advertising strategy where users are shown ads while they browse the app. The key here is to ensure that the ads served are relevant to the users.
In a nutshell, free apps help capture more downloads, boost user engagement, however, to make money through ads will require a huge user base.
2. Freemium
This is a revised version of the free pricing strategy in which the apps will be available to download for free, however, it will have only limited features or functionalities. To access complete app features, users are required to pay a subscription fee, usually termed “in-app purchases”. There are basically three freemium strategies to choose from-
Two-tier approach
It comprises apps that are free to download and use but have premium functionality that can only be unlocked after the user makes the payment. This type of app pricing strategy can be witnessed in gaming apps where users have to purchase in-app currencies or pay to upgrade to the next levels.
Free Trial
Under this mobile app pricing strategy, users can access all the app features but for a limited period only. The primary objective behind this is to encourage users to play around with the complete app, make them familiar with the features, and then ask them to pay to unlock the complete features once the free trial expires.
Ad-removal
The third freemium strategy is built-in advertisements. In this case, users have access to all the features and functionalities but ads are served. In order to make the app completely free from ads, users are asked to pay a small ad-removal fee.
3. Paid
Under this app pricing strategy, users have to pay to download the app. It also includes the “Pro” versions of the free apps, such as MX Player Pro. This pricing model is, however, less popular compared to the popularity of free and freemium apps.
In case you decide to choose a paid pricing model, ensure to back it up with an effective marketing strategy. To persuade users to purchase a paid model over a free equivalent will require some effort. Besides, your app description needs to be apt and compelling enough to make users understand the value they would be getting if they opt to pay. Users tend to have higher expectations with a paid app, make sure that you stand to their expectations else they would feel that they got robbed of their money.
4. Paidmium/Paymium
This pricing model is a blend of the paid and freemium model. In this case, users not only have to pay to download the app but also have to pay to avail or access the additional features and functionalities inside the app. Although not a widely used mobile app pricing strategy, it possesses the potential to make great revenue streams. This pricing model is best suited for music and social networking apps.
Choosing the Right Pricing Strategy for Mobile Apps
1. Analyzing User Behavior and Psychology
Human psychology plays a significant role in determining the price of your app. There are multiple alternatives available for an app in the app marketplace, so how to ensure that the users choose your app over others? For this, you must ensure that the overall value of the app is much greater than its price. Users should feel that your app is relatively better at the price it is being offered.
Today’s consumers are smart and well-informed. Before making any decisions, they compare an app with its other alternatives and assess their pros and cons. So while deciding your mobile app pricing strategy, do consider the other similar apps available in the market, define your value proposition, and ensure that you are providing a greater value than your competitors.
2. Competitor Analysis
Evaluating the competitive landscape and studying your user audience can help you uncover the opportunities where your competitors are lacking. Analyze their strategy on how they are targeting users. Apart from this, understand the market demand, get into your customers’ shoes and check your app from their perspective, it would help you set the right price. See what makes your product special and how you can leave your competitors behind by providing more value and features to your user base.
3. Analyzing Market Value
The right app pricing strategy surrounds what the market is willing to pay. To figure that out, you should experiment with different price levels for your app to check the market response.
Mobile apps have a recurring revenue stream. You need to push regular updates and offer new features in order to stay competitive. It is therefore important to comprehensively look over the recurring revenue model without worrying about the revenue per price point.
4. Build what the users want
An app should be developed with the aim to address user concerns and offer them what they want. It gets easier to decide on the app pricing when you know what your users desire and then design accordingly. Find out how you can enhance the value of your app- may be through an outstanding design and an elegant user journey.
To figure the app pricing model, you should have a fair idea of the mobile app development cost which includes the actual cost, the value offered by the app, and the money required to grow it in the market.
5. Affordability
Even if you have built an excellent app with some remarkable features, it won’t help much if users can’t afford it. You need to address affordability. Hence, apart from offering the desired functionality, the app should be affordable for the target users. If you want to draw more users towards your app, offer better features and value at a reasonable price. Besides, it will help you set up a loyal customer base. While deciding on the pricing strategy for your mobile app, do consider the sustainability of your business.
Undoubtedly, the right mobile app pricing strategy can do wonders for your mobile app as well as your overall business otherwise it can be a make or break factor if correct strategies aren’t implemented. To thrive in the market with ease and achieve the desired results, it is essential that you select the right pricing model as early as possible.
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Originally published at https://www.dewsolutions.in on January 5, 2021.
