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Paul LabergeDeveloper Evangelist
Frédéric HarperDeveloper Evangelist
Ah, the ultimate question for developers trying to maximize their profits on the Marketplace: “What should I charge for my app?” The question is simple. The answer is always far from simple. As a developer who spent intense and likely long hours making an idea come to life in the form of a Windows Phone app, honing it and tweaking it and then tweaking it once more, this decision is an agonizing one. Fear, uncertainty and doubt creep into your head… What if I overprice it? Even worse, what if I underprice it? How many apps will I have to sell/distribute to break even? Every single app situation is unique; there isn’t any single silver bullet that can solve your pricing questions. This post is meant to provide you with a set of tools to help you come to an answer to that incredibly important question.
$5.99 for that? Are they crazy? How many times have you found an app you wanted to purchase but balked at the price? Probably quite a few times. And here’s an even more interesting question: After balking at that price the developer is charging for that app you want, how often have you bought it anyway (even if you had to walk away first and then come back later to purchase it)? It’s a good question and says a lot about the psyche of the typical consumer with app shopping on the mind.
The most successful entrepreneurs selling apps and games on application Marketplaces (it really doesn’t matter which mobile platform we’re talking about here; Windows Phone, iOS, Android, Blackberry – it’s all the same for this context) have something in common. They know their market, their target customer and the purchasing behaviour of their customer. In other words, they intrinsically know the true value of their app to prospective purchasers.
So how do these successful app publishers know what price to charge their app? Well, frankly they do their homework. Think of it this way: if you were in the market to purchase a fast food franchise, I’m guessing you wouldn’t just hand over a suitcase full of cash to the franchisor and say “Here, now gimme my franchise!”. Of course you would research it first! Things like how much does the franchisor charge as a startup fee? What are the recurring franchisor fees? Are there minimum revenue targets required to keep the franchise? Is there an ideal (or at least good) location for my franchise? Is my location going to attract the clientele I am targeting? etc., etc., etc.
It’s essentially the same thing with pricing an app. Doing your homework (and not cheating or copying, mind you) goes a long way to driving the success of your app. For example:
The equation above is about as obvious as it gets. But your revenue goals may vary greatly from other publishers’ revenue goals. Are you looking to break even? Make a profit? Make a monster profit? Every decision comes at a price so be aware of the cost of your goals.
There are basically three revenue models in the Windows Phone Marketplace (at least, the way I see it).
Free is free. As in beer. Meaning you build the app, you publish the app and make it available to anyone and everyone with a Windows Phone for free with no real strings attached. In this model, price = 0, meaning your revenue is also 0. There are lots of reasons why you would want to build free apps, but I’ll leave it to you to think of some of them.
Freemium is free, with a catch. The catch could be implemented in a number of ways. The most obvious way is advertisement-supported. That means that you are giving away your app for free to anyone on the Windows Phone Marketplace who wants it, but you are generating your revenue from ads that exist on the app. There are tons of apps in the Marketplace that have adopted this model. The catch to you as a publisher, however, is that the revenue stream you get from this model will vary. The revenue you get from an app in this model depends not only on the number of downloads, but also how often the users will open the app. If users download the app and open it once, your revenue will be small. If your app is popular and often used, however, the app may actually far exceed the revenue you would get from a paid app. For more info on how freemium can work, there’s a really great blog post by the author of the Krashlander game that you might want to check out about how his app did.
Paid apps are exactly what you would expect. Users download your app and (eventually) pay for it and continue using it. If you price your app or game right, this model is a great one as you can almost forecast the revenue you get from your app in the Marketplace based on download trends and run rates. If you use the paid app model, however, please be aware of a few things:
As you can see, pricing your app correctly requires work on your end. Do your homework and it will likely pay off in spades for you. That said, you can still have a number of tricks up your sleeve to entice users to buy your app. I discuss some of them now:
Good luck! If you have other pricing strategies that you have found worked, feel free to comment!
This post was the third in a series of five posts on strategies for being successful on the Windows Phone Marketplace. The first post (publishing in the right geographies) is here. The second post (trial mode and the art of the upsell) is here. The fourth post (differentiation using Windows Phone-specific features like Live Tiles and Push Notifications) and fifth post (how to get promoted in the Windows Phone Marketplace) are upcoming on this blog.
Hi Interesting article. However my experience as an early developer on Windows Phone make me think that the current model is flawed. I think Microsoft was unwise to keep a free option at the very beginnning. After all on iOs nothing free or very little. Sadly WP7 users are now expecting Free apps. apps with ads doesn't work anymore. It used to be a good model for a few at the beginning but not anymore. And AdCenter is not available for every developers in the world. I conducted recently an interesting experiment. I published last year a small paid app at a price of $0.99 with an heavy marketing push. The app included also a Trial version.I got a decent but not great return. As a test I released a week ago the app for free for a period of two months. Yesterday my download stats have literally exploded, something like 4000% increase!
It clearly show that the current model doesn't work, users are expecting too much. i have great fun developing for WP7 and i don't regret it. But i would like to find a way to get paid for the time I spent building an app even at a reasonable price.
Your points are interesting, particularly given your personal experiences.
The interesting thing that we are finding that (in aggregate), developers that include a trial are actually getting 70 times the downloads and 7 times the number of trial-to-paid transitions compared to those that don't provide trials.
Your comment about iOS not providing trials is a fair one - it's true that they don't. One of the things you will notice in the App Store, however, is that many developers create a trial experience for their apps by publishing a separate, free version of the app that is functionality-crippled or time-bombed or whatever. So in essence, many of the publishers on the App Store are doing exactly what we offer on our Marketplace. I believe that our solution for trials is better, however on a number of fronts (I get into this in my previous blog post here: blogs.msdn.com/.../winning-on-the-marketplace-trial-mode-the-art-of-the-upsell.aspx). Another point: you are not required to have a trial for your app; that is completely your choice and lots of developers have decided not to provide a trial for their app.
With respect to ads and market availability for ads, you are correct that we do not currently support all markets for ads in our own native ad solution (this is changing, however and you can expect us to add more markets on a consistent basis). This fact shouldn't deter you from using ads in your apps if you feel this is a revenue model you want to follow, however, as we do support a variety of other ad networks as well. In my blog post above I reference the experiences of the publisher of Krashlander with respect to ads and how it benefitted them.
Finally, I think it's important to realize that we are still new to the market and we have a nascent but growing user base. With the second generation of Windows Phones coming to market we are seeing a LOT of interest in the platform and the user base will continue to grow. With growth comes opportunity for app developers and publishers, so you should keep that in mind.
I appreciate your enthusiasm and I hope my responses help give you a different slant on the topic. Definitely keep at it with Windows Phone!