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    Winning on the Marketplace: Finding the pricing sweet spot

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    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.

    winning$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.

    franchiseSo 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:

    • Understand the market you are addressing.  What would you define as the typical customer for your app?  How much buying power does that typical customer have? How many of these typical customers are in a given market?
    • Who is my competition? Understanding the competition you will be facing (past, present and most importantly, the future – more on that below) is very important.  As you’ll see later, your price point doesn’t have to be similar or less than the competition, but you should have confidence in the price point you end up on compared to your competitors’ price.
    • Does my app have differentiating features compared to the competition? If you have implemented a feature that clearly differentiates the experience or value of your app compared to your competition, then you have an opportunity to charge more (but note this can be a dangerous line of thinking – be reasonable and self-critical about the value of these differentiated features).
    • What volume of downloads are you expecting? Depending on how many instances of your app you expect to sell, it may be a competitive advantage for you to use this knowledge to force the price of your app up or down.
    • How much did it cost you to build your app?  Sounds like a simple question but there are a lot of nuances to it.  The cost to build the app includes hardware and software, your time (and that of anyone you recruit to help you), real estate and office expenses and other miscellaneous expenses (such as taking out an investor to lunch, etc.) among a myriad of other expenses.
    • What are the carrying costs for your app?  Just because you published your app doesn’t mean your actually done.  The best apps don’t rest on their laurels.  Bug fixes, feature updates and general customer service (like any software business out there) are part of the bargain.  You need to spend some time here to determine realistically how much the app is going to cost to maintain and factor that into your pricing decision as well.

    rpq

     

    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.

    Free, Freemium and Paid

    marketplace-screen-confirm-purchaseThere 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:

    • Include a trial (more on trials in your app here).  A great feature of the Windows Phone app platform is that it provides a great facility for allowing you to put trials on your paid apps easily.  This will allow you to showcase your app without risk to the user, which has shown so far to produce seven times the revenue (on average) that you will gain for your app compared to an app with no trial.
    • Use the Freemium model in your trial.  There is nothing stopping you from adding advertisements into your trial mode.  In fact, I strongly encourage it.  That way, you still get revenue even from your trial app.  Who doesn’t like free money?
    • Spend time figuring out the right price .  As discussed above, there is an art and science to pricing your app.  Make sure you research your potential user base and geographies to determine appropriate price ranges.  Be careful not to overprice or underprice your app as you will be leaving money on the table if you do.

    Parting Shots:  Tips on Pricing your App Right

    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:

    • Do not underprice your app.  If you underprice your app, you leave money on the table for sure, but you also make it very difficult to hike the price of your app later.
    • Experiment with different price points in similar geographies.  If you are rolling out your app in a controlled way (i.e.:  not publishing in every market right off the bat), then you can test the waters for your app’s pricing in targeted geographies that are similar to see what the purchasing behaviour ends up being.  That way you can make corrections as you enter new markets.
    • Start at the upper range of pricing.  It’s ok to be optimistic in your pricing as long as you’re realistic.  Understand the value of your app and after you do your research, follow your intuition and price it out even if you feel it might be a little high at first.  As an opposite rule to the first point above, it’s a lot easier to adjust your price downward.
    • Use app sales to your advantage.  Offer your app at a discount for limited times.  This will allow you to generate interest for your app and create buzz for it.  If someone sees your app is on sale for a limited time, that will make him/her think of buying it.  During the sale you’ll get less revenue per purchase but you may make up the difference and then some in volume.

    Good luck!  If you have other pricing strategies that you have found worked, feel free to comment!

    This post was the second 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.

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    Tips and Tricks from students: Windows Phone Game “Distortion”

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    distortionTeamSee what five students at Carleton university learned developing their first Windows Phone game and apply what they learned to your next game.

    Check out more tips from fellow students here

    Could you briefly describe your application/game?
    Our game is a 3D, side-scrolling, platform game developed for the Windows Phone. Each level of the game is comprised of doors that when entered, lead to another door in the level, with the objective being to find the path to the exit door. As the levels progress, the game gets more challenging and obstacles are introduced such as locked doors, enemies and ‘death’ doors. 


    Did you use XNA, Silverlight or both?
    We used both XNA and Silverlight to develop our game. We chose XNA because it was a programming language we were familiar with. We developed the gameplay in XNA and used Silverlight to incorporate menus and user interfaces.


    What was your banging your head against a wall moment?
    There were a few of them! The biggest one was that our game severely lagged when we ran it on a Windows Phone. Our code was optimized and our poly counts were extremely low, so we had a really hard time trying to solve this issue. We were trying to figure it out for weeks.


    Did you ever solve that issue?
    Some other groups in our class were having similar problems so our professor, Ali Arya, looked into the problem. He figured out that if you disable some of the lighting effects it greatly improves the performance. Of course, we lost some of the visual quality of our game, but having a playable game was much more important.


    If you had to build this same app again from scratch, what would you do differently?

    I think if we were to build this app again from scratch, we would be more careful to test every aspect of our game before starting the next task. We rigged our model right away without testing it and ran into issues with the normals. If we had tested it first, we would have saved ourselves the time of rigging the model twice. We also didn’t have enough time to implement background music and sound effects, so we would make sure to implement those if we had to build this app again from scratch.

    Any nice suprises?
    Yes! Incorporating touch and gesture detection was much easier than expected. There were a lot of helpful manuals and documentation online and when we made the switch from keyboard events on the computer to gesture events on the phone, it worked on our first try!


    Did you leverage the touch screen?
    We made use of a few of the touch screen gestures. ‘Horizontal drag’ was used to get the character to move left and right, ‘flick’ was used to make the character jump, and ‘tap’ was used to get the character to go through a door.


    Did you have a favourite feature?
    We particularly liked the application bar. We kept it visible throughout our game with a ‘home’ button that took the user back to the main menu of the game. It provided an easy way to incorporate an in-game menu and it helped our game to fit the style of other Windows Phone applications.


    What is one thing you think you did really well in this application?
    We are really proud of how our game turned out. In our initial design of the game, we only planned to create six levels but we ended up making 15. We have really nice 2D and 3D graphics for each of the 5 worlds and our game is unique, entertaining, and addictive. The game is also extremely responsive to touch gestures, making it really easy and fun to play.


    Are you publishing your application/game?
    Not at the moment. There are still some finishing touches we want to incorporate into the game before we put it in the marketplace. We are hoping to have it published within the next few months though.


    Where can I learn more about your app/game?
    At our game website.

    Who developed this application?
    Our team consists of five members working closely together to realize our vision.
    Yasmine Taha - Yasmine was the project manager as well as the Level Designer for the game to keep the team on track and come up with new levels which get progressively more challenging.
    Brittany Pinder - Brittany was the lead programmer and brought the game to life.
    Ayah Jardaneh - Ayah was responsible for all the 3D modelling and 2D graphics, to create unique concepts for each of the levels.
    Kyla Hidalgo -  Designed and the developed the user interface for the game  as well as the game assets
    Lindsay Coderre - Lindsay focused on rigging and animation to bring life to Kyla and her adversaries.

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    Fail or Succeed on your first Windows Phone app

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    There isn’t time to learn everything yourself, so learn what worked and what didn’t for other students. Check out some interesting lessons learned both good and bad from other students in these blog posts where students talk about what they learned building for Windows Phone.

    Windows Phone Games

    Windows Phone Apps

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    CUSEC rocked

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    Last weekend, Microsoft participated in CUSEC, where we talked to students about jobs at Microsoft, Imagine Cup, and developing for Windows Phone. Oscar Guerrero shares his thoughts on the event and some of the resources that were of interest to the students who attended.

    As the recruiters carried back an encyclopaedia's worth of resumes, and our team compared notes on the great conversations we had about developing with Microsoft platforms, we couldn’t help but realize, CUSEC was a great event. Our thanks to the organizers for letting us participate. More importantly, thank you to the students who stopped by our booth to find out more about Imagine Cup and the Developer Movement. We were amazed by how passionate the students are, the brilliant work shown at DemoCamp, and the varied, interesting conversations we had.

    Special thanks to those who tried and eventually succeeded at beating my personal record in Kinect Fruit Ninja!

    We hope you left with a better picture of how much fun it is to work at Microsoft, how good the windows phone platform actually is, and how to get free stuff from us like Xbox, Kinect and Windows Phones. They are only a phone app away!

    Here are the links we mentioned during our talks and tutorial:

    To keep up with what’s happening for Students in Canada:

    For more information and to register for Imagine Cup

    For tools and information about developing for windows phone

    Hope they are of use to you and we expect to see all of your phone apps soon on the Marketplace!

    For those who are thinking of attending next year. It is definitely worth it.

    Hopefully we will see you at CUSEC 2013!

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    Winning on the Marketplace: Trial mode–the art of the upsell

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    Part 2 of this 5-part blog post series on success strategies in the Windows Phone Marketplace deals with a fairly unique component to the Windows Phone platform called Trial Mode.  If you make use of trial mode in your paid apps and games (and you really, really should if you plan on putting a price on your app/game), then you are making it much more likely that users will download your app and in response to that, make the possibility of them paying for your app much higher as well.

    If your aim is to publish a Windows Phone app or game and charge money for it in the Windows Phone Marketplace, then you really should get to know a nice feature of the platform called Trial Mode.  Trial Mode allows you to publish your app that you charge users to make use of, but gives them a free trial mode of the app so that they can download it and make use of it to determine whether or not they want to purchase it.  And the beautiful thing about Trial Mode is that it means you don’t have to create a second, stripped-down version of your paid app that you have to manage separately from your paid app – both your trial app and paid app are one and the same, with the trial determining how your app will behave.

    While it may seem counter-intuitive to provide a free version of your paid app, consider these statistics that the Windows Phone Marketplace team has published describing the opportunity using trial mode in your apps represents:

    trialmodestats

    Basically, what this means is that if you implement trial mode in your paid app/game, you will get an average of 70 times the downloads you would have gotten without trial mode and 10% of those trial mode downloaders will actually buy your app/game.  That works out to 7 times the number of paid apps you will have earned than if you hadn’t used trial mode at all.

    So what defines a trial, anyway?

    What do you want it to be?  Seriously, that is the answer – we don’t limit the definition of “trial” to something we say it is.  Basically, we offer an API to query the Marketplace to determine if the user of your app has paid for it or not and you decide the behaviour of your app if the user has not paid for it.  In other words, the trial for your app is whatever you want it to be, including but not limited to scenarios like:

    • Limited functionality for your app if the user is in trial mode for your app
    • Ad-supported (i.e.:  advertisements show up at the bottom of your app) if the app is in trial mode
    • App may be used only x number of times if the app is in trial mode
    • App is time-bombed to not work after y number of days after the first use
    • App only allows z number of transactions in trial mode
    • App makes use of a service you implemented on the server-side only n number of times per day
    • etc.

    OK, so how do you use trial mode?

    There are two scenarios that are covered really well in the MSDN knowledgebase.  The first shows details on how to implement Trial Mode in a Silverlight app.  The second shows how to implement Trial Mode in an XNA-based game.

    If all you want to see is code, I have implemented trial mode in the following Silverlight sample here (a Visual Studio project in a zip file).

    How do you use trial mode effectively?

    As you saw from the code examples above, trial mode is extremely versatile.  Ultimately, it’s your choice as to how you implement a trial in your app or game.  That said, there are a few tips that can make your trial more effective, both for your end goals of having the user buy your app in the end as well as maximize the trial experience for your app’s users so they see the value of the work you have published.  Some of the things we have found are:

    • Don’t give it away:  Put serious thought into what you want to put in your trial.  Be diligent and understand the levers that will entice your user to want to go beyond the trial and pay for your app.
    • Make the trial experience compelling: Just like the advice to not give your app away, don’t limit the functionality or experience of your app so severely that the user can’t get a good understanding of the value the app holds.  Leave them wanting more; don’t leave them frustrated.
    • Use ads in your trial mode: The intent of implementing a trial in your app is to show the user that there is value in paying for your app, because one of the ultimate goals with your app is revenue (otherwise, why have a trial in your app?).  As a result, you should seriously consider monetizing your trial in a non-impactful way to your user through advertisements.  Hey, that way you get paid either way!

    Remember, if your app is a paid app, you want to add a trial.  Given that trials are common in the Windows Phone Marketplace, if you have a paid app with no trial, I can tell you that you are leaving a lot of money on the table as not many users will take the chance on your app.  Just some food for thought.

    This post was the second 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 third post (pricing strategies), 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.

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