How To: Decide on Pricing Models for your App

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So you have a new mobile application that you want to sell on the market. Congratulations! It’s a booming marketplace, you’re part of a very dynamic and often profitable environment. However, that does also mean there’s a lot of strong competition.

 How you position your product matters a lot and price is a big aspect of that. It decides who you’re competing against and what customers you’re looking for. In this article we go over the four most common app pricing models and tell you what they’re all about, hopefully helping you decide which one fits your product best.
 

1) Free (no spending for the user)

Free apps are often considered to be attention grabbers. Personally, I don’t think that’s true today, except when they’re really well known. Free apps are abundant, especially on Android – and a lot of them fall short on their promises. But, the model can make sense for a developer if the product 1) attracts a large audience and 2) is professionally made. When free apps fulfill these two criteria, they can be taken seriously and help put a developer’s name out there.

But what does free really mean here? The user doesn’t pay anything, there are no possible ways to spend money in the app. But that doesn’t mean you, as the developer, have to get nothing. Ads are how you make up for the lack of direct profit on download.
 

2) Freemium

Freemium apps are a model that you are definitely familiar with – one buys the product, pays nothing at the start, but then finds extra features that are “walled off”. To get them, you have to subscribe or pay for the pro version. Spotify and Dropbox both use that model. The most important question here is, does the premium part of the app offer enough to justify paying for it?
Spotify gives you offline mode, the ability to choose a certain song instead of the default shuffle and, most importantly, no ads. That’s a page you can borrow from if it makes sense for your product. Dropbox doesn’t really give you more functionality, but it gives you more of its product. Which is the space you have available. A freemium model only makes sense if you can do two things – offer enough for free and add sensible value for a price.
 

3) In-app purchases

The third model is similar to freemium in the way that, most of the time, you don’t pay straight away when you buy the product. Games do this a lot, for example Angry Birds. In it, you can buy more powerful resources that help you beat a level. Builder games also notoriously like to provide boosts for cash. But it’s not just games – Snapchat does it too by selling stickers.
So, unlike the freemium model, you’re not offering a whole new product or some huge features. You’re just nudging your customer along, making his time with the product better for a low cost. The trick is to have enough recurring payments so that it’s worth it.
 

4) Fixed cost

Last but not least, the age-old practice of just paying for something when you get it. It might not sound very sophisticated, but sometimes it still makes most sense. That might be the case you have a niche product that you know customers are going to need and like using. Why not give them the whole thing on purchase and get your money then and there? Paid applications need to have less obtrusive ads and higher quality if they want to sell well, so make sure to keep that in mind!

If you already decided on the pricing model, it’s time to market your app on the global market. Check out these 5 tips for successfully marketing your app internationally.

Comments, questions, feedback? Leave a comment below this article, we’ll be happy to answer!
 

Pic: ©Mohi Syed

Viktor Marinov

Viktor is the voice behind the freelancermap blog. Every week he comes up with helpful hints, checklists, and guides for freelancers and independent workers. If you would like to know how to find remote jobs online or how to niche yourself as a freelancer, don't miss his freelancer tips!

By Viktor Marinov

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