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Mobile App Developers Should Keep Their Apps Free: 10 Reasons Why
by Chris Preimesberger
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Single Payments Do Not Produce Returning Revenue
The "one and done" app pricing model leaves little opportunity for sustained revenue. After you nab a consumer's initial 99 cents, you likely won't see another penny from them.
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If You Build It, They Will Pay (Later)
Successful—and profitable—developers create free-to-download apps that users can expand or improve with in-app purchases (IAPs). After downloading a free app, consumers will pay to unlock features, such as new Candy Crush levels, or to remove advertisements, among other options. According to a recent Distimo report, 76 percent of all Apple Store revenue in the U.S. is generated from IAPs.
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If Your App Isn't Free, Another One Will Be
Apple's App Store launched just under six years ago with roughly 500 apps. Today, the iPhone and iPad store features almost 1 million apps. With so many options available, consumers can find a free equivalent to nearly every mobile app you produce.
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An Initial Fee Creates a Barrier Between You and Your Customer
Most potential customers won't even look in the paid-app section of the App Store.
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Paid Apps Give Too Much Away
Charging a one-off price means app users get to enjoy free updates for the lifetime of the application without having to contribute anything more.
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Mobile Users Try Before They Buy
"Free to try, pay to buy" is a modification of the "free 30-day trial" model that AOL pioneered in the 1990s. Consumers can try the app for free and use it for as long as they'd like, but there is a catch for using the free version, such as in-app advertisements or missing premium features. If you truly believe your app provides a unique service or top-notch experience, offer a free trial and reap the financial benefits later.
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Revenue From the One-and-Done Price Model Is Hard to Gauge
Subscription-based models, on the other hand, allow you to consistently measure return on revenue. Netflix is a great example: Each month you pay $8.99 for Netflix shows on your smartphone—no more, no less. This model allows Netflix to accurately estimate future revenue.
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Value-Based Revenue Is Even Harder to Gauge
Placing an initial value on your app is difficult because there is a fine line between too cheap and too expensive. Set your price too low and you gain too much market without the adequate revenue to support the product. Set your price too high and you shut potential customers out.
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Mobile Users Also Buy as They Try
Similar to the "free-to-try, pay-to-buy" model, usage-based financing gives developers the opportunity to get their app in front of a large audience and then make money as users upgrade. Unlike the free trial model, which typically features a light and premium version, usage-based pricing allows developers to charge for different pieces of an app. A great example is Repix, a free photo editing app that allows users to buy extra filters, animation effects and other features.
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Free Apps Simply Reach More People
According to App Annie's recent list of the top grossing iPhone apps in the U.S., nine out of 100 apps exist as purely paid apps. Thus, 91 of the top 100 apps are free to download and generate revenue through other venues.
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