How to price your mobile app
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The document provides insights on app pricing strategies from Claire McGregor of Appbot. It emphasizes the importance of market validation, feedback, and prioritizing product value before monetization, while distinguishing between free, freemium, and paid models. Additionally, it discusses pricing benchmarks and strategies for SaaS and in-app purchases, highlighting the dominance of freemium apps in revenue generation.
How to price your mobile app
- 1. How to Price Your Mobile App Claire McGregor Co-founder, Appbot.co
- 2. Pricing is hard. REALLY hard.
- 3. The three most important lessons I’ve learnt about pricing.
- 4. #1 Make sure there’s a market BEFORE you “perfect” your pricing.
- 5. #2 AcLvely seek feedback from day 1.
- 6. #3 Focus on building something great first, then moneLze.
- 7. That is the quesLon ☺ To free or not to free?
- 8. What are the opLons? Completely free Freemium Paid upfront Paymium FREE
- 9. Rules of thumb Paid and Paymium dominate for: • Business • Produc-vity • U-lity Free or Freemium dominate for: • Entertainment • Lifestyle • Games • Content
- 10. Business models for free apps Freemium model • In-‐App Purchases • One-‐off or • Recurring (subscrip-ons) Completely Free, needs revenue • Ads • Directly generate revenue and • Act as conversion lever to upgrade/move to paid (freemium) • Possibly endangered species! Completely free, no revenue requirements • Revenue derived elsewhere • Maybe app is not core product • Goals are around convenience & engagement • Examples: Banking apps, remote control apps
- 11. Pros & Cons of free Pros • Lowers barrier to download Cons • Need high download volume to make significant revenue • Lose free as a promo-onal lever • Easy to give too much away • Greater compe--on • Expect lower ra-ngs • Can take longer to recoup development costs
- 12. “92% of revenue on the App Store is from freemium apps, yet they account for only 11% of the apps on the app store.” -‐ Dan Counsell, Realmac -‐
- 13. For apps that need to generate $ The free Litmus test
- 14. Is your app inherently viral?
- 15. Inherently viral apps require users to connect with others to be valuable. Examples: Social media apps, VOIP apps, mulLplayer games.
- 16. They aggressively push you to connect with others in their onboarding…
- 17. … in any way possible
- 18. Because the app has no value if you use it alone. These apps are made for freemium, but are relaLvely rare.
- 19. Is your app highly shareable and in high demand?
- 20. Think music apps, collaboraLve apps… Sharing isn’t necessary, but it adds value. If users don’t have to share to get value, high demand is even more important to ensure enough scale for freemium.
- 21. Will your conversion lever be encountered by many users, many Lmes?
- 22. Think call credits, virtual gambling chips Only 2-‐5% of your users will ever make a purchase. You need both volume and frequency to make significant revenue.
- 23. Not sure? Test & Measure $$.
- 24. Top 10 Lps for awesome IAPs
- 25. Goal: IAP users
- 26. …that change your boaom line Chart from “How I Got 2.3 million downloads (without spending a cent on marke>ng)” By Stuart Hall
- 27. Not this…
- 28. How to get from to
- 29. #1 Make the free version valuable (enough).
- 30. #2 Use feature requests for ideas
- 31. #3 Diao compeLtors feature requests Solve a compe-tor’s pain point and you have a chance to make money and grab some market share J
- 32. #4 Leverage most loved feature
- 33. #4 Leverage most loved feature… cont’d The fine print: • Make sure you grandfather old users • Be careful not to remove the value of the free version
- 34. #5 Prompt IAPs aher a “wow” moment Happy users are much more likely to convert!
- 35. #6 Primarily target most engaged users
- 36. #7 Look for consumable product opportuniLes
- 37. #8 Offer bundles
- 38. #9 Test different price points for each IAP Op-mize each IAP price point for max revenue.
- 39. #10 Timing is everything • Avoid interrup-ng users • Prompt an upgrade AFTER a user sees value
- 40. Pricing Apps for SaaS Products
- 41. Two key decisions Free or paid download? Offer subscripLons as IAP? $0.99 +
- 42. Consider Free download if: Access on mobile adds value The App Store could be useful for product discovery
- 43. Should I offer my subscripLons as an IAP? Yes if… • App is core product • Increase in conversions & revenue > revenue share taken by app store • You have the tech to support it
- 44. How much do I charge?
- 46. Book 1% Business 4% Education 4% Entertainment 5% Food & Drink 1% Games 45% Health & Fitness 7% Lifestyle 1% Medical 1% Music 2% Navigation 1% News 1% Photo & Video 12% Productivity 4% Reference 3% Social Networking 1% Travel 1% Utilities 9% Weather 3% Top 200 Paid Apps by Category (USA)
- 47. $0.99 36% $1.99 18% $2.99 18% $3.99 11% $4.99 10% $5.99 1% $6.99 2% $7.99 1% $9.99 2% $15.99 1% Download prices of Top 200 Paid Apps (USA)
- 48. $0.99 49% $1.99 14% $2.99 14% $3.99 3% $4.99 12% $6.99 5% $7.99 2% $15.99 1% Prices of Games in Top 200 Paid chart (USA)
- 49. $0.99 35% $1.99 9% $2.99 26% $3.99 26% $4.99 4% Top Paid Photo & Video App Prices (23 apps) $0.99 41% $1.99 35% $2.99 12% $3.99 6% $4.99 6% Top Paid Utility App Prices (17 apps) $0.99 7% $1.99 31% $2.99 31% $3.99 23% $4.99 8% Top Paid Health & Fitness App Prices (13 apps)
- 50. IAP benchmarks
- 51. Business 0% Education 2% Entertainment 4% Finance 0% Games 74% Health & Fitness 1% Lifestyle 0% Medical 1% Music 6% News 1% Productivity 2% Social Networking 8% Sports 1% Top Grossing Apps by category USA
- 52. Paid 2% Free 98% Top Grossing Apps Free vs Paid Download
- 53. $0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 IAP Prices in Top Grossing Apps (USA)
- 54. $4.99 16% $9.99 13% $0.99 11% $19.99 9%$1.99 9% $2.99 7% $99.99 5% $49.99 4% $3.99 3% $7.99 2% $14.99 2% $29.99 2% $39.99 2% $24.99 1% $59.99 1% $11.99 1% $6.99 1% $5.99 1% $12.99 1% $8.99 1% $79.99 1% $34.99 1% $13.99 1% $16.99 1% $74.99 0% Other (32 price points) 4% IAP Prices in Top Grossing Apps (USA)
- 56. 4.99 18% 9.99 14% 0.99 13% 19.99 11% 1.99 10% 2.99 7% 99.99 6% 49.99 5% 3.99 3% 29.99 2% 7.99 2% 14.99 2% 6.99 1% 39.99 1% 24.99 1% 5.99 1% 8.99 1% 13.99 1% 34.99 1% Other (26 price points) 4% IAP Prices in Top Grossing Games Apps (USA)
- 57. $9.99 9% $4.99 7% $2.99 6% $59.99 6% $7.99 6% $11.99 5% $1.99 5% $39.99 4% $99.99 4% $19.99 4% $12.99 3% $79.99 3% $24.99 3% $3.99 3% $49.99 3% $14.99 3% $0.99 2% $29.99 2% $5.99 2% $22.99 2% $74.99 1% $38.99 1% $34.99 1% $8.99 1% $25.99 1% $23.99 1% $16.99 1% Other 10% (14 price points) IAP Prices in Top Grossing Non-Games Apps (USA)
- 58. $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 $160.00 $180.00 $200.00 Top Grossing Social Networking Apps IAP Prices
- 59. $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 Top Grossing Music Apps IAP Prices
- 60. IAP summary • Freemium works at this scale • $4.99, $9.99, $0.99 or $19.99 are the most common price points for game IAPs • SaaS models very common in Non-‐games • Keep it <$20 if you’re building a music app
- 61. Tweet me, maybe? @clairesayshi @AppbotX Read more: blog.appbot.co