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How Not To Sell Your App: Paid vs Free Apps

paid-vs-free-appsWhen launching your app on the app stores, one question that always comes to mind, no matter what type of app you’ve created is: “Should my app be free or paid?”. Between paid, free, trial or freemium selling your app can get confusing, but for the moment, let’s concentrate on the two categories available: Free vs. Paid.

Before getting into the details let’s establish the fact that there’s a huge cultural difference between iPhone and Android users. iPhone users come preconditioned, paying for content dating back to the days when iPods roamed the earth. For that matter, iPad users are even more tolerant, with 80% of all iPad apps listed as paid apps.

paid-vs-free-apps

Source: SourceBits

Meanwhile, the Android market is less mature and more skeptical of paying for apps. Pingdom.com created a great graphic showing the difference between the iOS and Android marketplaces, and the difference between the two markets is staggering. The bottom line is that Android fans are less tolerant towards paying for apps. Knowing these facts are essential before going into a development cycle since it could change monetization priorities or plans. The more niche the app market is, the more likely charging for such an app should be. App Annie claims that 2014 marked a record year having 98% of Android app revenues coming from ‘Free’ titles.

So what should you consider when publishing your app up in the market? Assuming you don’t have big development costs to recoup, the difference between paid and free can be boiled down to the following points:

Free Apps

  • Competition: is much higher for free apps for a single fact – there are more free apps than paid ones
  • Value of leads: when an app is supposed to provide a physical service or product, it is vital to gather valuable users which are more likely to purchase. Thus, value of leads is significant. In general, users who download free apps tend to be of a lower lead quality.
  • Expectations: Compared to when you pay for an app, expectations regarding app functionality are generally a bit lower for free apps, so users may put up with less than perfection. That being said, having a buggy app will effect your retention rate regardless of it being free or paid.
  • Likeliness to download: Since free apps do not cost anything to download, users do not mind downloading them to try them out and then deciding to keep the app or to uninstall.
  • Engagement: Similar to quality of leads, ‘downloaders’ on free apps are not specifically engaged to the apps. The number of dormant/unused free apps are getting higher. Since store ranking takes into consideration engagement, publishers should be careful and aim to get engaged users.
  • Download Cycle: Can downloads generate more downloads? We have showed in our previous post that ASO depends partially on number of downloads. Which means that getting a download base will increase your position on the store and in turn give you a higher visibility for new users to notice your app.

Free-vs-Paid-Apps (1)

Paid Apps

  • Competition: Since stores have lower numbers of paid apps, publishers may worry less about their rivals.
  • Value of leads: Subscribed or paying clients are known to be more active in purchasing products and services. As a result, users are considered more qualified leads.
  • Expectations: Payment is becoming an issue these days, especially when most software available is open source and free. Users and the tech savvy new generation expect apps to have high value content and features when paying for them. Taking that into consideration, if your app will cost users something, be sure that you deliver on value, otherwise you may find yourself dealing with low ratings and reviews that will counteract any good ASO activities you’ve done.
  • Likeliness to download: Although stores offer a refund for apps within a limited time frame, users may still be hesitant to pay for an app when not completely convinced, leading them first to try free apps from your competitors.
  • Engagement: As you have seen above, value of leads and engagement may sometimes be directly proportional. In this case, users who download paid apps are usually more frequent users.
  • Download Cycle: As we said earlier, fewer number of apps found under the ‘paid’ category allow you to have a higher ranking by default. So how would you increase the number of downloads? Use funds gathered by paid users to invest in advertising!

Putting it all in table, the result would be something similar to the following:

paid-vs-free-apps-cheat-sheet

So which one is best for your app?

However, keep in mind that the best model for your business is the best model for your app. Meaning, if your business is focused on very selective clients and you offer a very high quality service or content, then why not make them pay. On the other hand, if you have an app complementary to your business (hotel apps), it may be useless to think of generating revenues from the app itself, since the objective of going mobile is to facilitate user experience.

Image collage with one of the photos by: Cascadeureka

 

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