We often hear that developers, while great at coding and thinking of cool apps, sometimes find it frustrating to come up with a good pricing structure for their app. When you’re working on a really cool product that you’re eager to take to market and get feedback on, the last thing you want to do is spend days coding the app to fit a pricing structure that may or may not even work. Here at BlackBerryCool, we’ve talked to a lot of developers about pricing methods they’ve tried, and we thought we’d put together some hints we have heard that seem to work.
1. Don’t look to iOS – $1 is hard to make a living on
Often times BlackBerry developers will look to Apple and competing apps on other platforms for an idea of how to price their app. If you’re comparing to iOS, your app may end up around $1 and if you’re looking at Android it will probably end up being free. Realize that while $0.99 may be a good starting point for a coin flipping app of some sort, or an easy theme, but if you’re building an app that you’re looking to make a business out of, start with something that will gross a decent amount of revenue. Also, BlackBerry still comes with higher barriers to entry which ties a premium to the app price. In the end adding a dollar to the price won’t hurt the customer’s pocket but it could be double your revenue.
2. Compete on two fronts: features and price
Before coming up with a good price and launching your app, you should be checking out the competition and seeing what other apps are out there. Make a spreadsheet and list out the various competitors, price, and feature sets. This should give you a good overview of how your app fits. Does your app fall behind others in terms of features? Consider pricing lower or adding a unique feature or two. Differentiating your app is an easy way to hone in on a subset of users that are looking for different use cases of an app and willing to pay more.
3. Long term support brings long term costs
If you’re going to be updating this app over a long period of time and it will require continuous support – go subscriptions. Recurring revenue is not only a good way to sustain the development of the app, but it’s a great way to build a business. As your app portfolio grows and you have several apps with recurring revenue, you can start to budget for overhead costs and potentially build a big enough budget to hire. Charging for updates is another way to support long term development, but getting users to update is hard enough. It’s easier if the billing is in the background and updates come free.
4. In-app advertising will give you headaches
We have spoken to several developers with popular apps that have said many of the ad services have been killed by acquisitions and it is very difficult to get the ad spaces filled. Often times what will happen is that your app will ping the ad server such as AdMob, and it won’t return an ad. The best way to handle this is to have your ad return an in-house ad for another app you’re selling. This is one way you can monetize your unfilled ad inventory but it requires a decent portfolio of apps.
A theory on why mobile ads aren’t doing as well as they used to is that when the large players acquired the smaller ad networks (eg. Apple acquired Quattro and Google acquired AdMob), these companies killed off the sales teams that were crucial in attracting partners to the ad platform. The big guys expected the inventory to fill itself with their pre-existing partners but you still need hustlers constantly attracting new ad buyers.
You may be able to squeeze more money out of the small inventory with some creative coding. The more intrusive you make the ads, the more likely you are to make money. The Jared Company has a free screencapture app called Screen Grabber that displays an ad and it isn’t all that obvious how to click away from it. The company may be making some decent money on that app but there’s a ton of screencapture apps on the market and it’s increasingly difficult to differentiate.
5. In-app payments are the future
It has been predicted here before on BlackBerryCool – eventually all apps will be free. More apps are moving to a free trial and in-app payments give another layer of depth to the free trial system. While all apps will eventually offer a minimal amount of free trial, those with in-app payments will be able to further monetize the app by charging for unlocking features or offering progression through a game at an advanced rate.
Take a look at the Top Grossing apps in Mobihand and their prices. Here are the Top 3:
1. Tether $49.99
2. BeBuzz $5.99
3. BerryWeather $9.99
These apps are priced in such a way that the developers realize the cost it takes to create an app and the value that the user derives from the product. Some might think that Tether is too costly given the alternate tethering solutions, but there are countless users that loved the simplicity and were willing to pay. While we’re not telling developers to charge an extreme amount, we’re saying that most developers need to be far more bullish on app value. Combining a more bullish price stance, a free trial, and the ability to unlock additional features at a price will help you design an app that you can build a business on.