As the greater app market swells, it can be hard for creators to decide whether or not they should monetize their product, and if so, to what extent.
In the five years since free apps were first released, the usage of “freemium” plans has grown exponentially, even becoming the norm amongst developers. Yet while these programs can succeed economically, challenges remain. Before deciding whether or not to charge for your app, you must weigh the general pros and cons while also assessing the general quality and nature of your service.
Releasing Your App for Free
Providing your app at no cost to the consumer demonstrates confidence in your product. Instead of receiving money up front, you gain the certainty that you can make a profit once users are hooked on your service and are willing to purchase upgrades.
According to Forbes, 76% of all revenue from the U.S. Apple App Store is derived from in-app purchases. In other parts of the world, the percentage can run even higher.
Since the general market is trending towards freemium plans, making your app available for free might seem unavoidable. Instead of spending money to promote your service initially, you can concentrate on developing the app to its fullest potential so that downloaders will stick around instead of sampling similar applications.
If your app is well developed enough to keep users engaged and to give them the impression that it’s a good investment, then you may still benefit from releasing it for free. People will be much more likely to spend money once they have used an app they like, and charging a subscription for a complete version of the product will yield much more profit than an initial set price.
Aside from in-app upgrades, one of the most common money-making features for freemium apps is the use of advertising. This is where app creators must tread the most carefully.
If your app is incapable of reaching high download numbers as well as high conversion rates (transforming free users into paid ones), then you must increase advertising in order to raise money. And while ads will provide income, they also have the potential of alienating the consumer and lessening your retention rate.
Charging for Your App
While a “freemium” plan does expose your product to the highest amount of users possible, it still presents the obstacle of turning these users into paying customers.
By charging as little as a dollar for an app you would otherwise give away for free, you can lower the price of even your most advanced version of the service, since these users in the higher tier will no longer be covering the overhead of the free users. By making all of these plans cheaper, a higher percentage of customers may opt for the more advanced version of the app.
Blue Cloud Solutions reminds that you should also consider whether you have a clear target audience. If you do, it’s more important to market to your potential customers than to worry about whoever else will download your service. Paid apps also inherently carry an air of legitimacy.
If they follow through with this impression, they will also generate more active user loyalty. This feeling is reinforced by the cleaner aesthetic that paid apps can afford, without all the distracting ads.
Especially if you’re marketing a business-focused app, it may be worth charging users a small amount, or at least trying a free trial period in the hopes that your service is useful enough to warrant continued use. Before deciding, you should research the competition--are there similar apps that offer comparable features? If so, how much do they cost?
Staying Flexible, Knowing Your Product
If you know all the ins and outs of your app, you’ll be better equipped to decide what business model is right for you. The main opinion of established entrepreneurs seems to be that the freemium route, while often the best way to gain exposure, can be overused.
But if you’ve created something that you think is better than the competition, especially if the competition costs something, then releasing your product for free is not a bad idea.
Then again, if you feel that your app is developed well enough to rack up paying customers, then charging a small download fee could work out for you, too. In the end, it seems most important to put the work in first, with AppMakr, make sure your app is tailored well, and then remain flexible upon its release. Generating a good product is the most important step.
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