Pricing for Success: App Industry Trends and Best Practices

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Our presentation from VDC Conference, September 13 2011, Las Vegas.

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Pricing for Success: App Industry Trends and Best Practices

  1. Pricing for Success:App Industry Trends and Best PracticesHendrik Koekkoek, Analyst, Distimo
  2. Mobile App StoresGreat for Consumers, but There Are Many…
  3. We Know App Stores1. Distimo collects factual and timely market data, worldwide2. Dedicated to markets where app stores are leading distribution channel3. Independent and cross-store analysis, applying same metrics to every store
  4. Distimo Monitor Free App Store Monitoring1. Free cross-platform app store monitoring tool for developers2. Support for all major app stores3. Transactional data allows us to benchmark applications with the market
  5. Distimo Report Data Examples Worldwide Consumer iPad’s Road to 75k applications Activity iPhone
  6. MAJOR TRENDS IN APP PRICINGWHAT DOES THIS MEAN FOR YOU?
  7. 1. App Pricing
  8. Average Listing Prices Whole Store $5.26 $4.81* $4.17 $3.84 $3.30 $3.29 V CAST HAS HIGHEST AVERAGE LISTING PRICE AMONG MOBILE PHONES APP STORES * April 2011 data, others July 2011
  9. Average Listing Prices Whole Store vs. Most Popular Whole Store Most Popular +3% +15%* +16% -18% +118% +1% THE AVERAGE V CAST APP IS SLIGHTLY OVERPRICED BUT FINDING THE RIGHT PRICE FOR YOUR APP IS NOT EASY * April 2011 data, others July 2011
  10. Average Listing Prices Whole Store vs. Most Popular +160% Whole Store Most Popular +237% +283% +33% +330% No Data Medical Healthcare Medical Medical Lifestyle HEALTH RELATED APPLICATIONS TEND TO BE OVERPRICED ACROSS STORES, SO ARE ENTERTAINMENT APPLICATIONS July 2011 Data
  11. Average Listing Prices Per Category Most Popular Apps Store AVG $1.76 July 2011 Data
  12. Average Selling Price Most Popular Apps $3.94 $3.79 * $1.47 Weighted Average Price, * April 2011 data, others July 2011
  13. Average Selling Price Most Popular Apps $3.94 $3.79* $1.47Since July 2010: -21% No Data -27% INCREASING COMPETITION LOWERS PRICES Weighted Average Price, * April 2011 data, others July 2011
  14. Recap: App Pricing• AVERAGE LISTING PRICE AND AVERAGE SELLING PRICE OF APPS DECLINING: DON’T OVERPRICE YOUR APP• APPLICATION PRICES CAN DIFFER A LOT ACROSS CATEGORIES: KEEP IN MIND THE CATEGORY IN WHICH YOUR APP IS PUBLISHED
  15. 2. New Monetization Strategies Become Key Revenue Driver
  16. Proportion of Available Free vs. Paid Apps 81% 19% 76% 24% 66% 34% 60% 40% 54% 46% 38% 62% Paid Apps Free Apps MOST STORES HAVE A MAJORITY OF PAID APPS * April 2011 data, others July 2011
  17. Volume Growth Since July 2010 (iPhone) July 2011 data
  18. Volume Growth Since July 2010 (iPhone) INCREASE IN DOWNLOAD VOLUMES HIGHER FOR FREE APPS THAN FOR PAID APPS IN THE APPLE APP STORE FOR IPHONE July 2011 data
  19. Proportion of Free Volume vs. Paid Volume 8.7 11.8 13.7 100 100 100 IN V CAST APPS, FOR EVERY 100 DOWNLOADED FREE APPLICATIONS 11.8 PAID APPLICATIONS ARE DOWNLOADED ON AVERAGE. THIS IS HIGHER THAN THE IPHONE’S AVERAGE
  20. IPHONE OF ALL APPLICATIONS FEATURE IN-APP PURCHASESBased on United States – July 2011
  21. OF REVENUE COMES FROM APPS FEATURING IN-APP PURCHASESBased on 200 most grossing applications in United States – July 2011
  22. THAT’S UP FROM28% LAST YEAR!REVENUE FROM APPLICATIONS THAT FEATURE IN-APP PURCHASESBased on 200 most grossing applications in United States – July 2010 & July 2011
  23. IN-APP PURCHASESINTRODUCEDTO ANDROID MARKETIN MARCH 2011. 68% OF 25 MOST GROSSING APPLICATIONS USE IN-APP PURCHASES NOWBased on 25 most grossing applications in United States – August 2011
  24. Possibilities in V CAST NO IN-APPS YET, BUT: 44% OF REVENUE OF 200 MOST GROSSING APPLICATIONS GENERATED BY SUBSCRIPTIONS
  25. Recap: New Monetization Strategies• DOWNLOAD VOLUMES OF FREE APPLICATIONS MUCH HIGHER THAN DOWNLOAD VOLUMES OF PAID APPLICATIONS• IN-APP PURCHASES HAVE BECOME AN IMPORTANT MEANS OF INCOME IN COMPETING STORES• SUBSCRIPTIONS ALREADY A LARGE DRIVER OF INCOME IN V CAST APPS SEEK FOR OTHER WAYS OF MONETIZATION THAN A ONE OFF FEE EXPLORE THE POSSIBILITIES OF A SUBSCRIPTION MODEL OR IN-APP PURCHASES FOR YOUR APP
  26. 3. Channel Fragmentation: Going Beyond Mobile
  27. Download Volume Top 300 Free – United States 100 : 12.9 JANUARY 2011 Based on transactional data from Distimo Monitor top 300 free applications US – January 2011 & July 2011
  28. Download Volume Top 300 Free – United States 100 : 12.9 100 : 18.5 JANUARY 2011 JULY 2011 Based on transactional data from Distimo Monitor top 300 free applications US – January 2011 & July 2011
  29. Download Volume Top 300 Paid – United States 100 : 25.8 JANUARY 2011 Based on transactional data from Distimo Monitor top 300 paid applications US – January 2011 & July 2011
  30. Download Volume Top 300 Paid – United States 100 : 25.8 100 : 29.2 JANUARY 2011 JULY 2011 Based on transactional data from Distimo Monitor top 300 paid applications US – January 2011 & July 2011
  31. Revenue Top 300 Paid – United States 100 : 68.9 JANUARY 2011 Based on transactional data from Distimo Monitor top 300 paid applications US – January 2011 & July 2011
  32. Revenue Top 300 Paid – United States 100 : 68.9 100 : 78.1 JANUARY 2011 JULY 2011 Based on transactional data from Distimo Monitor top 300 paid applications US – January 2011 & July 2011
  33. Recap: Channel Fragmentation• COMPARING THE IPHONE TO THE IPAD, DOWNLOAD VOLUMES OF THE IPAD ARE CONVERGING TOWARDS THOSE OF THE IPHONE.• IN TERMS OF REVENUE, TOP IPAD APPLICATIONS GENERATE ALMOST FOUR FIFTH OF THE REVENUE OF TOP IPHONE APPLICATIONS OPTIMIZE YOUR APPS FOR TABLETS!
  34. Recap
  35. Recap• AVERAGE LISTING PRICE AND AVERAGE SELLING PRICE OF APPS DECLINING• APPLICATION PRICES CAN DIFFER A LOT ACROSS CATEGORIES• DOWNLOAD VOLUMES OF FREE APPLICATIONS MUCH HIGHER THAN DOWNLOAD VOLUMES OF PAID APPLICATIONS• IN-APP PURCHASES HAVE BECOME AN IMPORTANT MEANS OF INCOME IN COMPETING STORES• SUBSCRIPTIONS ALREADY A LARGE DRIVER OF INCOME IN V CAST APPS• COMPARING THE IPHONE TO THE IPAD, DOWNLOAD VOLUMES AND REVENUES OF THE IPAD ARE CONVERGING TOWARDS THOSE OF THE IPHONE
  36. What Does This Mean?
  37. What Does This Mean for You?DON’T OVERPRICE YOUR APPLOOK AT THE PRICES OF POPULAR APPS IN YOUR CATEGORYSEEK FOR OTHER WAYS OF MONETIZATION THAN A ONE OFF FEEEXPLORE THE POSSIBILITIES OF A SUBSCRIPTION MODEL OR IN-APP PURCHASESFOR YOUR APPOPTIMIZE YOUR APPS FOR TABLETS
  38. Analyze Your Performance.Look at the Neighbors.Don’t Sit Back.
  39. Analyze Your Performance.Look at the Neighbors.Don’t Sit Back.Go to monitor.distimo.com
  40. Distimo Monitor DISTIMO MONITOR BENCHMARKS HELPS YOU DETERMINING THE RIGHT PRICE FOR YOUR APPS MONITOR.DISTIMO.COM
  41. Hendrik Koekkoekhendrik@distimo.com Custom in-depth The free app store market cross-platform app reports for carriers store monitoring & manufacturers tool for developersFor more info, visit report.distimo.com For more info, visit monitor.distimo.com
  42. Thank you.

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