Pricing mobile apps


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Slides from presentation at #MobDevCon where I talked about pricing strategies and ideas for mobile apps

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  • AgendaLook at background of industry and pricingLook at some options and how we can apply them
  • Built by 14 year old – knocked Angry Birds off top of charts
  • iSteam – 100000 in 3 months (3 devs)Ocarina - $1m in first yearEnigmo $5m in 15 months
  • KunalVermaGoogle example of success1.5 million downloadsEarning 3 times what could in a traditional IT job in India
  • 2 devs2 years work$2million+
  • There are no absolutesNot every app is the sameBut this shouldn’t stop usThis is about patterns and general guidelines
  • Vision Mobile: $500 per month = ~£325
  • Ave. cost $10kAve. income $500
  • The long tailDoesn’t work if you’re just a point in the tailWorks if you have lots of apps or you’re the store
  • Whether you’re selling apps, clicks or eyeballsIf a race to the bottom is this just about competing on price – you can do better than this
  • LinkedIn comments from developers discussing best monetization strategiesReally? Based on what?Even on a high end/expensive device? In all markets?
  • As opposed to apps that don’t want to cover costs or make a profit?
  • Given up on getting more users or producing more or a better product
  • Having a product (or idea) is not the same as having a viable business
  • Rather than what you want (or can) and then trying to work out how to monetize it later.Of course if you have funding to keep going while you amass a large user base and then work out how to monetize later go ahead. But you’ll need deep pockets and to be able to keep all those usersJust because you build it…Trying to monetize a small user base is very hard (especially if not highly focused) and you will likely be more profitable doing something else.But you have to build something you are knowledgeable and passionate about. So you care enough to make it great and keep going when it gets hard
  • This is what people pay for.Even if that problem is what to do with free time – solved by a great new game
  • Not as many people doing it – less competitionPeople more willing to pay more – potentially people pay big money for life changingsocial, weather and utility apps aren't where the real money is madefinance & business apps make money
  • A reasonable assumption but backed up with figuresbetter app quality results in more downloads and revenue (
  • crash reports & bug tracking > 3x revenueanalytics > 2.5 revenue
  • Is it a race to the bottom?
  • Dev/designPromotion/marketinginfrastructure
  • Time can also include number of times usedDepends on app lifespanTime restriction normally the worse as often short and don’t give enough time to get addicted
  • SupportInfrastructure(?)BackendPromotion/marketing/cost of acquisitionARPU/DLifetime Costs
  • A high end 3d game can probably charge more than a simple casual game from an indie developer
  • People don’t like it when the price goes down (if they’ve just paid more)Cheap initiallyThen higherThen come down after timeLots of fluctuations can be unsettling and is unnecessaryDifferent prices in different marketplaces (if platform has multiple marketplaces)
  • Maximizing revenue
  • Price elasticity of demand
  • Be easy to buy fromSeamless integration is key to being effective – else just don’t do it : break in flow causes people to stopHow about offering to buy an extra life when die and close to reaching a new levelOrExtra points when close to a top scoreHear be fear – of bill shock
  • IAP doesn’t just mean freemium but it’s one of the best ways to do freemium
  • A separate FREE app is bad – get all your users and reviews in one placeTruly free provides no real benefit to you orFree users can end up with an inferior experienceMore to keep in sync for developers
  • Engagement drives IAP for games:strategy trivia, family ( playing for longer leads to more from IAP more than 18x as much in some instances
  • Depending on what platform allowsConsider other payment providersOffer not just a 30/20%age cutSmall fee and smaller %age – may work out cheaper for you on larger amountse.g. or do it yourself or PayPal
  • Obviously good from your point of viewBut Make users LOVE you if don’t have to pay to use on each device. Especially if you can share/link details/progress across devicesAd supported, functionally limited trials are a different form of double charging that can frustrate users – a very short term view by devs : can give the impression to users that just want a quick return and not focusing on making the best products for the long term
  • Competition and device precedents can mean this is the best approachSoundHound: free [MS], $4.99[ovi], $5.99[a]. $6.99[i]But this can anger and confuse customers – is this discrimination? It may be seen as such? What about paid on one OS but ad supported on another (e.g. Angry Birds)
  • Why wouldn’t you?But make sure you feel appropriate on each platform : successful apps do thi
  • Culture of country may impact what people are willing to pay
  • Some platforms more than othersSome countries more than others
  • Leak it yourself To control qualityBut modify approprately
  • Typically higher prices on tabletGoogle I/O 2013a higher propensity to buy things on tablets vs. phones1.7x higher purchase rate on tablets
  • Typically this means:Free or very cheap at firstThen a higher pricePrice comes down over time
  • On Windows Phone: (marketplace stats from early 2012)70 times more downloads : 10% conversion rate : 7 times more sales
  • Time can also include number of times usedDepends on app lifespanTime restriction normally the worse as often short and don’t give enough time to get addicted
  • £2 a month isn’t really a big dealSmall amounts regularly are better than a bit once/occasionallyGet people in the habit of giving/spendingSmall amounts are easier to get
  • Provide ongoing valueIncentivize/rewards/motivate repeated use – extra benefits the more days use the app consecutivelyEncourage re-engagement – get details to contact them, could just be push notification
  • It’s harder to add laterBetter to build something that has retention/continuous engagement at it’s core
  • Call for detailsIf an option - can charge bigComplicated, longer, more expensive sales processThey’re paying for support – make sure you can provideCould be as much as 10 times the price
  • But least effective for generating revenue
  • Not about how people are treated
  • The premise of advertising funded businessAdvertising isn’t badIt’s worked well for many businesses for many years : e.g. newspapers, TV
  • Simple because catch allIn reality want targeting
  • Want person to notice the ad (and probably click on it)Without negatively impacting the experience the user actually wanted – to use the app and be entertained, informed or get something done
  • When a break in flow may be appropriateYou’re saying “hey you may want to do this instead” – that isn’t why they opened the app isn’t it?When user may want to break from what they’re doing : leaving anyway, at the end of a task
  • Harder to ignoreMore options to do somethingHigher CTRRich media is good here
  • can be blocked – affects some platforms more than othersCan be blocked at a proxy level too, esp. on WiFi networksCan also be blocked by disabling data connection while playing/usingCan take up valuable screen real estate – matters more on smaller devicesAnecdotal evidence that in some markets/cultures ad supported apps are seen in a negative light due to the data/bandwidth costs of serving all the ads
  • Higher eCPM != higher revenue – need highly target ads to get the higher rate and unlikely to eb able ot show as many of themDedvelopereconomics survey - those who obses about eCPM and fill rate ended up with the lowest overall return. There are more important things to worry about.
  • Slightly better returnDon’t waste the opportunity – cross promotionA fallacy? – can multiple networks be as integrated as well?
  • Be smart about how you target your ads.On web, one womens clothing company changed ads based on the weather of the place where viewer was from and saw 600% sales boost.
  • If you have a targeted audience then may be more appropriate and pay better than generic ads
  • Potentially higher return and more controlIf have a targeted audience.
  • Sell the advertising once+ sponsored contentMatch brand values and targeted demographics
  • Provide for and monetise all9 Tips for Indie Game Developers I Learned at GDC 2013 (David Silverman) back to piracy?
  • Average downloads – out of 2 million
  • 5 in a millionSo much harder than where’s wally
  • SEO marketplace/app store – web – youtube
  • Anon – various sources: not sure of original
  • Have a strategyKnow the marketplace rulesApple won’t let you incentivize installs
  • Not from app store promotion – leads to spikes in downloads at bestHigh in charts more likely to get thisNeed continual promotion to get continual high downloads (or go viral)
  • Banner ads in simplest form
  • success breeds successthink brand not appmonitise the brandangry birds the best example of thisclothes | toys | magazines | films | cartoons | every product you can think ofMore royalties from licensing
  • Battle Bears – from SkyVu entertainmentBuilt the game first but had the intention to create the cartoon right from the start and with that comes further merchandising options
  • "The Doodler has made cameo appearances in several other iPhone games, such as Parachute Panic, The Creeps, Finger Physics and Pocket God, just like the Pocket God Pygmies are playable in Doodle Jump." CROSS PROMOTION
  • Build on successOr stand on the shoulders of giants
  • Don’t put all your eggs
  • Pricing mobile apps

    1. 1. Matt Lacey @mrlacey
    2. 2. I want you to create awesome, financially sustainable, apps
    3. 3. Build something quickly Get loads of downloads Make millions
    4. 4. Build something Then a miracle happens Make millions
    5. 5. Build something Get few downloads disappointment
    6. 6. reality
    7. 7. no
    8. 8. 2/3rds of apps lose money
    9. 9. “the app poverty line”
    10. 10. high costs and low sales
    11. 11. making money
    12. 12. it„s business
    13. 13. not about coding
    14. 14. "I prefer free apps with adds [sic], cause they target all categories of people. But payed [sic] apps just target well off people"
    15. 15. "For larger business apps, or larger games, maybe it‟s better to go with paid options, in order to cover cost and make profit."
    16. 16. “I‟ll earn more if I can just get a higher ePCM”
    17. 17. “I‟ve got a great idea for an app but I don‟t think people will pay for it and I do want to do adverts”
    18. 18. start with the app
    19. 19. build what people will pay for
    20. 20. inform entertain provide a service
    21. 21. solve a problem
    22. 22. solve a hard problem
    23. 23. quality matters
    24. 24. crash reports, bug tracking & analytics
    25. 25. monetization
    26. 26. indirectdirect
    27. 27. charging
    28. 28. fixed costs
    29. 29. great app updates support
    30. 30. variable costs
    31. 31. fixed + variable + margin
    32. 32. dev + recurring + margin
    33. 33. how much?
    34. 34. Availability of substitutes Price of substitutes Necessity Who‟s paying Brand awareness and respect Relative cost to buyer Perceived production value Culture Device OS Perceived value Perceived lifespan Payment options Seasonality
    35. 35. experiment
    36. 36. IAP
    37. 37. freemium
    38. 38. freemium – 1 app or 2
    39. 39. IAP - easy to experiment
    40. 40. engagement & IAP x18
    41. 41. IAP – beyond the app store
    42. 42. paying more than once
    43. 43. vary price by platform
    44. 44. Yes, support multiple platforms
    45. 45. vary price by location
    46. 46. piracy
    47. 47. piracy – accept and embrace
    48. 48. phone v tablet 170%
    49. 49. vary price over time
    50. 50. trials
    51. 51. trials – help sales
    52. 52. time limited functionally limited other?
    53. 53. subscriptions
    54. 54. most effective revenue model
    55. 55. A lesson from charities
    56. 56. retention is key
    57. 57. build in retention and engagement from the start
    58. 58. enterprise pricing
    59. 59. indirect monetization
    60. 60. advertising
    61. 61. most popular revenue model
    62. 62. “If you‟re not paying, you‟re the product”
    63. 63. If you‟re users aren‟t willing to pay, perhaps someone will pay for your users
    64. 64. seen as simple
    65. 65. attention encourage clicks not impact experience
    66. 66. when to show
    67. 67. placement matters
    68. 68. effective integration is key
    69. 69. Full screen ads generally generate the more engagement and ultimately more revenue
    70. 70. Be prominent but at appropriate breaks and between content
    71. 71. banner ads
    72. 72. Acquisition Click Engagement Impression Install Lead Mille View
    73. 73. optimize for accidental clicking of ads get in the way have lots on screen at once assume it‟s a silver bullet
    74. 74. fallback networks
    75. 75. cross promotion
    76. 76. smart targeting
    77. 77. affiliates and referrals
    78. 78. sell your own
    79. 79. sponsorship
    80. 80. games
    81. 81. with time with skill with money
    82. 82. promotion
    83. 83. 5 downloads per month
    84. 84. ongoing
    85. 85. “good marketing will make a bad product fail faster”
    86. 86. acquisition
    87. 87. App store promotion
    88. 88. halo effect?
    89. 89. merchandising
    90. 90. cameos
    91. 91. obligatory clichéd image