The document provides insights on app pricing strategies from Claire McGregor of Appbot. It emphasizes the importance of market validation, feedback, and prioritizing product value before monetization, while distinguishing between free, freemium, and paid models. Additionally, it discusses pricing benchmarks and strategies for SaaS and in-app purchases, highlighting the dominance of freemium apps in revenue generation.

1.
How
to
Price
Your
Mobile
App
Claire McGregor
Co-founder, Appbot.co

2. Pricing
is
hard.
REALLY
hard.

3. The
three
most
important
lessons
I’ve
learnt
about
pricing.

4. #1
Make
sure
there’s
a
market
BEFORE
you
“perfect”
your
pricing.

5. #2
AcLvely
seek
feedback
from
day
1.

6. #3
Focus
on
building
something
great
first,
then
moneLze.

7. That
is
the
quesLon
☺
To
free
or
not
to
free?

8. What
are
the
opLons?
Completely
free
Freemium
Paid
upfront
Paymium
FREE

9. Rules
of
thumb
Paid
and
Paymium
dominate
for:
• Business
• Produc-vity
• U-lity
Free
or
Freemium
dominate
for:
• Entertainment
• Lifestyle
• Games
• Content

10. Business
models
for
free
apps
Freemium
model
• In-­‐App
Purchases
• One-­‐off
or
• Recurring
(subscrip-ons)
Completely
Free,
needs
revenue
• Ads
• Directly
generate
revenue
and
• Act
as
conversion
lever
to
upgrade/move
to
paid
(freemium)
• Possibly
endangered
species!
Completely
free,
no
revenue
requirements
• Revenue
derived
elsewhere
• Maybe
app
is
not
core
product
• Goals
are
around
convenience
&
engagement
• Examples:
Banking
apps,
remote
control
apps

11. Pros
&
Cons
of
free
Pros
• Lowers
barrier
to
download
Cons
• Need
high
download
volume
to
make
significant
revenue
• Lose
free
as
a
promo-onal
lever
• Easy
to
give
too
much
away
• Greater
compe--on
• Expect
lower
ra-ngs
• Can
take
longer
to
recoup
development
costs

12. “92%
of
revenue
on
the
App
Store
is
from
freemium
apps,
yet
they
account
for
only
11%
of
the
apps
on
the
app
store.”
-­‐
Dan
Counsell,
Realmac
-­‐

13. For
apps
that
need
to
generate
$
The
free
Litmus
test

14. Is
your
app
inherently
viral?

15. Inherently
viral
apps
require
users
to
connect
with
others
to
be
valuable.
Examples:
Social
media
apps,
VOIP
apps,
mulLplayer
games.

16. They
aggressively
push
you
to
connect
with
others
in
their
onboarding…

17. …
in
any
way
possible

18. Because
the
app
has
no
value
if
you
use
it
alone.
These
apps
are
made
for
freemium,
but
are
relaLvely
rare.

19. Is
your
app
highly
shareable
and
in
high
demand?

20. Think
music
apps,
collaboraLve
apps…
Sharing
isn’t
necessary,
but
it
adds
value.
If
users
don’t
have
to
share
to
get
value,
high
demand
is
even
more
important
to
ensure
enough
scale
for
freemium.

21. Will
your
conversion
lever
be
encountered
by
many
users,
many
Lmes?

22. Think
call
credits,
virtual
gambling
chips
Only
2-­‐5%
of
your
users
will
ever
make
a
purchase.
You
need
both
volume
and
frequency
to
make
significant
revenue.

23. Not
sure?
Test
&
Measure
$$.

24. Top
10
Lps
for
awesome
IAPs

25. Goal:
IAP
users

26. …that
change
your
boaom
line
Chart
from
“How
I
Got
2.3
million
downloads
(without
spending
a
cent
on
marke>ng)”
By
Stuart
Hall

27. Not
this…

28. How
to
get
from
to

29. #1
Make
the
free
version
valuable
(enough).

30. #2
Use
feature
requests
for
ideas

31. #3
Diao
compeLtors
feature
requests
Solve
a
compe-tor’s
pain
point
and
you
have
a
chance
to
make
money
and
grab
some
market
share
J

32. #4
Leverage
most
loved
feature

33. #4
Leverage
most
loved
feature…
cont’d
The
fine
print:
• Make
sure
you
grandfather
old
users
• Be
careful
not
to
remove
the
value
of
the
free
version

34. #5
Prompt
IAPs
aher
a
“wow”
moment
Happy
users
are
much
more
likely
to
convert!

35. #6
Primarily
target
most
engaged
users

36. #7
Look
for
consumable
product
opportuniLes

37. #8
Offer
bundles

38. #9
Test
different
price
points
for
each
IAP
Op-mize
each
IAP
price
point
for
max
revenue.

39. #10
Timing
is
everything
• Avoid
interrup-ng
users
• Prompt
an
upgrade
AFTER
a
user
sees
value

40. Pricing
Apps
for
SaaS
Products

41. Two
key
decisions
Free
or
paid
download?
Offer
subscripLons
as
IAP?
$0.99
+

42. Consider
Free
download
if:
Access
on
mobile
adds
value
The
App
Store
could
be
useful
for
product
discovery

43. Should
I
offer
my
subscripLons
as
an
IAP?
Yes
if…
• App
is
core
product
• Increase
in
conversions
&
revenue
>
revenue
share
taken
by
app
store
• You
have
the
tech
to
support
it

44. How
much
do
I
charge?

45. Paid
download
benchmarks

46. Book
1%
Business
4%
Education
4%
Entertainment
5%
Food & Drink
1%
Games
45%
Health & Fitness
7%
Lifestyle
1%
Medical
1%
Music
2%
Navigation
1%
News
1%
Photo & Video
12%
Productivity
4%
Reference
3%
Social Networking
1%
Travel
1%
Utilities
9%
Weather
3%
Top 200 Paid Apps by Category (USA)

47. $0.99
36%
$1.99
18%
$2.99
18%
$3.99
11%
$4.99
10%
$5.99
1%
$6.99
2%
$7.99
1%
$9.99
2%
$15.99
1%
Download prices of Top 200 Paid Apps (USA)

48. $0.99
49%
$1.99
14%
$2.99
14%
$3.99
3%
$4.99
12%
$6.99
5%
$7.99
2%
$15.99
1%
Prices of Games in Top 200 Paid chart (USA)

49. $0.99
35%
$1.99
9%
$2.99
26%
$3.99
26%
$4.99
4%
Top Paid Photo & Video App
Prices (23 apps)
$0.99
41%
$1.99
35%
$2.99
12%
$3.99
6%
$4.99
6%
Top Paid Utility App Prices
(17 apps)
$0.99
7%
$1.99
31%
$2.99
31%
$3.99
23%
$4.99
8%
Top Paid Health & Fitness
App Prices (13 apps)

50. IAP
benchmarks

51. Business
0%
Education
2%
Entertainment
4%
Finance
0%
Games
74%
Health & Fitness
1%
Lifestyle
0%
Medical
1%
Music
6%
News
1%
Productivity
2%
Social Networking
8%
Sports
1%
Top Grossing Apps by category USA

52. Paid
2%
Free
98%
Top Grossing Apps Free vs Paid Download

53. $0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
IAP Prices in Top Grossing Apps (USA)

54. $4.99
16%
$9.99
13%
$0.99
11%
$19.99
9%$1.99
9%
$2.99
7%
$99.99
5%
$49.99
4%
$3.99
3%
$7.99
2%
$14.99
2%
$29.99
2%
$39.99
2%
$24.99
1%
$59.99
1%
$11.99
1%
$6.99
1%
$5.99
1%
$12.99
1%
$8.99
1%
$79.99
1%
$34.99
1%
$13.99
1% $16.99
1%
$74.99
0%
Other (32
price
points)
4%
IAP Prices in Top Grossing Apps (USA)

55. $0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Top Grossing Games IAP Prices

56. 4.99
18%
9.99
14%
0.99
13%
19.99
11%
1.99
10%
2.99
7%
99.99
6%
49.99
5%
3.99
3%
29.99
2%
7.99
2%
14.99
2%
6.99
1%
39.99
1%
24.99
1%
5.99
1%
8.99
1%
13.99
1% 34.99
1%
Other (26 price points)
4%
IAP Prices in Top Grossing Games Apps (USA)

57. $9.99
9%
$4.99
7%
$2.99
6%
$59.99
6%
$7.99
6%
$11.99
5%
$1.99
5%
$39.99
4%
$99.99
4%
$19.99
4%
$12.99
3%
$79.99
3%
$24.99
3%
$3.99
3%
$49.99
3%
$14.99
3%
$0.99
2%
$29.99
2%
$5.99
2%
$22.99
2%
$74.99
1%
$38.99
1%
$34.99
1%
$8.99
1%
$25.99
1%
$23.99
1%
$16.99
1%
Other
10% (14 price points)
IAP Prices in Top Grossing Non-Games Apps
(USA)

58. $0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
$200.00
Top Grossing Social Networking Apps IAP Prices

59. $0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Top Grossing Music Apps IAP Prices

60. IAP
summary
• Freemium
works
at
this
scale
• $4.99,
$9.99,
$0.99
or
$19.99
are
the
most
common
price
points
for
game
IAPs
• SaaS
models
very
common
in
Non-­‐games
• Keep
it
<$20
if
you’re
building
a
music
app

61.
Tweet
me,
maybe?
@clairesayshi
@AppbotX
Read
more:
blog.appbot.co