Thank you. I think it's great. I had some thoughts and some ideas for future research.
I like looking at quadrants to pick pricing models. One conclusion, I would have to challenge, though, is putting games in quadrant one, and concluding that paid app is the right model for them. Look at the 24 Top Grossing Apps on Android. https://play.google.com/store/apps/collection/topgrossing?start=0&num=24 One is a paid network utility. One is a health/fitness app with subscription model. But the other 22 are games using the freemium model. >From the looks of them, many are using the "video arcade token" model, where addicted people pay for gems or coins to pass a level. So some games have been successful in a freemium model. It's not easy to know without internal data if they have succeeded in creating long term engagement or if they have simply managed to extract more money from people in a shorter amount of time. I do agree with your conclusion that price should be between the median and the theoretical maximum for your type of product. I would simply state it as "choose the highest price you think you can get away with". I assume you are going to match the quality of the product to that price, of course. I would also challenge the idea that "(b) you will have to slash the price at some point to spur growth". I think I can agree with the idea if you state that "you *may* have to slash the price at some point to spur growth. I don't think it's necessarily a skill you have to master. Some state it as a) Choose the highest price you can b) so you can lower it later for a promotion or permanent price cut c) because it's bad to ever increase a price. I agree with a, but not b because you can also price high and stay high. I have done so. Many apps for the same market (in desperation to compete with me, I think), have cut their prices in half, and as best I can measure, it didn't pay off for them. And I completely disagree with c. I completely believe that you can increase a price as well as decrease one. In fact, I do want to experiment with that. I do want to know, for example, if there is any big psychological barrier between $9.99 and $10.99. The figures you cite suggest that Android apps gain less from having the example two week sale than IOS does. I would speculate that the difference is "If a price drops in the app forest, and no one know, does anyone care?" My perception is that iOS, in the app store itself highlights changes in price, plus a gazillion web sites track whether iOS apps change price or go free. That doesn't really happen on Android, so a price break in itself will not get you more traffic. I also see in those figures, a cautionary tale. On iPad, even though on average the discounters are making a 19% revenue increase, 80% of the apps who try the discounting are *losing* revenue out of it. So I see some people doing it right and winning big, and a lot more trying and failing. The need for and success of a price drop strategy may be highly correlated to a waterfall model of apps. In that model, an app has a static value proposition and is never updated after launch. In that case, I do expect the revenue to level out and then decline over time. That's a good time, apparently, to do price drops, and eventually make it free. By that time, you have your next big app ready and can drive traffic to it. In a more dynamic setting, an app that is constantly updated can give ever increasing value to the end user for the same price. You build goodwill with your customers that pays off in more in app purchases, subscriptions, and referrals to friends. There's nothing wrong with either model - if it pays off for you. I agree most strongly with your epilogue. I'm not ready to do a PHD thesis on pricing tactics. I think there is probably money on the table if I got all of the pricing tactics down. But I think there are more worthwhile things I can do, by increasing the conversion rate of my app, and refining the in app product offerings. The only way to know for sure is through an experiment you can't currently do. If you could set up the Google Play Store to randomly show a different price to half of the people viewing the listing at the exact same time. You could run that experiment and come up with the ideal price. Till then, we all just have to guess. Other thoughts: - I believe users are less sensitive to in app purchase price than to the price of an app. Partly due to an established relationship with the app where they see clear value. Partly due to the "Open Wallet" syndrome. Sometimes, a user will buy the app and right away buy $50 worth of in app products. At the same time, few apps are successful at $50 price point. I moved an in app purchase from 3.99 to 5.99 to 7.99 and no one cared. They wanted it or they didn't. - I believe users are less sensitive to price where there is a perceived need rather than a want. If you need a particular app for your job, you want the one that works for you, whether its the $2 one or the $5 one. Or maybe get them both just in case. Nathan -- You received this message because you are subscribed to the Google Groups "Android Discuss" group. To view this discussion on the web visit https://groups.google.com/d/msg/android-discuss/-/qvdo400ZreAJ. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/android-discuss?hl=en.
