Choosing the Right Pricing Model for Your App

Choosing the right pricing model for an app is simple… pick anything other than freemium. Make your app paid and work out where the sweet spot is, keep increasing the price until you’ve pushed it too far then bring it back a little. If you’ve got an online component or are delivering new content regularly then make it subscription based. Pretty simple, right?

Now let’s dive a little bit deeper…

Okay, but Should I Go Freemium?

Should your app be freemium? Hell no. I have a hard time thinking of any indie app developers that have had a roaring success with this model. Unless you can sustain thousands of downloads per day and have a very enticing selection of in-app purchases, then freemium is not going to work for your app. I know a lot of indie Mac and iOS developers and the paid market is still where they are making a sustainable income. By all means play around with freemium, but just be careful if you do.

As of writing this I still believe paid is the best chance you have of making your app sustainable. I’m talking about indie apps here, not games. Games are a different beast altogether and something I have much less experience with.

If I Go Paid, What Should I Charge on iOS?

Always depends on the app, but here’s some generic advice. If it’s a useful niche app then I think it should be around $4.99. I’m not suggesting you launch at that price, you should probably be launching at something lower, like $1.99 — This is so you can gain some momentum in the charts, customers always love to get a good deal, and “launch pricing” always works well because of this.

After launch you can set your app at a higher price point, this will give you much more room to manoeuvre in the coming months. You can put your app on sale at various times of the year and people looking for a bargain are much more likely to buy something with a bigger discount. Going from $1.99 to 99¢ is not a big deal, but an app that was $4.99 going down to $1.99 or ¢99 is a much bigger deal. Putting your app on sale three or four times a year can give your bottom line a much needed boost.

What Should I Charge on the Mac?

Do not price your app at $1.99 or even $4.99 — Unlike iOS, the volume is just not there on the Mac. For an app to have long term success you need to charge more. If your aim is to build and run a sustainable indie business you’re just not going to do it with bargain basement apps priced at $1.99. You’re going to need to aim a lot higher.

The top grossing apps on the Mac tend to be in the productivity and creative categories (I’m ignoring games). If your app can help someone do their job better, faster or easier then you can easily ask upwards of $19.99 for it. Ideally you want to be in the $49.99 tier or higher.

Don’t forget, that as well as selling on the Mac App Store you can also sell direct. So far I’ve found building Mac apps to be more sustainable than building iOS apps. However iOS has the potential for a much bigger payout at launch, this is simply due to the sheer volume and reach of the App Store. There’s nothing stopping you from building for both platforms, in-fact it’s something you should seriously consider. For example: Realmac, Flexibits, Panic, Tapbots, and Omni. All successful and all build for both Mac and iOS.

Pricing Will Not Save Your App

You can tell yourself your app would be successful if you’d have picked the right pricing model, but honestly that’s just wishful thinking. There’s almost always another reason why an app hasn’t taken off like a rocket ship. It might be marketing. It might be that it’s lacking features and is poorly designed, or maybe it’s just not that useful.

We also tell ourselves that if we add a certain set of features the app will be a hit and gain all the users and press attention it deserves. This is a lie, and it’s dangerous to think like that. Adding features or improving the design to try and make an app more popular is an uphill battle, and one that you’re probably not going to win. If you’re app is in this situation, proceed with extreme caution.

Over the years I’ve noticed that some apps just seem to take off at launch and consistently do well. Other apps have a great launch then trail off over time, it’s then a continual fight to keep them doing well and making a respectable amount of income. Often the effort outweighs the return, and in those cases you just have to call it a day and move onto the next big thing.

A Pricing Experiment

I don’t know you, but I’m willing to bet that you’re not charging enough for your apps. Head over to iTunes Connect and bump the pricing of all your apps up to the next tier. Leave it for a week and see what happens, all good? Do it again. Congratulations, you should now be earning more revenue. This advice won’t work for everyone, but at the same time I do think it’ll work for a huge number of the apps out there. I know it’s worked for me in the past. If things don’t pan out you can always drop back to it’s original price, your app will then effectively be on sale and you’ll get a nice bump in revenue.

Final Thoughts

Pricing an app and coming up with a viable business model is hard, and while setting the correct price might not make or break your app it will allow you to maximise the amount of revenue it generates over time. If you’ve not yet experimented with pricing you should go ahead and do it now. You could be leaving money on the table. Clear for iOS is currently sitting at $4.99 and I’m currently considering increasing it further. If I do, I’ll let you know how the experiment pans out in the coming months.

Please remember that changing the pricing of an app that’s already live is not going to suddenly make it a success. As I’ve mentioned, if you’re apps not doing as well as you’d like, there’s probably much bigger issues at play.

Dan Counsell @dancounsell