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What's your experience with selling free vs. paid apps in the mobile app stores (AppStore, Android Market, Windows Marketplace for Mobile)?

Is it better to publish free apps with advertisements or paid apps? If paid, then with trial or without? Is it worth discounting apps to 99 cents?

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4 Answers 4

Publish a free with ads and paid version of your app

I've got five different apps on the Android marketplace right now between what I've developed for my startup and what I've developed independently. I'm working on breaking into the Windows Phone 7 Marketplace where another person I work with already has two apps in there. The story is the same in both markets. Since advertisements require that you have network access while using the app which not everyone has many people are happy to pay for an app to avoid this requirement. Many people also just simply hate ads and would rather gladly pay for an app. And of course there are always people who would suffer through anything as long as they don't have to pay. Statistically, an average of 30% of our users across all the apps I brought up are using the paid version without ads.

So give the customer the freedom to choose. Offer both versions. After all, you make money either way.

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Hey, I'm curious how does your add revenue stack up against the paid version. i.e. 30% bought it for $1, and 70% generate $0.50 in add revenue the first year. –  Evan Mar 18 '11 at 14:52
    
@Evan I'm actually under an NDA to not get into the specifics of my startups pricing setup. But I will say of my personal pricing system that its far more profitable to have a user launch an app with ads at least once a day for half a year than it is to sell the app for anything less than $5. It really depends on what you develop. For example look at a pedometer app vs a game app. You would want ads on the pedometer or to sell it for a higher price since it would be used a lot year round but you would want to sell the game since it would probably cease regular use after a month or so. –  Rob S. Mar 19 '11 at 0:01
    
@Evan Theres also the possibility that someone may use an ad version for several months before buying the paid version giving you even more total revenue. –  Rob S. Mar 19 '11 at 0:06

There are 4 ways to make money with apps:

  1. Get someone to pay you to make an app for them. (For developers this is usually the most profitable.)
  2. Have an app which provides access to a paid service. (The app is just a means to an end. But you do need the service people will pay for.)
  3. Have an app that provides value, utility or entertainment that people will be prepared to pay for. (This may be linked to a service. Although not normally services that people have to pay for. - Though there are exceptions.) If doing this, it's recommended to provide a trial version that allows people to try the app wihtout first having to pay.

from http://windowsteamblog.com/windows_phone/b/wpdev/archive/2011/03/08/an-update-on-windows-phone-marketplace-new-tips-policies-and-regional-access-program.aspx:

Users like trials. Paid apps that include trial functionality are downloaded 70 times more than paid apps that don’t include trial functionality, expanding the number of potential customers to purchase the full paid version.

4 . Provide a free application which is subsidised by placing advertisements in it. It may be appropriate, or an option, to offer the ability to hide advertising if the users pays for the app.

I've heard anecdotal reports that people have made more money from ad subsidised apps in the WP7 marketplace than from paid ones but this is hard to prove.

There are possible combinations and variations on the above but it really depends on the app.

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I think for WP7 apps the Trial mode should be used, but I've heard complaints that Free apps are still downloaded far more than the trial apps since they receive their own section in the marketplace. I've heard of developers releasing 2 apps (paid with ads in trial and free with ads that mimics exactly the trial and provides a link to the paid). I hate the idea of cluttering up the Marketplace (and I haven't done this), but I also would like to make money off of my apps. Any thoughts on this "strategy"? –  theChrisKent Mar 18 '11 at 20:29
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@thechriskent distinguishing between free, trial and paid apps is still an unresolved issue. Having 2 apps is currently the best available solution is you want to maximize users/income. While concerns about cluttering up the marketplace are noble I think this should be more of Microsofts concern. Just make sure that you clearly distinguish between the 2 versions to prevent any user confusion over the 2 different versions. –  Matt Lacey Mar 21 '11 at 9:56

you will probably find this article interesting. I think they make some really good points, although if you're talking about a game I'm not sure this applies.

http://37signals.com/svn/posts/2808-how-makalu-interactive-created-the-international-iphone-hit-racesplitter

Don’t be afraid to price an app beyond $0.99

To determine our pricing we surveyed coaches, who said they’d pay $50 for such an app. Then we spoke to some parents to understand what would be the impulse buy threshold, and we came to believe that was around $25. We settled on $24.99, hoping the app would then be popular among coaches, parents and enthusiasts.

We will experiment with pricing in the future, but so far we’ve not had any complaints about the product’s price. We’ve been told by several customers that although they initially tried the cheaper alternatives, they ultimately settled on our app, and feel it represents a good value to them.

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I think it probably depends on the quality of the appliation. If something is free but gets alot of hits, then the Ads are worth it, as long as they aren't intrusive.

But something paid that gets moderate buys would probably do just as well, as opposed to something that is paid and fits a niche market (maybe only 100 or so buys) probably wouldn't get much revenue.

You also have to consider if that 'app' already exists, if it does your better of trying a free with ads version.

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