You have certainly put in a lot of effort in building your app, and it is surely going to be loved by the user. The appearance is bold, and it is error free, but all these would be recognized only when it would be sold in the iTunes store, and for that, pricing is extremely crucial. The approach to pricing differs and high price is equally successful and low price depending on the presumption.
There are several pricing models allowed by apple, but it is necessary to choose the right one.
Revenue Sharing And Pricing
Apple has a profit sharing model which says 70% of the total revenue will be given to the owner, and 30% will be kept by apple as it would be delivering support regarding payment processing, downloading, connectivity and more. The payment would be released once you reach the $250 mark, and till then you have to bear the server cost and all other expenses. Your pricing for the app has to be finalized based on these rules. If your app is popular, it would be placed on the hardware. There would be users facing the problem and the cost would increase. This should be also kept in mind while pricing. For web app route, pricing may be a difficult job.
There are two possible ways of revenue generation
1. Earn from advertising and give away the app free.
2. Charge for your app according to the expense.
You have one more option where you can build a free app and an add-free app with improved features. In this model, some features are giving free, but users always are tempted to purchase the paid features. This policy is effective in case of games where one level is given free, to make the user attracted to the game, and then the user requires purchasing the app for other levels. The data reveals that this is effective as more than half of the users try the free version while 44% try before buying and 4% buys without trying.
There are apps which are priced a bit high, but purchased massively because of the marketing strategy. If the owner is confident about the trial then giving it out free, would be effective.
Audience Group Matters In Pricing
Massive pricing, $10 or more, may be overlooked by every kind of user, but if it is priced a bit higher than the average ($2.5), then people may try it, depending on the application of such app, in their life and the utility they provide. It is necessary to understand the customer group before pricing your app. There are groups that don’t bother about the price if the app provides utility. This said, it must be also noticed that low priced apps are also doing well.
What Are Users Willing To Pay?
It is crucial to imagine yourself as your customers. If you were at the place of customers, then what will you be willing to pay? This involves a lot of mathematics and economics. When the general users were asked how much they are willing to pay for an app or have already paid for a single app, some said they would never pay for an app while some paid max of $100 for an app. This large range is responsible for an average of $14.58, which means, if your app is sturdy enough and serves an excellent utility the user may be ready to pay high.
While saying this, it should also be mentioned that there are companies that depend on free apps that get revenue through advertising. There are also ad free subscriptions that can be purchased from the store. While this plan has been successful for some of the companies the real cause and effect scenario needs to be revealed till now. There are companies that are looking forward to long term business, and they want to provide their customer something, that adds value to their life. The model has been so far, effective for them.
The app store is not rigid about paid or free strategy. You are given the option to determine your budget and pricing. The users have their own budget and the weekly budget is quite low for most of the users. It is a competitive market, and you need to make an effort to get the share of their spending. The competition would increase in the coming future with new apps being released every day. You have to be very sure about the app and the pricing in order to get the best from the market.