There are apps whose sales figures seem to move at a tortoise speed, which is never good for developers. Developers need to see revenue coming from the app so they have enough financial resources to keep working on the app, so its next version can be hotter.
Revenue from apps can be improved significantly by reducing the app price. The discount goes a long way in increasing the app customer database and the more downloads, the higher the revenue. In return, the higher the downloads; the better the chart rankings of the app, thereby increasing visibility which in the same way adds on to revenue.
Apple App Store
Distimo did an analysis on iPhone and iPad apps price reduction and noted that a reduction in price of the apps does in actual fact increase revenue. I suppose it’s the same buying behaviors that we all possess. We are likely to buy more of what we want should it be on discount that is why concepts such as Black Friday seem to work really well.
Reducing the price could be in the form of only charging a user once – off fees instead of ongoing monthly payments. Or reduce the app fees to next to nothing, only have in –app purchases, etc., the list goes on. Revenue will definitely improve. The trick here is to then keep the momentum going so that the effects of the price reduction are not felt only for one or two days and then its gone, but for a very long time.
Google Play – Android App Store
Last year after Thanksgiving Google Play was among the retailers participating in Black Friday. Apps prices were highly reduced with some even seeing a 90% reduction in price. The price reduction brought with it high sales – high downloads volumes again proving that price reduction does work as a revenue-improvement technique/strategy.
The Question of Sustainability
Even though developers seem to see a spike in downloads after a price reduction, is price reduction a sustainable business model? Not, all the time. Users will buy the app the first time that the price goes down because it is a good bargain. But what happens when the price goes up in the future? Do users hold onto it or look for substitutes that are offered at a cheaper price? Do developers even get to enjoy the revenues from that initial spike, when on the other hand the support costs increase inline with the volume of downloads?
This all sounds a bit negative but it’s not meant to discourage developers from increasing revenue by reducing prices. There are developers who will make so much money within weeks or even days of price reduction and there are others who won’t be able to get much, but will only have their revenues improving at another stage in the future.
On the other end of the spectrum that are users that value more the app that they paid more for than an app that they got on discount. It’s that ‘luxury insanity’ that anything cheap is deemed to be of poor quality and not worth having, that developers also have to look out for.
Developers need to decide cleverly on reducing prices to improve revenues or keep prices and hope things will get better because there are merits to each strategy.