Free or paid?

by Giovanni Foschini on 09/18/2012

When developing an app, we also have to decide which business model we want to use when bringing it to market. In this regard, I think it’s important to start from these two facts:

  • free apps are much more likely to be installed than those that cost even just 79 cents.
  • 9 applications in 10 are free; so along with our app there will be others that are similar and probably free.

So how can we make our applications free without losing money?

Some suggest making apps pay directly through advertising rather than by users. It’s a shame though that in reality this model only works if our app will be used by at least a hundred thousand users.

Another option, which I consider more intriguing, is the one suggested by this article, which recommends using the In App Purchase model.

The In App Purchase mechanism consists of purchasing services or features directly inside the app, but only when the user needs or wants them. This purchasing method might seem random, but in reality there are statistical models that demonstrate its profitability. There’s good reason that as early as 2015 the amount of business is expected to reach 5.6 billion dollars – hardly peanuts…

By designing our application with this business dynamic we can:

  • offer our app for free, allowing for the maximum possible circulation;
  • grow loyalty with users who get used to using our app without any up-front costs;
  • make it easy to purchase advanced features because the user already understands their value.

The basic premise for this mechanism to work is that our app must truly produce value for the user, even in its free version, precisely in order to form the foundation on which to develop the business of In App purchases.

And why not think about this mechanism for traditional PC applications as well?

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