Pricing for Apps

Guides By 7 years ago

How much should I charge for my App? I always tell clients not to rely solely on an App to generate revenue. It must be a part of a combined strategy. People often think in terms of ‘well if I get 100,000 downloads and charge $2 for each download……….”, its just not that simple. Consider firstly the purpose of the App, is it to enhance your product/service? generate awareness for your business?

If the answer is to generate $$$ only, with the exception of games, you will likely fail. For example an App we are building for a client now will cost them around $26k. If they chose to sell it for $2 a pop, less Apple’s cut, GST etc. they will need to sell 17,000 Apps to break even. This may take several months to reach at which point, updates are reuqired and new features to be added. These are additional costs which continue to push profitability further away. A key variable in the equation is the cost, and a simple answer would be to increase the price resulting in a better margin. Not the case, as the price goes up, downloads go down. There is a sweet spot for most Apps.

Our client will release the apps for free, to attract more downloads and in turn generate more exposure of their core brand and products. They would need to make on 50 sales of their core product to cover the cost the the App. Pricing might be used to create the perception of value, where a free App offers little value and a $4 app is more useful.

In summary the key point here is to ensure that an App, unless a game, should not be the only source of revenue.