Monday, March 21, 2011

How Much Is Your App Worth?

App pricing is not a new topic, but after reading this article on, I decided to share my experience with app price testing.  The article I'm referring to discusses the creation of relatively simple apps which still take many hours to develop and tweak.  After all the work a developer puts into an app of this type, they turn around and ask themselves, "how much will people pay for this app?"

My first app, iCarc, fell into the same category.  After many lunchtime and evening hours, I was ready to submit to the App Store, and launched it at the $1.99 price point.  I got one review (read it here), which clearly stated that $0.99 would be a better value.  They did have some grounds for their comments and since then I have improved the app considerably, but the point is that anything over a dollar and users begin to get edgy.  I believe I actually dropped the price for a while after that too.

Coming from an internet marketing background, I knew that price testing is important, so I decided to find out exactly what users were willing to pay.  The process was simple.  Starting on a Monday, I set the price of the app to $4.99 and left it that way until the following Monday, at which point I dropped it by a dollar.  Five weeks went by and I was back down to $0.99.

The results told me exactly what I needed to know:

1. I actually made sales at the $4.99 level, and indeed at every level below, so the revenue was about the same, just less buyers.

2. $1.99 and $0.99 sold the same number of copies.

iCarc is geared towards a fairly niche market, so I decided that having more buyers was better than having a few at a high price.  Also, since $1.99 and $0.99 picked up the same number of sales, I realized that it wasn't the price that was the factor, only the interest in the product.

Ever since, I've been confident in the $1.99 price point.  Maybe that's what it comes down to for developers -- having the confidence in their products, knowing what they are worth, and sticking to their prices.  If you have a quality app that people want, don't be afraid to charge a little more for it.


Cannonade said...

Nice post Andrew. I think I need to spend some time doing price testing.

Anonymous said...

had a similar experience on Android market, but would add that with Android return policies, we got a lot more returns at the $0.99 price point than at $1.99 where we eventually settled.

Anonymous said...

I find this to be very true. Since I'm personally not a penny pincher the .99 to the 1.99 range is all the same to me. An app that costs more would have to be something that I really needed or that I have tested before.

George Birbilis said...

Not good for building a brand though this lowering of the price that much. First customers will not be very happy to find out they paid that much

Andrew said...

Thanks for your comments, everyone. Cannonade pointed out some further discussion on this post at Hacker News:

I replied to one post which suggested that higher prices make for better quality sales and ratings, as has been mentioned here by Anonymous as well.

I'm thinking I will try a few more price tests, and do a follow up post.

Anonymous said...

Thanks for posting your comments. I've been developing and selling apps for mobile devices since the old Pocket PC days, and the pricing model sure has dropped considerable. I remember back in 2002 when I created a simple Today Screen plugin that basically showed how much battery power you had left on the device. I sold this plugin for $9.95 US and sold a ton of them! In today's market, people complain about spending 99 cents for an app and expect everything to be free. It seems that Apple's iTunes Store started this trend with the 99 cent music and extended to their App Store. This definitely makes it hard for developers to make a living at app programming.

Andrew said...

There are probably a number of factors that have brought down the expected value of an app.

I read an article a while ago that indicated the size of the device played a role in how much people were willing to pay. An example of that is Angry Birds for 99 cents for iPhone, and $4.99 on the iPad.

Another factor is mere availability. There are so many apps on the app store that they just seem less valuable. For other phones and devices, there are very few apps, so they seem valuable. Apps for old Nokia phones for $7.99 are at most a couple bucks on the iPhone.