One important decision a mobile app creator needs to make is whether an app will be free or paid. This decision should be made early on because it’s a vital part of the monetization process. Ultimately, you want your app to earn money!
Is offering your app for free a bad idea if you want to maximize earnings? Not at all. Just because an app is “free” doesn’t mean the creator gets no return on investment. Most free apps include in-app purchases, ads or other special features that lead to monetization. When well-executed, either option can be effective, but there are pros and cons. Here a few points to consider as you decide.
Mass downloads vs. loyal customers
Earning cash up front from a paid app is nice, but the tradeoff is that you may get fewer downloads. Customers are more likely to search for and download a free app than they are to pay for an app they’ve never heard of. That’s not to say no one downloads paid apps, though: If you go the paid route, you just need to plan on heavier marketing rather than relying on customers stumbling upon your app in the store.
Then again, many people download free apps and never use them, so it’s possible get lots of downloads with little return. If the customer pays for your app, however, they’re more likely to use it and become faithful customers. This is especially true for apps that have subscriptions: It’s harder to get customers early on, but easier to keep the money rolling in.
Consider the competition
When you’re deciding whether your app will be free or paid, it’s also important to consider the competition. Someone is much more likely to skip paying for your app and download a free version, even if it has fewer bells and whistles. Then again, if your app is significantly better, customers may opt for your app regardless of its cost. This, of course, depends on the genre of app: No one wants to pay for an online shopping app, but someone may pay a lot for a quality educational app. Take some time to assess your competitors and your niche.
Free apps are more likely to receive positive reviews and less likely to receive negative reviews. People may download the app, try it out and then simply uninstall if they decide they don’t like it without leaving a negative review. If they love it, however, they may take the time to leave a positive review. If someone pays for an app and has a negative experience, you can bet they’ll leave a nasty review. The better your reviews, the more likely you are to get downloads, and the more money you’ll inevitably make.
One way to get the benefits of both a free app and a paid one is to offer a “lite” version, which allows users to try your app with limited features. If the user likes the “lite” version, she will be more likely to pay for the full version. Apps like Spotify offer a paid and free version, which draws users in and persuades them to pay when they’ve come to love the app.