When the iPhone was first released, many developers launched their apps at $10 a download, thinking that the apps would compete well with other games on different platforms such as Xbox. The rationale was that many games cost $20$30 or more on other platforms, so $10 for an iPhone app would be a bargain.
But sellers of iPhone apps soon realized that the market would not support such high prices for very many apps. It's hard to say why this happened, but I have a couple of theories:
- First, people were accustomed to paying $.99 for a song and couldn't make the leap to pay $10 for an app. They had already spent $400$500 on an iPhone, so accessorizing it with apps shouldn't cost a lot (so they thought).
- Second, many of the apps originally released were so simplistic that they weren't worth anywhere near a $10 price. These early apps lacked many features, were quickly written, had limited graphics, and were often buggy.
- Third, many users expected apps to be free since so much Internet content is free when it's downloaded from the Internet.
Regardless of the theories, many developers (large and small) are finding that giving away the app is a better way to get users to install and experience your app.
Even though 66% of the apps on the App Store are paid apps, many of them have a free or "lite" counterpart to help push their sales along. Many developers have gone back after they released a paid app and added a free app as well.
So, the question is this: What is the best way to monetize your app if you don't charge outright for it? There are really several ways to monetize a free app and you can experiment with each way to see which might work best for you:
- Add In App purchases and/or virtual currency to your app
- Pay for installs
Add In App Purchases and/or Virtual Currency to Your App
One of the most effective ways to monetize your app is to utilize the In App purchase capability found in iOS. With this code enabled on your app, you can create a storefront to sell all kinds of interesting add-ons to your app.
For example, game apps can sell extra weapons or extra levels of play. If you produce a fun, polished, and exciting app you will get thousands of downloads. You can convert a number of those users to buy add-on "points" or "upgrades," or additional levels of your game.
Other developers are also using virtual currency in their apps. Virtual currency comprises rewards given to a user for downloading another app. Instead of actual payment, the user is given rewards such as more game play, additional lives, and so on.
Some apps are providing both virtual currency and In App purchase capability within the same app. For example, Pinger's Textfree with Voice app allows you to earn free minutes by installing other apps displayed in its recommended list.
Some of the apps recommended are free, and some cost to install. Users are given more free calling minutes if they buy an app rather than install a free app. If you don't want to purchase or download any of the free apps in Pinger, you can also buy minutes in different bundles through an In App purchase. Pinger has integrated both capabilities quite nicely into their app.