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Free Apps vs. Paid Apps: How Should You Monetize Your App

Published November 25, 2015

Sitting on the fence when it comes to deciding if you’re going to charge or not for your app? Determining your monetization model is crucial for your app’s future success and growth.

Here are some key points that you need to evaluate before deciding on how you should classify your app.

TARGET CUSTOMERS

Who are your target users? Is this the paying market? This part should have been decided earlier in the process before the app was created. If you are in a niche market, there is higher chance of you being able to charge for your services but consider that you will be selling to a small number of possible users too. On the other hand, launching on a broader market increases the chances of downloads but you will have more apps to compete with.

In niche markets, the buying user pays for quality and worth. This might mean lesser app downloads but more revenue. In the free app market, you need to invest in marketing your app to gain more popularity and consequently, to increase the number of downloads.

VALUE

Who are your competitors in the market? What edge do you have over other apps? Establish your app’s expertise in the market and its value for your customers. Users are usually more willing to pay for apps that cater to niche needs. If your app is in the market to solve the more common problems, you will have to give users reasons to convince them to buy your app instead of getting the free alternatives. Build your app’s value and determine if it is compelling enough to get users to pay for it.

CUSTOMER LOYALTY

Are you after customer loyalty and building a community of users? Paying customers do their research before buying an app and would generally be more likely to stay since they have invested in your app. Paid apps give users a feeling of confidence when it comes to a cleaner interface and less annoying ads and pop-ups, or even the absence of ads. Users who download free apps are keener to decide to uninstall and go app hopping to find the best app for them.

GROWTH AND REVENUE MODEL 

How do you classify growth? Is it the number of downloads, user reach, or the amount of revenue? Free apps are more accessible for users especially for those who are turned off with anything that they have to pay for. Not charging for your app means that you will have to think of flexible revenue models to sustain your app’s growth.

Most apps these days go with freemiums where the app is free but users can only get the full set of features and functionalities once they download the premium version. In-app purchases are a good way to supplement your revenue but this model does not guarantee earnings from your app. On the other hand, going for premium accounts and one-time subscription fees limit your apps reach only to those who are willing to pay from the beginning. Conduct a study and experiment which model will be able to sustain your app’s growth.

 

In conclusion, sustaining your business and meeting your user’s needs both have to be evaluated and balanced to ensure revenue, growth, and user satisfaction.

Do you have additional considerations when choosing your app’s model? Let us know what you think in the comments section.

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