The Delicate Art Of iPhone Application Pricing

2-billion-iphone-apps_1With over 2 billion downloads so far and nearly 85,000 apps to choose from, Apple’s App Store is a growing economy of developers and consumers with one simple metric taking precedence over all else- the price of the apps.

Determining that price is a delicate art- make it to expensive and nobody will want it, make it free and it’s not worth your time, so how do you determine the value of your app?  It’s really not about its value, it’s what you want it to accomplish.  From simply wanting to turn a profit, to using it as a branding method, apps have many different purposes.

Back when the App Store went live, most of the popular apps were games and simple tools that were either free or cost $.99 or $1.99.  Thanks to rising prices, market research firm The Yankee Group predicts a so-called  $4.2 billion mobile app “gold rush” within five years.  Furthermore, one in four downloads will be a paid app that costs on average $2.37 by 2013, they predict.

Create with Context, a researcher and designer of mobile apps, sought to answer a few questions regarding the different monetization methods and pricing points used on mobile apps, and what iPhone users thought about them.  Bringing several users into their labs, Create with Context held focus groups and gained useful insight into how average users look at iPhone app pricing.

In regards to paid apps with free trial versions, users indicated that while they’re still favorable, they had differing opinions in terms of how it should be implemented.  Some users felt that $4.99 apps, for example, should have a free “lite” trial version, while others want the full app for free but with a timeout.  “Light versus full creates confusion,” an iPhone user told Create with Context researchers.

Interestingly enough, the $.99 price point that was a strategic part of the App Store’s initial launch now signals “cheap, sophomoric, and even dangerous apps,” some users say.  At the other end of the scale, high-priced apps in the $50 and up category still scare away most users.

However you look at it, the concept of iPhone app pricing – and all other mobile apps for that matter – will always be constantly evolving, along with the distribution and general monetization methods being used.  As the iPhone and similar smartphones become more prevalent gaming and productivity devices, the apps will evolve in both complexity and pricing, making it increasingly difficult to keep up with.