With consumers now spending more than four hours a day inside apps on their phones, developing an iOS or Android app for your business is no longer a nice-to-have. Offering unique functionality, whether through an eCommerce app or a productivity tool, can steer your organisation in an entirely new direction and unlock lucrative revenue streams for your business – but deciding whether to opt for a paid or free app model can be challenging.
Paid apps are exactly that: users pay to access your content from the get-go. Free apps, on the other hand, are free at the point of download but are often supplemented with in-app purchases, adverts, or premium subscriptions to unlock additional content. But which is right for your application? Below, we’ve rounded up the pros and cons of both pricing models.
Paid app pro: Safer cash model
Perhaps the biggest advantage of a paid app over a free one is that as a developer or rights owner, you can generate an income as soon as your app launches. Rather than having to persuade consumers to download your app and then pay for in-app subscriptions, they’ll pay before they download your app. Let’s face it: app development is expensive, and the sooner you can start recouping some of your costs, the sooner you can invest in more functionality.
Paid app con: Fewer downloads
It goes without saying that paid apps are downloaded less than free apps. 90.8% of iOS apps are free, and 96.2% on Google Play Store are free, representing the vast majority of apps and contributing to more than 95% of all revenues, too. Consumers prefer free content and are less willing to pay for software than they are tangible items, which means you’ll need to work hard to convince consumers to part with their cash and buy your app from the store.
Paid app pro: Less competition
Consumers are more likely to download free apps than paid apps, and though that might be a downside in one respect, it opens up opportunities in another. Indeed, the paid section of the App Store is often less competitive than the freemium tier, and as such, you’ll likely appear in app store search engine results pages (SERPs) and come up in recommendations more than you would if you were competing with dozens of free apps offering the same stuff.
Paid app con: Takes longer to build traction
When you offer your app for free, consumers are more likely to check it out, download it, and see if it’s for them. In time, you’ll drive thousands of new users to your app without having to lift a finger. With a paid app, on the other hand, users can’t try your app for free – it’s paywalled and as such, it’ll take longer to build traction and generate returns and interest.
Paid app pro: Offers marketing opportunities
Finally, positioning your app as premium software unlocks new marketing opportunities for your business, allowing you to temporarily offer your app at a discounted price or even for free for a limited time. There are a number of websites that promote premium apps with free or discounted coupons, and limited-time offers can boost downloads, reviews, and hype.
Free app pro: Lowers barrier to entry
Perhaps the most obvious benefit of a free app is that the barrier to entry is lowered; it takes a couple of taps to download a new app, and if you don’t like it, it can be uninstalled in an instant, too. Free apps are more accessible and more attractive to consumers, even if they then have to pay for content unlocks to maximise their use. Consider a freemium model as offering a free trial – users can test out your app, but they’ll need to pay for the good stuff.
Free app con: Harder to recoup losses
With so many apps on the App Store and Play Store, it’s natural to want to offer your app for free to entice customers into your brand. But the truth is that it’s hard to generate significant returns from freemium apps. Add in the fact that developers are charged up to 30% commission from Apple and Google, and it’s easy to see why a high percentage of apps fail.
Free app pro: Maximises reach and downloads
Another significant benefit to a free model is that you can attract thousands of downloads and press attention with the right marketing push. As well as App Store Optimisation, you can introduce schemes such as refer a friend, social media shares in exchange for in-app currency and work with a public relations team to spread the word about your software. As it’s so easy to give your app a try, the chances are that the vast majority of users will.
Free app pro: Maximises reach and downloads
Another drawback to offering your app for free is that your user base has no financial investment in your product – they’re far more likely to uninstall or abandon your app if they don’t like it immediately. Typically, engagement rates on apps are lower on free apps than paid apps – and that makes sense. If you’ve paid to access premium software, you’re more likely to give it another go and ultimately become a loyal, long-term user than if it was free.
The truth is that some apps are best suited to adopt the freemium model, whereas others should charge from the get-go to maximise sales and engagement. If you’re considering an app for your business, reach out to the app development experts at Zudu today on 01382 690080 for a free consultation, and check back to the blog soon for more app dev advice.
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