In today’s technology-led world, it has become an absolute necessity for businesses to operate online and develop a mobile application. Taking your business online is not an easy task as getting an app developed for your business you have to go through several brainstorming sessions and have to make decisions that will in the future, have a direct impact on your business.

Apart from development, design, and maintenance, the pricing of an app is an important determinant of how good your app will do once it is deployed on the Appstore and play store.

Choosing the right pricing strategy for a mobile app project is the most complex task, there are many factors that should be considered before moving forward with a pricing strategy.

If the right pricing strategy is selected it becomes a great way to generate revenue or to make up for the money which has been spent on the development of the app.

According to statistics, 30% of the traffic on the Appstore comes from mobile devices which makes it essential to select the right pricing strategy for the mobile app project.

In this blog, we will tell you about the types of pricing strategies that you can select for your mobile app project and the factors you should consider before selecting the pricing strategy.

Types of pricing strategies for your mobile app project: 

Free

The free pricing model is the most used pricing strategy for an app, using the free pricing model apps are offered free to be downloaded from Appstore and play store.

The free pricing model is the most useful model used by businesses as it attracts a large number of users which determines their success in the long run. According to Statista, 96% of the apps offered on the google play store are free to download and on the App store, 90.3% of the apps are free to download.  

If you prefer the free pricing model for your mobile app project you have to choose from the two categories the free pricing model offers. Completely free is the strategy free pricing model offers, this strategy is used by businesses whose aim is not to make profits through the app. The main purpose of a completely free app is to act as an add-on tool for customers.

The second strategy the free pricing model offers is an in-app advertisement, using this strategy the app is offered free but users see constant ads while using the app.

Companies and businesses that develop this strategy earn revenue through ad placement on the apps. Mostly gaming apps use this strategy to generate revenue for their sustainability.

One thing you must make sure of while choosing this pricing strategy is that the ad placed on the apps should be relevant.

Advantages of the Free pricing model: 

• More number of downloads if compared to paid apps
• Free apps are people’s choice
• Higher user engagement

Disadvantages of the Free pricing model: 

• Users can get frustrated because of ads
• Requires a huge number of users to generate profits from ads.

Freemium: 

Freemium model of pricing is the advanced version of the free model of pricing, the freemium model of pricing is another most used pricing strategy for mobile app projects. using the freemium model mobile apps can be freely downloaded but the apps offer some premium features which can only be used by paying a certain amount which is termed as In-app purchases. You can earn revenue using the in-app purchases option in form of subscription fees, ad removals, etc.

Just like the free pricing model offers two different pricing strategy the freemium pricing model also offers three different strategies. The first and the most used freemium strategy is the two-tiered approach in which apps can be freely downloaded but it offers some premium features which can only be used by paying a certain amount. The most common example of a two-tiered approach is mobile games which offer extra lives only when users pay for them.

The second Freemium strategy is a free trial approach that provides users free functionality of apps but only for a limited time. This strategy allows users to familiarize themselves with the app, users can avail the full app only after they pay for it.  

The third strategy of the freemium model is the advertisement approach it offers users an app for free but in-app advertisements are included in the app. By paying a certain amount set by the app company users can completely avoid seeing the ads while using the app.

Advantages of Freemium: 

• Attracts many users around the world and organic traffic
• Huge source of income if the app gets successful

Disadvantages of Freemium:

• Notifications can often irritate users
• Constant updates are required with proper management

Paid: 

The name itself explains the pricing strategy, Users have to pay to download the apps from Appstore and google play store. Comparing paid pricing model with Free and Freemium pricing strategies, the Paid model is less popular. Paid pricing strategy is often used by businesses operating in niche markets. An extensive marketing strategy is necessary to gain a large user base when paid model of pricing is used for a mobile app project.

If you are opting for paid pricing strategy you must ensure your app offers the value the users are paying for as customers expect a lot when they pay for an app. The free trial approach can be used to familiarize users with the app and convert them into potential long term app users.

Advantages of paid pricing strategy: 

• The revenue flow is not based on user interaction
• It can lead to gain a loyal user base

Disadvantages: 

• User who pays for an app tends to have higher expectations 
• Apps can’t have prospective users because of the price factor 
• can have a lot of bad ratings if the app is not worth the money users pay for. 

Paymium: 

Paymium model of pricing is the blend of both freemium and paid pricing strategies. In this model of pricing, users have to pay to download the app but there are premium features that can only be accessed once the user pays for it. This model of pricing is the least popular among the list of pricing strategies used by businesses for their mobile app project but once the Paymium apps get a loyal user base it leads to higher revenue flow. The most common example of Paymium model-based apps are music apps and social networking apps.

Advantages of the Paymium model: 

• Continuous revenue flow
• Out of the box ideas for your app allows you to gain new users

Disadvantages of Paymium Model:  

• Least popular pricing strategy
• Less download ratio
• Complex procedure as high-quality content, amazing features, and updates are required  

Factors to consider before selecting the pricing strategy: 

Human behavior:

Human behavior is the most important factor which plays an important role in determining the right pricing strategy for the mobile app project.

In today’s digital world the competition has raised to the extreme there are many other options available for mobile applications that’s why extensive research should be conducted to find out the trends and behavior of consumers.

The consumers of today are well-informed thanks to the internet a lot of information is now accessible to them, so because of this reason, you must make sure that your mobile app has a greater value than its price. 

It’s human nature that they compare products before choosing one that’s why you must look into the market for similar products and develop a pricing strategy for your mobile app project accordingly.

Hence having an understanding of customer’s psychology can help you prepare a good pricing strategy

Willingness to Pay: 

Another important factor that should be considered while selecting the pricing strategy for the mobile app project is determining what is the market willing to pay.

Market research should be conducted to know the price levels the market is willing to pay for your mobile app project. The best situation to analyze the price for your app is to test your developed app at different price levels to see how the market responds.

Knowledge of competition in the market: 

Studying the Pricing levels in the market is a great option to decide the price for your mobile app project. Analyzing the competition in the market can help you to gain knowledge about your competitors, the pricing strategies they are using, and their customer base.

Analyzing competitors can also help you to know where you are lacking in the competitive market this can lead you to develop strategies accordingly.

Due to the above-mentioned reasons studying the market is one of the crucial factors which should be considered to select the best pricing strategy for your mobile app project.

Affordability: 

The apps you develop should be affordable to a large consumer base. No matter how much your app is unique and offers a lot of features if the prices you are offering your app for are high there are high chances of consumers using alternative apps as there are many substitute apps available on both Appstore and play store.

Due to this reason, you should make sure the developed app is affordable to the consumers as well as offers the best features in the offered price levels.  

In conclusion: 

With the growing app market, it is important to take steps in order to stay relevant. Determining a correct pricing strategy for your business mobile app is a difficult but highly profitable task. Knowing your customer base and the value of your product plays an important part in this regard.

The mobile app market is getting quite saturated that is why having a flexible monetary system can help you stand out and make your app popular among users. Your pricing strategy should be able to meet market needs and user’s expectations only then it will be able to help you accomplish your business goals.

The above-mentioned factors can help you choose the right pricing strategy for your mobile app project which will, in return generate great revenue for your business and help you engage more customers.