App: To Fee Or Not To Fee

Which is better for business in the long run: free app or paid app?

While businesses have come to terms with the fact that apps are fundamental to business success, the next big question remains – What kind of an app?

App strategy has to be woven around consumer interests – what will give value to the end user? Or, why would the consumer use this app? App strategy would be a fine balance in value derived, both to the consumer and the company. And while putting the value component on paper the dilemma most businesses face is whether to make the app free or chargeable.

There is no absolute answer to the question above. Although a paid app can seem like a huge monetizing opportunity, but what if consumers do not find value and abandon the app. On the other hand what if there are many downloads, wouldn’t that be like an opportunity lost? The only way to an answer to this is by doing an in-depth analysis of the marketplace, user base and company requirements and then arrive at a logical solution that balances all three.

Understanding Trends

The app landscape has drastically changed. To begin with, most apps were paid apps. There were just a handful of apps that came free. In most case there used to be a limited version of the app that was free, the full-feature version was often charged for. But this has changed over the years. The market is now flooded with free apps. There are different revenue models these apps follow. Some apps encourage in-app purchases, some cash on ads and some on both.

Free Apps

Free apps are the most popular style of app marketing. With growing market clutter consumers would rather have it free than pay for it. With free apps though, companies present the consumer with numerous opportunities to make in-app purchases or flood the consumer with advertisements throughout the app usage time. Companies need to be sensitive while making aggressive sales calls with both the methods mentioned. Although free apps can be a great boon to retailers as more the app usage, more the revenue.

Paid Apps

It is indeed amazing how premium or paid apps make a significant chunk in the app market despite of the market being flooded with free apps. Here are a few points to consider before you decide to make your app paid.

• The app is marketed by a premium vendor.
• Consumers get value that outweighs the burden of price.
• The app falls short of supply as compared to the demand in the market.

The Takeaway

The key to a successful strategy is one that provides value to the consumer. So if a paid app can justify the value preposition, it makes sense to have a paid app. Similarly if a free app can successfully monetize though ads or in-app purchases without putting the user, having a free app would be preferable.