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When to Offer Paid and Free Apps to Ensure High Profitability:

  • Uncategorized
  • Jul 22, 2021

Are you really ready for paid mobile apps? Unlike many other product markets where free products are primarily an app support role, the mobile app industry, free apps are far more common than paid apps. They have a trend in the direction of the free versions of app over the past decade, with 96% of the applications on the Google Play platform being free as of July 2020. However, 63% of free apps had less than 1,000 downloads per month and 60% of app publishers were generating less than $ 500 per month in 2015. With the questions like ‘are there ways paid apps can make free apps more profitable and how can app publishers improve their profitability? in mind, the research team examined the decisions made by app publishers to offer the free, paid, or both versions of an app by considering the dynamic interactions between the free and paid versions. Information for application publishes on how to manage the control decision during the life of an application and its version.

First, the researchers demonstrate how the free and paid versions affect current demand, future demand, and app sales for each version, noting that the snowballing user base of each version motivates future demand for both versions through social influence, whereas, offering both versions at the same time hurts. Also, having a paid version reduces the in-app purchase rate and active user base along with that of a free app. But having a free version doesn't seem to have much of a negative impact on the paid version of an app. Therefore, app publishers should consider the negative impact of the paid version on the free version. In general, offering both versions at the same time helps a publisher achieve cost savings but reduces sales for each version compared to when either version is offered alone. Second, analysis shows that the most common optimal rollout strategy is to offer the paid version first. Paid apps can generate revenue per download from day one of sale, while in-app revenue from each of the versions depends on a sizable user base from time to time to build.

As a result, publishers can rely on paid applications to generate working capital and amortize development and implementation costs much faster. However, there are differences between the applications categories related to the different ways the applications can monetize from different revenue streams. For example, the percentage of utility applications that should launch a paid application. The app is especially high because it gives you less opportunity to monetize the free app through in-app purchase items and advertising. In contrast, entertainment apps should primarily release a free version because of their high availability of in-app ad networks and in-app purchase items.