Two of the Top App Pricing Strategies: Pros and Cons of Each

Jenna Rodrigues
December 20, 2022

The pricing strategy you choose for your app is critical. If you choose the wrong strategy, your revenue could significantly underperform expectations and you may feel a lot of doubt around your entire app. But if you choose the right pricing strategy, your wildest expectations just may be exceeded. The exact same app could have very different results depending on your pricing strategy.

What makes this decision even more difficult is that there is no universal “best” app pricing strategy. What works exceptionally well for one app may utterly fail for another app. 

There are several pricing strategies you might be considering, but the two of the most popular—for a good reason—are paid and “freemium" pricing. We’ll delve into both of these pricing strategies and analyze the pros and cons of each.

Freemium Pricing

Freemium pricing is a strategy in which your app is available to download and use for free, but there are premium features that are locked behind a paywall. In many ways, this strategy is a nice middle-ground between a completely free app and one that users must pay for. It's also the most common app pricing strategy in most categories. 

When you use a freemium pricing strategy, you allow users to get a taste of what your app has to offer. This can be particularly effective when you have an app that is loaded with features, as it provides a valuable benefit to free users which can lead to those users buying the paid version to unlock additional goodies. 

On the other hand, if your app has just a few key features in it, then freemium may not be beneficial because users won’t see much value in using the free version. Therefore, there’s no real angle you can leverage to convert them into paid subscribers. Users may become frustrated that they even download the app when they find that there is little they can do without paying.

Pros of freemium pricing:

•      Likely to get more downloads than paid apps

•      Opportunity to prove your app’s effectiveness and convert users to paid

•      Easier to get users which boosts name recognition

Cons of freemium pricing:

•      Risk of not converting users to the paid version

•      Brand perception could take a hit if the free version is underwhelming

•      More total users—free and paid—to attain revenue levels of a 100% paid app

Freemium pricing can be great for broadly scoped apps with many features.

Paid Apps

Pay-to-download apps only make up 6% of all iOS apps and 3.2% of Android apps. However, the paid app strategy can benefit apps with just a few very premium features. In this case, it wouldn’t make sense to use a freemium model as users would find no benefit from the free features. If your app is like this, then going straight to a paid app is likely to be more effective.

We also have to consider human psychology. Free things are often viewed as inferior to things that have a cost. When you offer your app as paid rather than free to use, it can create a sentiment that your brand is premium quality.

You need to be honest with yourself, though. If your app’s features don’t offer much beyond what other competitors are offering for free, then putting a price on your app without a free version could be a significant detriment.

Pros of paid apps:

•      Revenue per user will be higher than a freemium app

•      Helps present your app as a premium-quality product

•      Less ambiguity in pricing compared to freemium apps

Cons of paid apps:

•      Could struggle to get users if established competitors have free apps or features

•      More difficult to build a large user base without a free version

•      No opportunity to prove your app’s effectiveness to “on the fence” users

A 100% paid pricing strategy can be effective for many types of apps, but it's also important to ensure that the competition isn't significantly undercutting your price.

Bottom Line: Different App Types Require Different Pricing Strategies

When you break it down to its simplest form, the pricing strategy debate is all about the scope of your app. If you have just a few features that are very powerful, then a paid app is likely your best choice. However, if your app is loaded with useful features, then a freemium model could be a great way to show off some features for free to bring in more users and entice them to pay for additional features.

If you’re struggling to settle on a pricing strategy for your app—or if you need help building or marketing an app—feel free to get in touch with the experts at Camber Creative. With years of experience, Camber has worked with apps of all types and can help make yours a success.

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