It has been said that the exercise of pricing is as much an art as it is a science. There is no doubt that pricing is a challenge, especially with iPhone/ iPad applications because the Application Store is so new, relatively speaking. Whenever there is a new market for a good or service, it takes some time before the market achieves a sense of equilibrium. The state of the economy over the past several years has not helped the situation for developers since people scrutinize their purchases more closely.
Even a $0.99 application is scrutinized as the customer decides whether to spend their dollar on your application or someone else’s. It’s also very possible that the low price apps have been highly influenced by the fact that the iTunes store started selling songs for $0.99, which set the stage for the Application Store.
Many developers, however, are simply following the herd, pricing their apps low with the hope of gaining acceptance and market share. However, the goal of this article is to get developers to focus on delivering value instead of just a low price. Many developers are finding that they can’t make enough money at $0.99 to break even let alone realize a profit.
Understanding your audience and delivering value can help you price your application appropriately in this cutthroat market. Regardless of the current economy, iPhone/iPad application developers would do well to carefully examine all aspects of pricing as it pertains to their product, make careful pricing decisions, monitor and measure sales, and make adjustments as needed to maximize their revenue. Keep in mind the purpose of this article is to help you maximize sales for your application through better marketing. And marketing includes the challenging area of pricing.
The right price for your iPhone/iPad application is where your profits are maximized. Thus, the highest price you can charge without reducing your pool of customers is your goal. Knowing the exact price to charge is difficult, but you can get fairly close to the right price based on how steady your sales are and customer feedback via the reviews and comments they make.
You need to consider a number of factors when pricing your iPhone/iPad application. For starters, look at competing apps in your category and then ask yourself the following questions:
How much do your competitors charge for a similar application? Take a look at the Application Store and review how many apps are similar to yours. Have you produced a Battleship game that is similar to other Battleship apps? For example, a recent search for Battleship games on the Application store revealed at least 15 similar apps.
What are the differences between your application and someone else’s? Do you have more features? Do you have more levels of play if it’s a game? If you are offering a new financial calculator application, does it offer something more than the other calculator apps on the store?
How does your application rate against the competition? Do you feel that your application has better graphics? Better sound? Are there more exciting types of play? Have you confirmed this with your reviewers, friends, followers, customers?
How do you define your application and its market? If you are selling an application for sales reps only, have you attempted to define approximately how many sales reps are in North America or any other country? How many of these sales reps might own iPhones/iPads? Having this knowledge will help you make a better decision in the pricing process.
How does your application compare to free apps? If there are many similar free iPhone/ iPad apps, you will need to strongly communicate and market the value of your application. Overcoming objections to free is a high hurdle but can be done with the right marketing.
Remember, the old adage “You get what you pay for” applies to anything, including iPhone/iPad apps. Many free apps are downloaded and never used. Additionally, ask yourself the following questions from a costing perspective. These questions will help you get some context on how much you need to recoup:
What were the actual development costs or time involved for your iPhone/iPad application? Knowing your development cost is very important in helping you determine the price of your application as we will discuss later in this article.
How much would the application cost to develop by another company? Larger development firms can often create an application less expensively than a small developer because they already have developers and graphic designers on staff and can redirect their efforts to that iPhone/iPad application. If you know someone who works for a development firm, ask them how much they typically spend to develop an application. Sometimes independent developers have to outsource some of the development for graphics or other complex requirements to outside agencies or other developers.
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