How to price an iPhone app

iphone app pricing

Pricing an app seems like a mystery sometimes. Most apps are priced at either $0.99 or are free, or so you’d think… How do you know how much your app should sell for?

The fact of the matter is, you don’t.

Unless you have the time and money to do market research (and no, asking your mom or friends if they’d pay for your app doesn’t count), you’re really in the dark here, but fortunately, Apple has made pricing a very easy thing.

Here’s how you do it based on a real life example:

One of my favorite apps is Running Playlist and Pace Calculator < > (I’ll post a post mortem for the launch of this app in a later post since I learned quite a lot from it).

At some point in time, I had to move the app from one company to another due to location issues (I moved).

Apple doesn’t make this process easy, and what you have to do (or at least had to do at the time) is re-launch the app under the new company and discontinue the old one.

I didn’t want to lose my customers from the original launch, so I issued an update to the old app, greyed out the icon, and made a pop up come up every time the app launched telling customers about the new app. I also noted that there is a new app in the app description.

Lastly, I raised the price of the old app to $8.99 to deter new people from downloading it (obviously, those who already downloaded it in the past didn’t have to pay anything).

Everything worked well, and most of the customers from the old app transitioned to the new one, but the problem was that people were still downloading the old app at $8.99!

I thought I made it clear that the app was being discontinued, but they kept buying it and I was making more money on the old app than the new one!

Eventually, I just removed the old app from the market since I felt uncomfortable selling it at such a high price when the new app was free, but that taught me a lesson.

When pricing an app – experiment!

The “Rights and pricing” module in iTunes connect allows you to change your price on a daily basis. Why not experiment with pricing once the app is launched and find the optimal price?

Here’s my pricing experiment from running playlist (I removed financial data and use the average profit as the baseline):

Friday: App priced at $8.99 – Profit: 149% (compared to average)
Saturday: App priced at $5.99 – Profit: 174%
Sunday: App priced at $2.99 – Profit 135%
Monday: App priced at $0.99 – Profit 34%
Tuesday: App is free – Profit 7% (from in app downloads)

As you can see in this example, my optimal price is $5.99. That’s where I make the most profit.

When you do this experiment, make sure to repeat it several times, and make sure you do it in different days. Saturday may be a day when most people look for this type of app so maybe that’s why the downloads where so high.

I keep these experiments going for about 3 weeks and repeat them every few months to make sure I’m still on top of the market and my pricing is competitive.

I’d love to hear what you have to think about this, how do you price your apps? Do you have a pricing strategy?

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