Pricing Your

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 Android applications, because the Android Market 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 couple years has not helped the situation for developers because people scrutinize their purchases more closely. Even a $0.99 app is scrutinized as the customer decides whether to spend his or her dollar on your app or someone else's. It's also very possible that the low-priced apps have been highly influenced by the fact that Apple's iTunes Store started selling songs for $0.99, which set the stage for their App Store and the Android Market.

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 chapter is to get you 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 app appropriately in this cutthroat market.

Regardless of the current economy, Android app developers would do well to carefully examine all aspects of pricing as it pertains to their products, make careful pricing decisions, monitor and measure sales, and make adjustments as needed to maximize their revenue. Keep in mind the purpose of this book is to help you maximize sales for your app through better marketing—and marketing includes the challenging area of pricing.

The right price for your Android app is where your profits are maximized. Therefore, 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 Android app. For starters, look at competing apps in your category and then consider the following

• How much do your competitors charge for a similar app? Take a look at the Android Market 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 Android Market revealed at least 15 similar apps.

• What are the differences between your app and someone else's? Does yours have more features? Does yours have more levels of play if it's a game? If you are offering a new financial calculator app, does it offer something more than the other calculator apps in the store?

• How does your app rate against the competition? Do you feel that your app has better graphics? Better sound? Are there more exciting types of play? Have you confirmed this with your reviewers, friends, followers, and customers?

• How do you define your app and its market? If you are selling an app for sales reps only, have you attempted to define approximately how questions:

many sales reps are in North America or any specific country? How many of these sales reps might own an Android phone? Having this knowledge will help you make a better decision in the pricing process.

• How does your app compare to free apps? If there are many similar free Android apps, you will need to strongly communicate and market the value of your app. Overcoming free is a high hurdle but can be done with the right marketing. See Chapter 14, "Level the Playing Field with a Free App," to learn about the pros and cons to creating a free version of your app.

Remember the old adage "You get what you pay for." It applies to anything, including Android apps. Many free apps are downloaded and never used.

Additionally, consider the following questions from a cost 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 Android app? Knowing your development costs is very important in helping you determine the price of your app, to a degree, as we will discuss later in this chapter.

• How much would the app cost to develop by another company?

Larger development firms can often create an app less expensively than a small developer because they already have developers and graphic designers on staff and can redirect their efforts to that Android app. If you know someone who works for a development firm, ask him or her how much the firm typically spends to develop an app. Sometimes independent developers have to outsource some of the development for graphics and other complex requirements to outside agencies or other developers.

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