Some Pricing Misconceptions

So, you have just completed your app and you are trying to figure out the best price to charge. Often, developers think that in order to compete on the Android Market they must price their apps very low, like $0.99. Your thinking may have been influenced by one of the following:

• You see a lot of downward pricing pressure on the Android Market from what you've read and think you had better not price your app too high.

• You think customers will expect you to charge only $0.99 for your app because you believe everyone else is. You succumb to the pricing pressure.

• You think that pricing your app at $0.99 will help your app to make it into the top Android Market sales results. You rationalize that you will make up for the low price in volume sales.

• You see dollar signs looming and think your low price will attract tens of thousands of buyers, even if they have no use for your app.

Caution is recommended against adopting any of these mindsets and dropping your price right away. Any one of these thoughts may quickly result in low revenues, no immediate paychecks from Google, and discourage you from creating more apps for the Android Market in the future. Let's review each of these thoughts in a little more detail.

You see downward pricing pressure and think you should follow suit. Yes, it was true that overall average prices were falling on the Android Market. But, more recently prices have seemed to stabilize and some categories have actually seen slightly higher prices, even with games. Because the Android Market was a relatively new storefront, developers and buyers were trying to find that sweet spot where buyers would buy and developers would receive fair compensation for their work. What we are learning over time is that while prices have stabilized for Android apps, many are being sold at two to four times the $0.99 price point and they're seeing steady sales. Base your initial app price on a rational determination of how much time and money you have put into the project, the size of your buying market, and other factors we'll discuss later.

You think customers will expect you to charge only $0.99 for your app. Not so fast. If you truly offer unique functionality for your product, you can certainly charge more for your app as a starting point. Pricing your app at $0.99 is like putting your newly published book in the $5 bargain bin at your local bookstore! Is that where you want your work of art to go first? How will you discount from there? How will you do any promotions or entice users to buy additional apps if you are already at the lowest price point possible?

Next, you think that by entering the market at $0.99 you will easily enter the top 100 in sales and make up for the low price in volume. As more apps are being added every day to the Android Market, your chances of making it into this exclusive club become narrower. You've got to use other means to help buyers find your app on the Android Market.

Let's face facts! The chances of entering the top 100 in sales on the Android Market by pricing your app at $0.99 are getting slimmer by the day as more and more apps are added to the store.

Lastly, you want to see those dollars coming in as soon as you launch your app on the Android Market, so you price it at $0.99. This is a mistake. We all want to make money, but you need to adopt a longer-term vision if you want to be successful selling on the Android Market. Unless you have very deep pockets, like a large game developer, you most likely have little to no brand awareness. Building a brand takes time and big bucks unless you happen to be one of the lucky few to have a best-selling game or other app. This is getting harder and harder, and the reality is that most developers won't make it into that cherished circle through luck alone.

So, what's your best option? You have to level the playing field as best you can, and that's by offering your users a free version of your app. Let your users "try before they buy." You want to establish a following for your app, and one of the best ways to do that is to offer an Android "light" app that allows users to preview the app, test drive it, and get a feel for it before committing monetarily. This is a long-term strategy, and it takes some time.

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