Developing effective multi-store app pricing strategy

Average best-selling application prices vary greatly in different stores

One of the basic questions every developer asks themselves before publishing an application is whether to charge for download, or to monetize the app another way. The decision to set a price for a download, however, does not end here. Developers must understand the market and the potential customer, as different stores attract rather different user groups, as well as different app categories target different customers with very different habits.

Significant price differences in different app stores

For example, our research shows that there are applications that cost a significantly higher price in independent app directories, compared to the original MNO stores. Developers try to take advantage of existing users’ willingness to pay more for apps in these stores.

There are two dominant types of independent stores where developers can alternatively submit their applications:

• Full-catalog stores: independent stores that provide applications for all major mobile platforms, including Android, BlackBerry, Symbian, Windows Mobile, etc. Notably, full-catalogue stores are the incumbents of the app market, some having been launched way back in 2000. Back then the average app selling price was as high as US$20, with very few apps being given away for free. We have found that users of these stores are more accustomed to the idea of paying for apps, and the stores themselves are generally more focused on improving developer monetization opportunities, and offering a range of additional app promotion options, particularly when compared with MNO stores.
• Platform specialists: niche stores concentrating on the distribution of applications only for a selected platform. These stores are relatively young, and only came into play within last two years, following the Apple App Store paradigm shift. They feature rich developer and user communities that get engaged in frequent app reviews and discussions. Developers can use these stores to generate social media buzz, and consumers use them to find better, and often cheaper, applications. These stores feature significantly lower average prices of Top100 paid apps than other store types.

Comparison of alternative stores for Android applications

Our comparison of alternative stores for Android application distribution shows that full-catalog stores have a much higher average price for their best-selling apps, whereas prices, and users’ willingness to pay, are much lower in Android specialist stores than in the Android Market.

Interestingly, the average price of Top100 paid apps in Android Market is twice as high as the overall average selling price , US$6.47 compared to US$3.07 in June 2011. This means that many users do not mind paying a substantially higher price for what they think is a good application.

Developers should know the user habits

Similarly, developers should not overlook pricing trends within different app store categories. Users would not pay more than US$1.50 for a ringtone, but they do pay US$4 for a book in the Android Market. Furthermore, users of independent stores pay as much as US$11.56 for best-selling books. Clearly it makes sense for developers to take a deeper look into the user habits of different app categories. Selecting the right category in the app store, with potentially a higher price, could create higher revenue streams.

Developers should vary their business models

Developers should choose the appropriate business model for applications distributed in independent stores, to benefit from their higher price levels and different user habits. Some stores are better at distributing free applications, some are better at highlighting discounted apps and special promos, while others work best for high-priced, high-quality content.

What are your experiences in independent app stores? Please join the conversation.

Please take a look at new research2guidance report “The Market For Mobile Application Development Services: Selling The Spades For The App Gold Diggers”, released in July 2011.

Free Android Insight report: Download the free monthly report here — “Android Market Insights (June, 2011)”

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