How do you decide what you charge for your iPhone app?

If you charge to little, you lose valuable revenue. If you charge too much, you might never gain the necessary momentum to move up the ranks in the app store.

Here are some things you may want to consider:

• How to Set Your App Price
• Free and Paid Strategy
• Free to Paid Strategy

How to Set Your App Price

Here is what I encourage you to do (at a minimum) when determining the price for your app. 

1. Evaluate your app. Step back and be honest. What would you pay for this app?
2. Ask for input. Find iPhone enthusiasts ask them what they’d pay.
3. Research the competition.  How are similar apps priced?  Does your app offer more/better features? Is it more compelling in some way?
4. Run the numbers. How many downloads would you need at $.99 to generate more revenue than if you charged $2.99?
5. Don’t under price your app. It’s much easier to lower the price of an app than increase it.

Free and Paid Strategy

I’m a firm believer in having a free and a paid version when possible.

Here’s why:

• You get double the exposure (in paid & free categories).
• People like free stuff, especially in the app store.
• A free version helps you build a user base.
• It allows the user to see your app in action without paying.

Create the free version to be valuable in and of itself, but to entice users to upgrade.

NOTE: There may not be a simple way to create a lite version. If that’s the case, go paid only. I’ve yet to see a free only app that I think is making more money than a paid app would.

Free to Paid Strategy

If you either don’t have the resources to build a lite and paid version or there just isn’t a compelling reason to have both, think about a free to paid strategy. 

A new app called Ping! by Gary Fung did just that. He launched the app as free for a limited time in September. I’m guessing he promoted the free version with mobile ads (although I don’t know for sure) and it soared up the charts to the #2 free app overall in the United States.

Then over a weekend, he made it $.99.  After over a week now, he’s still 28th paid overall (as of today).

I’d say this strategy has worked quite well for him.

Good luck in pricing your iPhone app!

photo credit: ell brown

We had a great iPhone app, Doodle Buddy, @ $2.99 that wasn’t selling to our expectations. We’d promoted it in our other apps with minimal luck. Its best rank was 57th in productivity. We joked about how it ranked #1 in Nicaragua when it had no downloads.

Well 3 weeks ago we decided to not just drop the price, but to make it FREE.

Free is a Compelling Price Point

I got an email shortly after the price drop from Joe Sipher (Pinger’s VP of Marketing) and the subject line read: “Free is a compelling price point”.  What happened was amazing. We all expected it to make a short lived surge into the top 100 free apps, but it did more than just that. It exploded. 

The next day it was 54th and 3 days later it was 6th overall for free apps.

Here’s how they ranking chart looked.
 

Bottomline: 1 Million downloads in 23 days!

What I Learned

Here are a few things I learned from this.

Takes time to get it right

It’s not always easy to get it right in the app store. Maybe the 2nd or 3rd or 4th time you’ll get it right.

Ever app has its price point

You do your best to price your app, but the consumers will ultimately tell you what the price should be.

Great offer + marketing vehicle = BIG Bang

We had announced Doodle Buddy to our users before and they had responded. It just hadn’t been fireworks. Now with a compelling offer and thousands of consumers to put it in front of, we had the right combination for a hit.

How has pricing changes and/or marketing helped your app sales?