What kind of pricing model should I start with? Building an app for iOS, iPadOS, and macOS.
I am working on a productivity app (consumer) that I would like to launch on iOS, iPadOS, and macOS – not all at once! I'm starting to think about how I might price this app.
Charge once per OS (what I'm leaning towards)
During my initial research, I remembered about an app I use quite a bit called Things. They have a pricing model that charges upfront for each OS.
Personally, I paid for all but the iPad version because I don't need it on the iPad, I just want it on my phone and computer. I really like having the option to opt-in to the devices I want to utilize.
Charge once for a Universal App
Another option is to charge upfront for a universal app. This approach would allow users to buy the app once and use it across all their devices.
I also feel like I would need to charge more for a universal app so I kind of feel like this would be unfair to those who only want to use a single version.
Subscription for a universal app
A solution to this might be to use a subscription model. In the short term, it would cost less than an upfront payment but would cost more over time since it's a subscription.
Subscriptions don't feel right for my use case. I will have little to no server costs. All the data will be synced via CloudKit if the users choose. Additionally, all the business logic will run on the device. Hence, no ongoing server costs (CloudKit has a very generous free tier).
A subscription for me doesn't feel right, and I think it's the most annoying for customers as well (they can be for me).
Freemium
There is a freemium option to each of those I listed, but I'd like to focus this thread on the pricing model I should use after I've converted folks to pay for the app. Basically, how should I make money from my app?
What should I be considering?
Is there something that I'm missing that I haven't mentioned? What types of considerations should I be making when choosing a pricing model to start with?
Thanks for reading! 😊
There's a lot to consider when it comes to pricing your product. As @levidxyz mentioned, thinking about the value you create is an excellent way to inform this decision.
If for example this budgeting app is going to save me $20 a month, then I don't think it would be unreasonable to have a subscription fee, as I'm continuing to get value from the app. The same might also be true if I'm going to save time.
If the app is just going to help me manage my budget a bit better than existing solutions, then perhaps a one-off fee might make the most sense.
I think you might be overlooking the freemium model, as there are different ways you could approach it. For example if I save $500 using the app, then there's a one off fee of $20 (sort of like Taxfix). Or you could allow users to get to certain threshold of use, before converting them to a paid customer (think Slack, or Notion).
It also depends your aspirations for the app, if you're looking to build a useful tool, and move onto another project, and generate some passive income along the way. Then one-off purchase might make the most sense for you personally. If you want to spin this off into a service business, then other pricing models might be better so that you can create MRR to cover to cost of continued development.
To start tackling this, consider the value drivers for your product, for inspiration look at the pricing pages for other services and see what they're listing for their product. Then consider what makes them worth paying for.
Thank you, @thatseika! You've given something to think about with regards to subscriptions. I hadn't considered the motivation point of view. It would certainly be tough to continue working on a product without any kind of recurring revenue. The freemium approach is really interesting to me too.
Thanks for the feedback!
Not saying you should definitely choose subscriptions, but I think this line of thinking isn't the best way to come up with a pricing model. IMO you should charge based on the value your customer gets, not based on how much it costs you to develop it.
In addition I think the ideal approach would be to charge based on the "value metric" for your app. For example, if your app's core feature is being able to quickly search through tons of notes, your customer would get more value out of the app the more notes they have in there. So you might charge based on number of notes.
That value-metric-based pricing isn't always straight-forward, though. It might not even be possible for some apps. But I still think you should try to charge based on the value your customer is getting not based on how much work/cost falls on you.
Btw, whats the app? 😉
Great point! Thanks, @levidxyz.
I guess I should have mentioned what the app is (oops!). I am building the budgeting app I wish I had. I've been using a spreadsheet for many years, but I've always felt like the experience could be better.
You're right about not basing the price on how much it costs me, but rather the value it provides. I wouldn't say I was thinking in that way, but perhaps I was doing so subconsciously. You've given me something to think about in that regard.
I'm not entirely against subscriptions. Something that comes to mind is Superhuman. They charge a monthly subscription for a desktop/mobile app. Obviously, the model works in some cases.
I'm more or less trying to get a pulse for pricing apps that I plan on offering across the different platforms.
In the app store having in-app purchases seems the best way to make serious cash. Give it away with 75-80% of what someone needs. Then charge a small amount (cross-platform) to add a feature and/or block of features.
For example, a free Word Processor on the App Store that gives you the ability to write documents, save them, and spell-check. For $2 there is a grammar check. For $1 export to PDF, etc... For $20 all of the features are available.
Oh! Thanks, @ToddInsights. This approach is super interesting. It's almost like we're selling individual features. I like the idea quite a bit. Basic features free, premium features at a cost, buy a bundle of features for a flat cost/recurring cost.
Are you thinking that those purchases would unlock features cross-platform? Pay once, unlock everywhere?
It has to be pay once, unlock everywhere. That exponentiates the value while giving users an incentive to have it for every platform.
Similar to the other posters, I recommend subscriptions. An ongoing value might be that you ship updates in a regular way. The issue with one-time payments is that you don't get any value from keeping customers, you constantly need to ramp up for the next big release to sweep up new customers. Like once a year a big new version release. That's where I'm trapped right now. And its much easier to start with subscription right away than to change it later.
Thanks, @eduardme! That does indeed sound like a tough spot to be. I'm reconsidering my position on subscriptions, but I want to think it through and package it correctly. Perhaps with some sort of freemium angle to reduce barriers.
Cheers!
In the app store, it's very hard to build a real business on one-time purchases unless you are ranked #1-5 for high traffic search term(s), and achieving that is a very very difficult. The competition is cut-throat and you will likely lose unless you feel like your app is multiples better than your competition.
It is possible to build an app business on subscriptions however. It does take a long time (maybe years) but it is possible. So if you don't think you can do the above, then I think you should choose free trial + subscription or freemium + subscription. If your app doesn't naturally lend itself to subscriptions, then you should find a way to add features that do.
Genius Scan is a reasonably successful app. You can see on Sensor Tower that they do about $40k monthly revenue. https://sensortower.com/ios/us/the-grizzly-labs/app/genius-scan-pdf-scanner/377672876/overview
Their pricing includes free, one-time purchase for a pro upgrade, and cloud storage for a subscription. https://thegrizzlylabs.com/genius-scan/pricing
I should clarify what "reasonably successful" means. The vast majority of apps do less than $5k monthly. Most do less than $1k monthly. If this is a side project to you, this may be fine. I don't know what the actual statistics are, but a very small percentage of apps do more than $5k/month.
For reference Genius scan is ranked #6 for "scanner" and "scanner app" which are very popular search terms. They have 433K reviews with a 4.9 star rating, and they have been around for 10 years to get to this point.
I would recommend you do some research so see which apps are successful and check out their rankings on AppAnnie, revenue estimates on SensorTower and study their pricing strategies, ratings/reviews and how long they have been in the market to get to where they are today.
Super useful info, @stevenkkim. Thank you! I agree that ranking 1-5 would be quite difficult. Especially for a solo dev like myself. I'm not saying it's not possible, but I definitely feel like it would be quite difficult. No harm in starting off with subscriptions and going from there. Thanks again!
Apple is pushing developers to use subscription-based pricing. I would guess that you'll have more and more platform support if you choose this model.
Also, many apps have discovered that a upfront purchase pricing model is hard to sustain. You see a lot of apps switching to subscription pricing.
One thing to remember is that if you are continually developing your app, users get features and improvements for their subscription fee.
That's a great point, @girishw. Apple does seem to be pushing hard towards subscriptions and it makes sense, it generates more money for the dev as well as Apple. It feels a little tough for me, but I like what you said about customers paying a subscription to continue getting new features. If this product were a one-and-done deal, then perhaps a one-time payment would make sense, but I don't see that being the came so a subscription model is starting to make more sense. Thanks for your input!
Cheers!
While I didn’t try subscriptions yet, but I know the one-time payment situation my hypothesis is that it’s very hard to grow without subscriptions.
If you have one-time payments, you need traffic to get new customers. The only way to get more customers is to increase the traffic or somehow improve conversion rates. So your focus has to be on marketing.
If you got a subscription, however, you don’t need to push so hard for traffic but can work on making improvements on support and product to reduce churn with the goal to get more people into signing up than churning out. You would need some baseline traffic though.
I agree with @thatseika... if it's just a project to earn passive income go with the one-time subscription but if you want to build it into a real business, the subscription model would be my go-to.
also more than happy to help you get the app in front of your customers. Let me know
Thanks, @Sylvesterighodalo! I'll keep that in mind. Cheers!