Thursday, October 24, 2013

Free vs Paid Apps

To maximize both customer satisfaction and profit, should apps be free or paid? Users seem to maintain a tolerance for ads in free apps, which generates some money. One of Butterfruit Lab's current apps generates about the same amount of money with the ad-supported free app and the paid version with more content and no ads. 

According to Tech Crunch, paid apps are dead. The rate of free apps appearing in app stores is increasing. If these apps offer satisfactory alternatives to paid apps, we've got a positive feedback loop. Here's a graph from Flurry Analytics showing the recent decrease in the popularity of paid apps:

What's interesting is that the $5.99 apps seemed to disappear completely in 2012, but reappear in 2013. Maybe paid apps are losing ground, but people are willing to pay a good about for high quality ones. What does everyone think about apps with paid "Pro" or "Ad-free" versions? Or, what about in-app purchases?

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