Paid Apps vs Free Apps

by Martin

All right, now many people don’t know the difference between a paid app and a free app on the itunes,  android  or any other suitable  store for that matter from a developer’s perspective.

So what is the strategy here?

It’s actually quite simple. In the first scenario “Paid Apps”, you as a developer invested on developing that gorgeous app you want everybody to come across with and of course, spend their hard earned money on it. Some games with a strong franchise behind are basically a sure shot at the time of being uploaded as a paid app. You don`t have to be a rocket scientist here. If you love playing FIFA on your console, having it as well on your mobile device is a logic step into your gaming needs right? So, basically from the advertised price on the app store, the developer shares about 30% of the price tag with the app store, the rest is earnings, well after covering development costs and advertisement of course. This is the scenario when the developer did everything by themselves.

If the developer didn’t had the strength to advertise their product on their own, then another piece of the pie is shared with a Publisher. They will be in charge of letting people know about your app simply because the more you sell the more they earn. A publisher wont accept just any game. Must have potential , be original or something clearly targeted to a eager community of identified gamers. But as we all know, (at least the ones that has been reading my posts the past months) success ain’t guaranteed.

Mobile games have a very short life in shelves and need strong advertisement so this is a risky business no  matter the approach.

But what about “free apps”? Well the figure here goes different and in most cases have three different approaches to reach their goals:
First, A common free app is a “demo”, just to show possible buyers what is you app about. So you will have a limited version of the original app that will try to hook you in order to upgrade to the full version. Basically the same strategy goes for apps with “in app purchases” The main app will be free but if you want extra content or special items you will be charged from inside the app for them.

Second, another common free app generates revenue thanks to advertisement. You install an API in your game that will show gamers advertisement that wont be annoying or constant and will pay the developer a fee per click and downloads (in case that another app is being advertised through yours) There are a few companies offering this service to developers with an interesting amount of downloads on their behalf simply because they need channels to deliver the advertisement for their clients.  This is an interesting approach if you are in the top 100 free apps charts and this is what we did with our game Don’t Wake Dad, a casual platformer with more than 100.000 free downloads reaching top 20 in 4 countries so far. Here is the link for you to download our game: http://goo.gl/KKr7R  Free apps of course gets more downloads so it is a good idea to include different approaches to generate revenue in your catalog.

Third, Free tailored apps for companies to increase their branding exposure. Simple,  some companies hire developers to create a game for them as part of their marketing campaigns. There are studies that shows that social games increases branding awareness more than  500%.

Now you have the basics to understand that releasing a free app doesn’t mean you wont be making money out of it.

To end this post I want to share with you an ancient Japanese proverb: Money grows on the tree of persistence!

Martin

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2 Comments to “Paid Apps vs Free Apps”

  1. Very true Martin, Free app will have much bigger dl numbers then paid, always. A lot of teams and companies are eyeing on making free apps with IAP or IAD. Some successful free apps actually made more money off IAP money then they would actually made if they were paid to start with. Just like the game “Metal Storm: Online” The game was tagged .99 to begin with, after it got featured as N&N, the developer soon changed the price mark to free since the app already carried IAP packages in it. I think it reached no.1 spot in my country’s top free chart and was on the top grossing chart for many weeks in many different countries.

  2. Exactly Mike, the key here is that in order to make serious money out of advertisement on free apps you must have millions of users and this ain’t easy. There is always a catch right?

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