Make money form Windows Phone: Paid or Free app, which strategy to choose?

It is arguable wheatear it is more profitable for developers to have free ad-based apps or paid ones. It depends on the type of app, marketing , quality, target market size and lots of other things.  In this post I will share some tips that could help you choosing what is the right revenue model for your next app.  

Paid or Free app, which strategy to choose?

• Target market size

The first thing that you should do is to make a simple assumption of the number of impressions you expect the app to generate for a particular period. For example, if you have a "News" type of app or a mass consumer app (engaging enough), the assumption is that users will use the app daily by a large number of users, so there is a good probability for your app to generate a significant amount of impressions daily. The more impressions the app generates the more money you can get from advertising and vice versa. So, if your target market is big enough then offering the app for free with ads might be the best choice. Take a look at the Microsoft Advertising pubCenter for more information of how to make money from advertising.

• Competitive Advantage

If your app has a strong competitive advantage and it is hard to be imitated then, you can make it paid and even offer it at a higher price. In short, before start building a mobile app, make a quick research to see who your competitors are and try to find what your app's competitive advantage is, what makes it different. If you can`t find any, then the app is not worth implementing and you will not going to make a lot of money from it. For example there are more than 100 "Twitter" apps, so there is no point to implement just another "Twitter" app, because first of all the competition is huge, you do not have any sustainable competitive advantage other than may be a better UI or a few more features, which is easy to imitate and everyone can copy. On the other hand for example if you have developer a complex image processing algorithm and base your app on it, then you have a promising chance for success.

• Online or offline app

If your app offers static content, for example a database with facts or other information for which internet connection is not requited, then there is no point to offer your app for free and rely on ads, because ads are shown only when an internet connection is available. On the other hand, if you are showing dynamic content that comes from a web service, then showing ads is a good choice.

• Brand awareness

If you have a product or a company that you want to build brand awareness for, the offering a free app with no ads is the recommended choice. For example the WindowsPhoneGeek app is a free app with no ads, we do not make any money from it. The purpose of the app is to complement the WindowsPhoneGeek web site.

 

 

• Paid service/product awareness

If you are building an app that either monetizes or promotes another paid service (usually on a web site) or paid product, then choosing a free app with no ads is probably the best choice. For example if you have a service for which users are paying, by offering a free app you build brand awareness, attract more users and retain existing ones. All these should result in increasing revenue from the paid service.

FREE Apps

If you choose to offer your app for free, then you have to decide which of the revenue models described above to use. In the most common scenario developers choose advertising. There are many ad serving providers available, and in theWindowsPhoneGeek Component Marketplace we have collected a number of advertising networks for Windows Phone all of which have different offerings.

Paid Apps

The first thing to do before publishing a paid app to the Market Store is to determine what pattern you want to use:

• Paid app + Free ad based Trial
• Paid app + Free Trial with no ads
• Paid app with no Trial

Although all of these patterns can be seen in the Windows Store, my recommendation is to avoid publishing paid apps with no trial, since less people would purchase your app if they can`t try it before paying for it. According to Microsoft, more users would consider and buy Windows Phone apps if they could try the app out first to see if they like it. Here are some results reported results by Todd Brix(Senior Director, Windows Phone Apps Team at Microsoft) a while ago:

1.Users like trials. Paid apps that include trial functionality are downloaded 70 times more than paid apps that don't include trial functionality, expanding the number of potential customers to purchase the full paid version.

2.Trials result in higher sales. Nearly 1 out of 10 trial apps downloaded convert to a purchase and

3.generate 10 times more revenue, on average, than paid apps that don't include trial functionality.

4.Trial downloads convert to paid downloads quickly. More than half of trial downloads that convert to a sale do so within one day, and most of those within 2 hours.

So, although it definitely depends on the app, on average offering trial functionality should grow the number of "potentialcustomers" and if the quality of the app is good then the developer should expect increase in revenue. Also offering a free trial with ads is a good way to measure which approach works better for you and brings you more money: revenue from sales or revenue from advertising.

Final thoughts

With the upcoming release of Windows Phone 8, Microsoft are offering Windows Phone developers even more monetization's opportunities like in-app purchasing.

The choice whether to offer your app for free or to charge for it is yours and depends entirely on your incentive and objectives. Feel free to share your opinion/experience in the comments below.

You may also find helpful the following post: Creating a Windows Phone 7 Trial Application: Implementation and Best Practices