App Developers Should Charge More If They Want People To Buy Subscriptions, Suggests Report (theverge.com)

A new report from Liftoff, a Silicon Valley-based mobile app marketing and retargeting firm, says that subscription-based apps may do better if developers charge a higher price for services, rather than setting prices too low to lure users in initially. The Verge reports: The Liftoff report, which analyzed data gathered between June 2016 and June 2017, categorized app subscriptions into low-cost monthly subs ($0.99 to $7), medium ($7 to $20), and high-cost subs ($20 to $50), while also factoring the cost of acquisition per customer. The company found that apps in the medium price range had the highest conversion rate -- 7.16 percent -- and the lowest cost to acquire a subscriber, at just over $106 dollars. This was five times higher than the rate of people who subscribed to apps when the apps were in the low-cost category. This may partly be because streaming media apps, like Netflix and Spotify, have already conditioned people to pay around $10 a month for services. But it also might be attributable to the sunk cost fallacy, Liftoff says: the "cognitive bias people have that makes them stay the course because they have already spent time or resources on it." The report also examines apps that fulfill "need states," like dating apps or cloud services. These have the potential to offer services that customers are willing to pay for, again and again. But, according to Liftoff, utility apps have a much higher install-to-subscriber rate compared to dating apps. Blame those who eventually find love?

Comments

Oh man

[DontBeAMoran]

If we ever needed the "apps!" guy, it's NOW!

Cost is not priority

[amiga3D]

I want an app that does what I want without trying to take over my damn phone. I don't mind paying a reasonable price for that. I pay for FBreader app on Android because I've used it for many years on Linux and love it so when I found it on Android I gladly payed for premium version even though I really didn't need the premium, I just wanted to support the developer because it works without taking over my phone. I don't like apps that want access to things on my phone they don't really need and I get rid of them, free or not.

Re:Cost is not priority

[beelsebob]

Yeh, there's MASSIVE selection bias in the study.

The reason that apps that charged $10 for subscriptions were successful was not because that's the price sweet spot. Instead, it was because the samples in that category are dominated by a bunch of really useful applications.

There are tons of apps charging $0.99 for subscriptions to things that are fucking useless, so again, selection bias in that bracket.

Re:Cost is not priority

[bungo]

More to the point, other than apps that charge $0.99 and are useless, there are an uncountable number of apps that charge $0.99 that are ok, and even more that are 'free', but good enough. Free, being a relative term, as they may not cost, but have in-app advertising.

If the author thinks that I'll spend more money on a subscription app, rather that choose one of the cheaper options, then he's never heard of supply and demand.

I'm cheap and lazy. If I can get something that is good enough, but is free or only needs a low on-off payment, then I'll take the cheap option over a more expensive subscription.

One of the biggest problem is that with the sheer number of apps around, how am I to know that the subscription app is significantly better than the free app. The free app probably has more installs and more high star reviews, since it's free.

Not just for apps

[El Cubano]

This phenomenon is true for lots of things.

I read an interesting analysis about automobile purchasing behavior. The main point of it was that most people want to get a good enough deal to be able to brag about doing well on the purchase ("check me out, I am a skilled negotiator") but not so low that they appear to be cheap. I have to admit I don't fully understand why that is, as I always seek the absolute lowest price I can find, but hey some college professors studied it, so I guess it is accurate.

Of course, there is also the same sort of thing for "lifestyle" and luxury brands. Would a Rolex that cost $100 have the same value as one that cost $10,000? In some ways yes, but not in the ways which make a Rolex a Rolex.

On the flip side I remember having interesting "discussions" with people regarding the various merits of Linux and Windows. This was probably 10-15 years ago. A surprising number (at least surprising to me) were of the mindset that since Linux was basically given away for free that it must not be very good. Of course, that has somewhat changed over the years, but you still come across people like that.

It probably boils down to the fact that people, especially in consumerist societies, tend to equate price with value.

Re:Not just for apps

[Whibla]

But what in my above comment could possibly be Overrated?

It wasn't me, but, to add a bit of context, I tend to get a lot of mod points, and I do occasionally down-rate posts for being overrated. I don't see it as punishing a bad post, it's to counter the 'bad' moderation of an average post. Why should a post that's not particularly insightful, informative, etc. (granted that's just in my opinion, but then I'm the one that has the mod points at that time) be at +5? Well, clearly it shouldn't, but if it's not a troll, it's not off-topic, etc. -1 overrated it is.

Do you just feel the need to punish me for the other comments I have made because you cannot moderate a comment more than once? I'll understand if you don't want to reply directly (as then the moderation would be negated), but if you would kindly reply as AC and tell me what about my original comment was overrated, I would appreciate it.

As I say, it wasn't me (this time, at least). For me, with my forum settings, your post is currently sitting at 4: Interesting. Well, yeah, it is mildly insightful (last paragraph), mildly interesting (second paragraph), but when you say "I read an interesting analysis about automobile purchasing behavior", while you then summarise it, you do not link to it or provide a useful reference to it, leaving us unable to determine for ourselves the accuracy of your assessment or whether anything else could be taken from the report. Would I apply an overrated mod to your post, probably not as it currently stands, but were it at 'Score 5: Informative' I almost certainly would do so.

No conspiracy, no stalker, no long term animosity, just a personal opinion based on this one post. While, as a species, we're predisposed to see patterns in everything, and make up stories to explain them, sometimes there's no pattern beyond pretty randomness, and other times the story we fabricate is wrong. Perspective, my friend!

here's a crazy idea

[desdinova 216]

How about creating an actual value to subscribing/paying for the app.

Never ending revenue

[markdavis]

>"App Developers Should Charge More If They Want People To Buy Subscriptions, Suggests Report"

Or give up on subscription. There is no app I would ever get sucked into "renting", ever. But I will pay a few dollars for a useful app. Maybe even more for a fantastic one (of which I have only done once).

What progress?

[coastwalker]

I have yet to hear of any mobile app that was not a service that was free on the web at some point. Marketing is probably the greatest reason for the decline of the western world. Economic growth is not achieved by inventing charges for free stuff, these people are parasites.

Perception of Value

[seoras]

I've been doing Website's and Apps for a decade now and a hard lesson I learned early on was that people don't value what they get for free or cheaply.
As soon as you put a decent price tag on it their perception of it's value changes.
You get less complaints and support problems too.
Give stuff away for free and you are just asking to serve your heart up on a plate to vultures.
I even have to kick myself sometimes when I find myself griping over a $1.99 app that it isn't free. It's small change. Beggars and buskers stuff.
The whole sub $10 market is just toxic.

Bad statistics

[raynet]

The statistics are only valid if they have been gathered from apps that have been offered in all three categories. I would assume that on the cheap apps category there is lots of crappy apps that no-one wants to subscribe into.

The problem isn't what app makers are charging...

[Veilex]

... the problem is the utter lack of quality in the apps. It should be noted that any app which employ piece-meal fees (microtransactions) are incentivized to provide a shoddy product. Perfect examples of this are the glut of games in which the difficulty ramps up extremely high rather quickly... and offers a paid service/product/special currency in order to be able to contend with or bypass that difficulty. Rather than providing a quality gaming experience, app developers focus on a quick showcasing of the game in the first 10 minutes or so to hook people into the game... then employ the bait-and-switch money grab. One could argue that this is why few take mobile gaming seriously.