One of the biggest mistakes we make with our apps is not understanding where, exactly, users place value. I want to talk about my friend Ben really quick. He wrote a wonderful pro camera app called Obscura. You might have seen 1.0 when it launched, it got mentioned in the Apple press quite a bit.
Ben and I were talking at the Release Notes conference back in October about how his current monetization strategy just wasn't working. It was the typical App Store story: great app, lots of attention to details that mattered, but not bringing in money. He wasn't going to give up, though; he wanted to try a new monetization strategy with 2.0.
He launched his big 2.0 in mid-December, and three days ago he wrote about his big 2.0 launch. Here's the TL;DR of an interesting storm of events:
- 1.x was free up front with IAP for photo filters, ~1% conversion on that. $800 lifetime profit in over a year through 30,000 downloads.
- Ben's planned 2.0 was moving to $4.99 paid up front model since IAP just didn't seem viable for his app.
- Apple unexpectedly featured him on Dec 17th, a few days before his planned 2.0 launch (he was approved, sitting waiting for release the next week, after everyone was done avoiding the internet and potential Star Wars spoilers for the weekend).
- He launched 2.0 early to take advantage of the increased visibility, on Dec 20th.
- He profited ~$13,000 in December.
Ben's download / profit chart for the launch. Note the minimal profit increase when he was still IAP Dec 17 - 20, despite the extra downloads.
The effects of getting featured by Apple and launch-day spikes are no surprise, but I want to highlight why understanding where your customers place value is important. Ben and I were running some numbers on Twitter: had he rode out being featured with his IAP-based version 1, with his ~1% conversion, he would have seen ~$1,500 in profit.
He earned almost 10x more not because of Apple, but because he found a pricing model that aligned better with what his customers actually placed value on. His customers were more interested in paying for a great camera app than for some extra photo filters. It wasn't until he launched 2.0 that the extra visibility started to translate to real profits.
(And that's with him waiting 3 days to rush-launch the paid version, probably missing out on ~$8,000+ from the first 3 days? (sorry to point that out, Ben))
In Ben's case paid up front worked wonders for him. In the case of Slopes subscriptions are working much better than paid up front ever did. There is no silver bullet pricing model, and there is no "wrong" model, but if you don't experiment and find what works best for your business you'll be leaving money on the table.