2016-12-15 00:00:00 Starting a Business English Review considerations to keep in mind when deciding to charge for your app or give it away for free, and explore the pros and cons of both... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/03/Client-Checks-Investment-Portfolio-Through-Convenient-App-Services.jpg https://quickbooks.intuit.com/ca/resources/starting-business/should-you-charge-for-your-app-or-give-it-away-for-free/ Should You Charge for Your App or Give It Away for Free?

Should You Charge for Your App or Give It Away for Free?

2 min read

If you’re planning to launch an app, you need to decide if you should charge for it or release it for free. There are pros and cons to both options, and the right choice depends on your objectives for the app as well as your earning goals.

Free Apps

If your app is designed to promote your small business or help clients get in contact with you, you almost certainly want to give it away for free. In this case, the purpose of the app is to advertise your business, build loyalty, and help your clients. However, if your app provides a service in and of itself, you likely want to focus on earning money from it.

Free Versus Paid Apps

Charging for an app results in direct revenue from every person who downloads the app. Alternatively, you can give apps away for free and earn revenue through in-game purchases. For example, some apps offer a few features for free but charge for advanced features. In other cases, developers offer the entire app and all its features free of charge, and they use advertisements to generate revenue. In some cases, developers charge a small fee for the app, offer in-app purchases, and include advertising.

Making the Decision

When deciding how you want to monetize your app, you need to consider a variety of factors. While free apps are likely to be downloaded by more people, unfortunately there is no guarantee that buyers will make in-app purchases or use the app often enough to see advertisements. In contrast, when buyers pay for an app, you have guaranteed revenue, but the number of buyers may be smaller.

The type of app you’ve created also makes a difference. For example, if your app provides a service to business owners, you may want to offer a free trial period or a few free features so users can get a taste of what the app offers. Additionally, with service-oriented apps, advertisements may feel misplaced, but they are a common and well accepted feature in gaming apps.

Choosing a Price

If you decide to charge for the app or offer in-app purchases, you need to price those items carefully. Figure out your costs to create the app, choose a target number of apps you think you can sell, and price the app so it covers your costs. If you want to charge a monthly subscription fee for your app, consider your ongoing costs as well as the cost of creating the app. It’s also important to look at competitor’s prices so you understand what’s happening in the marketplace, as well.

In-App Purchases and Advertising

Luckily, many app publishers have systems in place that can guide you through the process of setting up in-app purchases. For example, Apple offers developers [StoreKit]https://developer.apple.com/in-app-purchase/) so they can sell premium content, virtual goods, and subscriptions. Similarly, app stores may also have tools to set up in-app advertising. In particular, Google has tools that help you to embed interactive media ads in your app.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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