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App Developers Should Charge More If They Want People To Buy Subscriptions, Suggests Report ( 50

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

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  • Oh man (Score:4, Funny)

    by DontBeAMoran ( 4843879 ) on Tuesday August 15, 2017 @08:06PM (#55022059)

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

  • Cost is not priority (Score:5, Interesting)

    by amiga3D ( 567632 ) on Tuesday August 15, 2017 @08:11PM (#55022083)

    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.

    • by beelsebob ( 529313 ) on Tuesday August 15, 2017 @08:16PM (#55022111)

      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.

      • by bungo ( 50628 )

        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

  • Not just for apps (Score:4, Interesting)

    by El Cubano ( 631386 ) on Tuesday August 15, 2017 @08:16PM (#55022109)

    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.

    • Paying more is a goal of marketing tech. Only an ignorant person does it. So much for free markets lol.

    • OK. This is getting a bit frustrating.

      I have come to expect getting moderated as Troll or Flamebait in political discussions as those are popular moderations in those sorts of discussion (some of my views are in fact outside the Slashdot mainstream), even though I do not intend to troll or flame. I have even come accept that I will get regularly moderated as Overrated in politically-oriented discussions (that seems to be a fairly common substitute for "I just disagree with what you say").

      But wha

      • by epyT-R ( 613989 )

        Welcome to slashdot. It still works better than 99% of internet discussion boards where people with out of band positions are simply banned.

      • I guess I should have seen the Overrated mod coming there. Thanks for confirming that this is a personal issue of some sort.
      • by Whibla ( 210729 )

        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.


    • Some of us don't seek the absolute lowest price because we've learned that there are tradeoffs for that low price, such as low quality or lack of features. Usually, the sweet spot is in the middle, because we typically don't need all the bells and whistles you get with the "premium" products.

  • by desdinova 216 ( 2000908 ) on Tuesday August 15, 2017 @08:21PM (#55022149)
    How about creating an actual value to subscribing/paying for the app.
    • by joemck ( 809949 )

      This. I think it's not so much a psychological effect of the price being higher. What we're seeing here is that apps that charge $7-20 a month are usually offering something of actual value, like a large library of TV shows. Meanwhile apps that charge under $7 are usually offering something of little value, that is either useless or can easily be had for free elsewhere.

  • Never ending revenue (Score:4, Interesting)

    by markdavis ( 642305 ) on Tuesday August 15, 2017 @08:23PM (#55022159)

    >"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).

    • by tepples ( 727027 )

      There is no app I would ever get sucked into "renting", ever.

      Not even something similar to Netflix or Amazon Video? And what would you recommend for web animation now that Adobe Animate CC is rental-only?

      • Not OP, but I wouldn't. I don't even subscribe to Netflix, Amazon Video, cell service, cable, etc. The only "subscriptions" I have are water, natural gas, electricity, FIOS internet, and garbage. I consider those to be needs. Everything else is a want that I have found a want for yet.

      • >"Not even something similar to Netflix or Amazon Video?

        That might be an exception, but it generally doesn't work that way.... in such cases, you have a subscription to the content and the app is just along the way for the ride. All the content providers include free apps to access the content (HBO Go, Netflix, Google Movies, Amazon Video, Time Magazine, etc, etc).

        • Distinction without a difference. An app developer could make an app technically "free" in the App Store or Google Play Store, but put some essential part of the logic of the app on the server and charge for access to the portion of the app that is on the server. Dropbox's storage upgrade is this way, for example.

      • by joemck ( 809949 )

        "And what would you recommend for web animation now that Adobe Animate CC is rental-only?"

        There are 3 kinds of web animation:
        A. Trivial animations, like menus sliding down or slideshow transitions. Just use CSS and a smidge of Javascript directly. It isn't hard.
        B. Annoying excessive animation. Don't make these.
        C. Full scene animation or small games. Use Unity or a similar tool that can export to WebGL.

    • I pay an annual subscription for my RSS reader, but that's because it's cross-platform, browser and app, and I don't want it to go the way of Google Reader. I'm happy to keep them afloat and fund new development, even if I don't use most of it. The alternative is that it dries up and goes away, and that would make me sad. Sure, I could move elsewhere, but this one absolutely nails my use-cases, and it's by far the best one I've ever used.

  • 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.

    • by epyT-R ( 613989 )

      oh you want a file explorer? that'll be $2.99, thanks. You should have everything in the cloud anyway.. it's only $10/mo for 1TB!

    • by tepples ( 727027 )

      I have yet to hear of any mobile app that was not a service that was free on the web at some point.

      "Free on the web", or free legally on the web? Because the "free" counterparts that preceded Netflix were apps made with the intent of infringing copyright.

  • It's not going to work. There are a significant amount of apps that I don't "need". There are some which are nice to have, but if they charged more, it wouldn't happen. I think there are too many people stuck in this entitlement to everyone elses money and anything they make people will buy. There are a lot of really good apps, that people spent time developing to be efficient and useful, and those are the ones that are getting more. No one seems to ever go "Hmm, that app gets more money because it's bett
  • Perception of Value (Score:4, Interesting)

    by seoras ( 147590 ) on Tuesday August 15, 2017 @11:31PM (#55022923)

    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 (Score:4, Insightful)

    by raynet ( 51803 ) on Wednesday August 16, 2017 @01:55AM (#55023275) Homepage

    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 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 t

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