An essential element of an app marketing strategy is that the price is a variable that must be set carefully because it has strong implications on the quantities that will be sold by the company and thus its profitability. By changing, and specifically dropping the price of an app, sales could be maximized.
Distimo, an app store analytics firm, released a paper last week on how price changes affect iOS app sales. The results are surprising...
When the price drops for iPhone apps, on average, cumulative downloads grow by 1,665 percent for the following five days. Note that a price drop is more effective on iPhone Apps than iPad ones (871 percent). It could be explained by the fact that the iPad is still often an entertaining or working device, where users care less about paying for good apps.
As we can see, it increases download volume, but it also permits apps to move up in the App Store charts. App developers then have a chance to shine and rise alongside the 700,000 apps currently in competition. In Distimo’s report, we can see that 850 iPhone apps and 930 iPad apps had changed prices at least once in December 2012, out of some 12,000 apps that had ranked in the top 400 across 10 key Apple Apps Stores worldwide. This is no coincidence; it works.
But what about the publisher's revenue? In general, is it better to keep higher prices and lower demand or lower prices and higher demand for a few days?
For Distimo, revenue growth does kick in around day 3 after the sale begins. Revenue in the App Store for iPhone went up by 95 percent at this point.
What’s more interesting, perhaps, is that the revenue growth continued well into day 5 and day 7 as well, with increases of 137 percent and 159 percent, respectively, for iPhone app sales. On iPad, those numbers were somewhat lower but still increased.
Given the stats and the figures presented by Distimo, App sales obviously help an app move up the charts and be downloaded by the thousands. Revenues react the same way. Sales could boost the initial notoriety and marketing strategy of an app, for a week or two. It is still necessary that the app should be good and appealing.