When your brand is worth a premium (app)

There is a strong push for just about any app to be freemium. But I am not convinced this is always the the right strategy for brands, particularly entertainment brands (eg TV shows)

We know that app consumers are incredibly price sensitive. Any app with a price, even as low as $0.99/£0.69, is regarded as a ‘premium’ app. Generally shared community wisdom is that a free(mium) app will have 10x the downloads of a free app. It has been well proven that If the in app purchase elements and their price points are carefully managed, free to download apps can end up generating significantly more revenue than premium apps with a payment model up front.

This is very true of games, especially casual games which have high replayability (Clash of Clans, Angry Birds, Candy Crush etc). In many cases, the most successful of the freemium games are those where the payment is made to overcome ‘deprivation’ or being excluded or locked out of from the game for a period of time.

However, there is a view that consumers are starting to be aware that freemium can often mean ultimately higher costs.

While freemium remains most common in entertainment, content, lifestyle and games apps; where there is a brand involved with a significant following, for example a solid fan base – it may be easier, more straightforward and ultimately more profitable to monetise the audience through a premium app. If there is a significant dedicated fan base, and the price set correctly – the paid nature of the app is unlikely to deter them. Bear in mind also that there is no reason why the app cannot extend to a ‘paymium’ app – with in app purchases to expand on the original paid app.

Important with a paid app is active management of a pricing manipulation strategy – dropping the price for short periods of time (often based on events, dates etc) or offering extras (eg – one extra series included for one week) as incentives to encourage purchase.

Additionally, some app store partners offer marketing support for premium apps – the app is given away to the customers of a high trafficked site/publication/chain in response to the marketing partner actively promoting this off. This can effectively 'buy' significant marketing reach at the cost of some foregone app revenue, usually a good trade off.

Based on brand awareness; size of fan community; demographic (there is definitely less price sensitivity amongst an older audience than younger game players) and the form of the app (eg, where it is not strictly a game), increasingly it seems that premium may be the better (initial) strategy for your app.

For some more articles which touch on this, check out:

http://dancounsell.com/articles/paid-paymium-or-freemium

http://gigaom.com/2013/12/20/2013-was-the-year-of-freemium-games-but-2014-may-not-be/

http://www.148apps.com/news/pricing-games-app-store-premium-dead-freemium-stay-everybodys-fault