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Indeed. Big game publishers can afford to give out their games for free, then harvest millions of dollars a week from in-app purchases, pour that money back into paid user acquisition, top the charts, and repeat until their next game comes out.

That business model is all well and good if you're a game publisher, and especially if you're a well-funded game publisher. But it kind of sucks for anyone who's not in a category that benefits so dramatically from in-app purchases. In-app purchases are not a magic-bullet solution to pricing problems for most other categories of apps.

(Now, one could certainly argue that games provide more value to the user than other apps do. While there's something to that argument, it's not sufficient. Surely the solution to this problem isn't "every app becomes a game").

So what should you do if you're an app developer, and you're not making a game? To be honest, you're in a tough spot. The deck is stacked against you. Prices are converging on zero, in-app purchases probably won't keep the lights on, and the prospect of flooding your app with advertisements probably makes you (or your UX designer) cringe.

This is where the freemium model should make sense, IMO. Create something of general value to a large TAM, but of extraordinary value to a smaller slice of that TAM. Give away the basic version to the TAM, but upsell the power version to the power users. It may be the case that your app is better for the power users than existing solutions for which they're paying hundreds, or even thousands of dollars. If that's the case, don't be afraid to charge higher than $.99 for the premium version. If the delta in utility between Your App and Existing Solution is extremely high, and the price gap between Existing Solution and Your App is big, you've got a lot of room in pricing, and that pricing will be justified.

Unfortunately, absent a fantastic way to do trial versioning, the existing methods are pretty inelegant. Apple needs to get better about allowing developers to do trial versions, or this overall pricing and monetization problem is going to get worse.




> upsell the power version to the power users

The problem is you then have to have two versions in the App Store, Acme and Acme Pro. Each version will have to go through the torture that is the App Review process. What if one gets rejected, and the other doesn't? It's a pain to have to start over again and lose another week, not to mention coordinating marketing, etc.*

If you decide to sell the Pro features as an in-app purchase, i.e. pay $9.99 for "Pro", what happens next year? "Pro 2014", "Pro 2015" ... ? Also this assumes that your app is built such that Pro features can be isolated from the rest of the app.

*EDIT: Also, if you have a free app and a Pro app, and the user finally decides to purchase the Pro app, with sandboxing, you now have a problem of how to best migrate user data to the Pro app.


"The problem is you then have to have two versions in the App Store, Acme and Acme Pro. Each version will have to go through the torture that is the App Review process. What if one gets rejected, and the other doesn't? It's a pain to have to start over again and lose another week, not to mention coordinating marketing, etc."

Exactly, which is why I said that Apple needs to allow for trial versioning. Otherwise, people attempting a freemium model are forced into this inelegant and suboptimal execution of freemium.


Why can't you structure an app such that it runs for a limited time for free, after-which a one-time, in-app purchase is required to continue? That sounds like a trial to me.


Apple's App Store rules forbid time expiring trials.




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