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iPhone app price drops grow revenue an average of 159% in 7 days

post #1 of 25
Thread Starter 
Price drops on Apple's App Store can be an effective tool used to gain interest and boost revenue in the short term, a new study has found.

Distimo


In its latest report, mobile app analytics firm Distimo took a look at the effect of price changes on mobile software. Their data found that a total of 850 unique iPhone applications, and 930 iPad applications, changed their price at least once in the month of December.

The data collected by Distimo found that price changes have a much greater effect on iPhone software than iPad. For example, downloads of iPhone apps increased by 1,665 percent five days after a price cut, while iPad software downloads grew by 871 percent.

Distimo also found that price cuts resulted in revenue growth rates continuing to grow the longer than the application was on sale. For example, revenue for an iPhone app increased 137 percent five days after a price drop, and 159 percent a full week after the discount was enacted.

Distimo


"There is a two-fold explanation for this lagged revenue growth effect: either an increase in income from one-off fees or an increase in income generated by in-app purchases," they explained.

Going in the opposite direction and increasing the price caused cumulative downloads to drop by 46 percent over five days on the iPhone, and 57 percent after five days on the iPad.

In all, the data shows that customers are more sensitive to price changes on the iPhone than they are on the iPad. Distimo came to the conclusion that price drops ? particularly ones sustained for at least a week ??are a smart play for developers looking to increase downloads and revenue.
post #2 of 25
No, no, no, no... Any back room analyst worth their salt can interpret this correctly. Lower app prices means a precipitous drop in iOS device sales, hence the need to slash prices. Apple is doomed!
post #3 of 25

That's incredible. I wouldn't have guessed it was by that much.

GIGO. The truth in all of life.
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GIGO. The truth in all of life.
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post #4 of 25
“Price drops on Apple's App Store can be an effective tool used to gain interest and boost revenue in the short term, a new study has found.”

post #5 of 25

If there's an app or game that I want, and it looks good, it makes no difference to me if it's 99 cents or $1.99 or $2.99 or whatever. The only apps I will specifically wait for price drops on are more expensive apps, like when something drops from $50 to $25 for a short period of time. That will definitely influence my decision. An app going from $1.99 to 99 cents will not. If it wasn't attractive at $1.99, 99 cents won't make it any more attractive.

post #6 of 25

Not mentioned here is the fact that there are many sites and apps dedicated to tracking price drops. The additional attention these apps receive has to be a contributing factor. I get a daily e-mail on app price drops to watch for apps that change to free, but I do find myself once in awhile purchasing an app that comes up as a price drop because I am now aware of its existence.

post #7 of 25
Quote:
Originally Posted by AppleInsider View Post

...
In its latest report, mobile app analytics firm Distimo took a look at the effect of price changes on mobile software. Their data found that a total of 850 unique iPhone applications, and 930 iPad applications, changed their price at least once in the month of December.

The data collected by Distimo found that price changes have a much greater effect on iPhone software than iPad. For example, downloads of iPhone apps increased by 1,665 percent five days after a price cut, while iPad software downloads grew by 871 percent.

Distimo also found that price cuts resulted in revenue growth rates continuing to grow the longer than the application was on sale. For example, revenue for an iPhone app increased 137 percent five days after a price drop, and 159 percent a full week after the discount was enacted.

I agree and accept that a price cut would and should increase sales.

 

I don't understand the two sets of numbers though. 1,665 and 871 percent versus 137 and 159 percent.

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"A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools." Douglas Adams

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post #8 of 25
Lower price increases demand. I sense the beginnings of a theory here...
post #9 of 25
Quote:
Originally Posted by Smiles77 View Post

That's incredible. I wouldn't have guessed it was by that much.

Mine costs zero. The demand's infinite....

post #10 of 25
Really? Things on sale sell better than when they're not. What a revelation.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #11 of 25

I added features to my app and then raised the price. I'm selling just as much as I did before and making more money. But, I'll have to see how it goes. The app was just released so I might be seeing a bump due to that.

 

What's tragic is how good apps which take freelancers a lot of time to develop can barely sell for the price of a cheap cup of coffee. It's also a shame the market gets flooded with apps built off of java based build for all device sdk's. Not difficult to see when you've downloaded one of those. The app market will soon be filled with apps that have drag and drop elements that someone built using a web browser. I really wish Apple would limit apps coded using to Objective C or C.
 

post #12 of 25
Originally Posted by Brasco View Post

I really wish Apple would limit apps coded using to Objective C or C.

 

I agree, for the most part. I'd love to see them block Flash again to prevent people from doing zero work and just porting Flash games to iOS (and even OS X…).

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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post #13 of 25
Quote:
Originally Posted by dasanman69 View Post

Really? Things on sale sell better than when they're not. What a revelation.

The point here was not that they sell more. They make a lot more money at the lower price. That's not at all obvious.
post #14 of 25

deleted


Edited by MacRulez - 7/5/13 at 3:10pm
post #15 of 25
Quote:
Originally Posted by Brasco View Post

What's tragic is how good apps which take freelancers a lot of time to develop can barely sell for the price of a cheap cup of coffee.

There are over 500 million iOS devices out there. If you make an app that is attractive to 1% of them at $1, your revenue is $5 million. That's not tragic. That's the power of a mass market with almost no cost to make copies of the product. You're being paid by the market, not by the individual.
post #16 of 25

Do you know what it takes to get enough exposure to capture that 1%. We have at least 6 apps currently out there. Just on the free side we are fortunate to get 100 downloads a day. There are a lot of crap apps out there not getting any downloads (I had one and pulled it) which are taking up app space for the apps that offer real value. The point is, with so many free crap apps, how is a user going to ever get to your app which offers value at .99. The supply far out weighs the demand.

 

There is a huge market opening up is China as well. I released an app in China selling 100's of free apps per day. Set it to .99 and DOA. I wish apple would setup iAds in the China market so we could start making money there as well. From my conversations with fellow students from China, the Chinese culture does not believe software is something people should pay for, it should be free. I'm fine with that, just give me a profitable ad channel to take advantage of it. We tried AdMob but they don't pay for ****.
 

post #17 of 25
Quote:
Originally Posted by lkrupp View Post

No, no, no, no... Any back room analyst worth their salt can interpret this correctly. Lower app prices means a precipitous drop in iOS device sales, hence the need to slash prices. Apple is doomed!


zzz

post #18 of 25
Originally Posted by stelligent View Post
zzz

 

I just had Zither Zather Zuzz flashbacks. Don't do that! lol.gif

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #19 of 25
Quote:
Originally Posted by NormM View Post

The point here was not that they sell more. They make a lot more money at the lower price. That's not at all obvious.

That's what happens when something sells more, duh
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
post #20 of 25
I have an app. Yes sales increase when I drop the price, for a week or so, then they fall. What should I do after reaching $1, give my app for free and stop working on it? :-)

Damn you, Apple. You never discount your stuff more than 10%, but you are driving AppStore prices to 10%, so 99% of iOS developers work for peanuts.

I'm not kidding. My app is in AppStore since 2008. I've witnessed several rule changes in AppStore that helped to drive prices to $1.
post #21 of 25
Quote:
Originally Posted by serkol View Post

I have an app. Yes sales increase when I drop the price, for a week or so, then they fall. What should I do after reaching $1, give my app for free and stop working on it? :-)

Damn you, Apple. You never discount your stuff more than 10%, but you are driving AppStore prices to 10%, so 99% of iOS developers work for peanuts.

I'm not kidding. My app is in AppStore since 2008. I've witnessed several rule changes in AppStore that helped to drive prices to $1.

Here's a interesting article I recently read.

http://www.nytimes.com/2012/11/18/business/as-boom-lures-app-creators-tough-part-is-making-a-living.html?pagewanted=all&_r=0
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
post #22 of 25
Regarding difference between iPad and iPhone numbers, I have my iPhone with me way more often then my iPad. Unfortunately I can only purchase iPad apps on the iPad, not the iPhone. the reverse of course is true. This means some times I miss out on deals because I can't get to an iPad or computer.
post #23 of 25
Quote:
Originally Posted by broadbean View Post

Regarding difference between iPad and iPhone numbers, I have my iPhone with me way more often then my iPad. Unfortunately I can only purchase iPad apps on the iPad, not the iPhone. the reverse of course is true. This means some times I miss out on deals because I can't get to an iPad or computer.

One should be able to buy a iPad app through the iPhone and then have it automatically installed the next time the iPad connects to the net.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
post #24 of 25
Originally Posted by dasanman69 View Post
One should be able to buy a iPad app through the iPhone and then have it automatically installed the next time the iPad connects to the net.


That's how it works already, right? Or do you mean iPad exclusive?

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #25 of 25
Quote:
Originally Posted by Tallest Skil View Post


That's how it works already, right? Or do you mean iPad exclusive?

I mean iPad exclusive.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
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