It’s always interesting when people do the math and figure out that the old sales concepts do actually translate largely into the digital age. The current case in point is a blog post by Jeferson Valadares a few days ago, where he analyses the iOS Paid vs Free with in-App purchase models to see which is making more money.
The free model wasn’t available from the start with Apple on the App Store - originally developers had to charge a nominal amount if they wanted to include In-App purchases with their application. However they changed the rules in more recent times and now it is possible to submit a free app that has additional content available only through In-App purchases. This has been referred to as the Freemium model (a merging of the words Free and Premium). His conclusion is that Freemium is now the winning formula for application developers on iOS. This should come as no shock to anyone.
In the traditional software sales market there was always the ability to “demo” or “trial” most software prior to forking out money for it, or at least get a taste of what the application is like before putting money down for it. Get them hooked on the free version and then they’ll pay for the upgrade. To me it needs to be clearly stated at the outset or it isn’t very fair to anyone. That is, state clearly in the description how the application is set up with In-App purchases and Apple has begun to ensure that such measures are taken consistently in the App Store which is great for the end user.
When my application was listed at $0.99 USD in the App Store it sold quite well (at least to my expectations) but when you’re up against free apps that have similar functionality, the free entry level entices users to download first and after they’ve used it they may just be more likely to buy the extras (or for the removal of ads). Then again from a developer point of view, selling apps with a up-front price is money in the bank - one download equals one sale. For those that want that certainty in their business model I’ll understand why many will stick with it. Then again, more sets of eyes on your product could just increase your overall sales.
Whichever route is chosen, developers need to decide this up front and code their app accordingly.