How should your app be billed? What is its value?

We all want to see a return on investment, especially when creating applications that require a lot of resources.

You spend a lot of money, time, and effort, and in the end, your app is done. Now comes a new challenge: how to charge for your application?

This decision depends on many factors. Hours of work, testing costs, marketing and promotion, purchasing any licenses are some of the aspects that determine the total cost of development. First calculate the cost, then set the price of the application.

To put the right price tag on your product, first, let's look at the different pricing models.

Understanding the pros and cons of pricing models will help you choose the plan that's best for you.

1. Pricing Model

It's important to find a balance between what the customer is willing to pay and the amount you want to receive to cover production costs and future maintenance costs. The pricing model you plan to adopt will depend entirely on the nature of your application.

1.1 Free

Who doesn't like getting something for free? Everyone does. Offering free apps is a good place to start. As long as it doesn't cost a penny, many users are willing to try the app.

For mobile applications, this is a viable pattern. Because stores have so many options, people usually start with the "free" tab to find a solution.

Another reason to make the app completely free is if you don't plan to monetize it directly, but use it as a booster for other revenue streaming platforms. For example, redirecting users to a website where they can make a purchase.

In other cases, you'll need to figure out additional revenue-generating methods. And the way to make money is to run in-app ads.

1.2 In-App Advertising

Advertising in the app generates ongoing revenue. You can implement many different ad serving formats in your application: video ads, banners, pop-ups, etc.

Still, you need to be very precise when choosing the format, period, and theme of your ad. Otherwise, you risk confusing users with irrelevant, aggressive content.

Use online services, such as Google AdMob, to filter and classify in-app ads.

What else can you do? Let customers pay a one-time fee to turn off ads.

1.3 In-App Purchases

We bet you've seen many examples of this model. According to this structure, users can download the app for free, but it will give them some extra features. If it's a gaming app, you can reactivate lives or unlock photo filters in the editing app for an extra fee.

This is usually the most commonly used model as it does not have any obvious flaws and allows users to access important application functionality.

1.4 Freemium

The term freemium comes from two words - free + premium. Like in-app purchases, it lets your customers download the app for free and then charges them for premium features.

There are several options you can try:

• provides two versions of the app : free and premium extensions. After downloading a free version and testing it, users can decide for themselves whether upgrading to the paid version or the free version is enough.
• offers a free trial : Set a limited free trial period for your app, once it expires, customers will need to pay to continue using the app.

In the free model, your goal is to lure users with the features of your app, forcing them to switch to the paid version.

Potential pitfalls

This pricing model can create a lot of work for developers as they need to deliver constant updates and improvements and manage two different applications.

1.5 Subscription

Subscriptions are another good strategy to consider for your application. Everything is simple: users have to pay a monthly/annual fee to continue using the app.

This is a common approach for streaming platforms and music apps. We all have active subscriptions to Spotify, Netflix or Apple Music.

Even if you can't acquire new users, you can still earn money from subscribing users. Think of this as an opportunity to build loyal and lasting relationships with your customers. Remember, you still need to provide updates and improvements, so you won't see a lot of subscription cancellations.

1.6 Paid download

This is the simplest pricing model. It requires customers to pay a one-time fee to download the app and use it for free.

What's more, users can't experience the app, you can only ask them to pay right away. Your potential users need to understand that this app is worth buying. Using marketing to convince people that your app is one of the best options for helping them solve their problems.

A short description in the app store is not enough. Users will want to know as many details as possible to make a purchasing decision. So give them this information, create visual content to show how everything works, launch a website, and use relevant platforms to promote it.

2. What is the value of your application?

Let's assume you analyze all the pricing models and choose the most suitable one. No matter which option you consider, you'll have to put a price on it.

make the right decision, you have to consider many things. These include:

• Purpose of your application
• your business goals
• your target audience
• Market demand
• The cost of building and maintaining the application
• your competitors
• where will you show the app

But most importantly, determine the value of the application. You and your team are the first to understand the value of the product. Only with a clear idea can you convince people that they will get a valuable return on their purchase.

3. How to identify the value of the application?

First, specify the problem your app solves: a dictionary to translate speech, an editor to improve your photos, or a task tracker to organize your workday.

Then, determine how it provides a solution that is better than thousands of other similar apps. Your dictionary may have a higher translation speed; the editor offers a wider range of manual settings.

Prove to your clients that if they pay for your dictionary, they will get a pocket translator that provides instant service and saves translations in a separate text document. As such, it can replace interpreters and reduce what you're most likely to pay for their work.

Still, try to be honest with your customers and respect their choices. You don't want to exceed their expectations. Build your relationships based on trust, and only then will you earn customer loyalty and retention, the key to ongoing revenue.

Last but not least - conduct a competitive analysis. View usage rates of similar apps and analyze the market you're in. Again, there are some strategies you can follow. Gain an advantage at a lower price than your competitors. If your app is at the same level, it doesn't do you any good to sell it at a higher price. However, if your application is more complex and advanced, you should be charged a higher fee.

Many people recommend setting a high price at launch and then lowering the price over time. Be realistic and don't spend more than the average user would pay. If we're talking about a mobile app store, users expect apps to cost around 0.99 cents, if not free. They hardly pay more than $6.99.