'AppStore Secrets' : Price Drops, Usage and Ad-Supported Models

[MacRumors]

Greg Yardley, co-founder and CEO of mobile analytics firm Pinch Media, recently gave a presentation at the New York iPhone Developers Meetup highlighting data gathered from over 30 million App Store downloads of applications utilizing Pinch Media's analytics libraries. The presentation, entitled 'AppStore Secrets', reveals a number of interesting of statistics and conclusions.

Notably, Pinch Media's data on price changes reveals that a price cut on average results in a 130% increase in sales demand, while a price increase decreases demand to 25% of previous levels. The data, however, also suggests that while price cuts can be beneficial, developers should not initiate price cuts on apps that are already seeing a trend of increasing downloads, and that applications that have already seen broad visibility benefit less from price cuts.

Regarding the ability of applications to sustain users' interest, Pinch Media discovered that only about 1% of downloads end up being used long-term, with only about 20% of users of free applications using the application beyond the first day. While paid apps generally perform a bit better in this regard than free apps, the drop-off in usage is still steep in the vast majority of cases. Similarly, the amount of time users spend engaged with an application decreases significantly, stabilizing at approximately five minutes per day, although games do perform approximately twice as well as other applications in this regard.





Pinch Media also performed analysis on ad-supported and paid applications to determine which model is likely to perform better. Based on their data and estimates of ad pricing, they concluded that in general an ad-supported application would have to "bombard" users with ads in order to generate as much revenue as a paid version. There are, however, certain applications (less than 5%) that can either command higher ad rates due to their audience or keep users engaged for a long enough period to make an ad-supported business model worthwhile. Consequently, Pinch Media recommends that unless there is a compelling reason to launch an ad-supported application, developers should charge for their apps and only switch to an ad-supported model if usage data suggests that such a move would be successful.

Article Link: 'AppStore Secrets' : Price Drops, Usage and Ad-Supported Models

[Mykbibby]

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Hmmm... Sound like consumers win always!

[Kilamite]

I for one can't be bothered with the AppStore much (in the sense of surfing it for the sake of surfing it) - if something really cool gets reviewed, I might be tempted but I never check the Top Free Apps/Top Paid Apps at all now.

I have everything on my iPhone I need, and anything else I'd add to it, as the research says, would probably never get used again.

[bacaramac]

I would say that this trend applies to me on usage. I wonder if the app store will slowly calm down or if people will continue to buy apps they won't use long term.

[Enuratique]

It doesn't take a rocket scientist to realize that there's no consequence to free apps. In general, you get what you pay for. There are notable exceptions (RolandoLite, etc) however a lot of apps are just buggy or not worth the paid version... People realize this after the first use.

The only free app I can recall using on a regular basis is Sudoku by Mighty Mighty Good Games. It's what I do when on the shitter at work.

[ipoppy]

Thats nothing....I have already forgot what I've downloaded from app store today. Is there any graphs for this???

[jhilla]

Originally Posted by Enuratique

It doesn't take a rocket scientist to realize that there's no consequence to free apps. In general, you get what you pay for. There are notable exceptions (RolandoLite, etc) however a lot of apps are just buggy or not worth the paid version... People realize this after the first use.

The only free app I can recall using on a regular basis is Sudoku by Mighty Mighty Good Games. It's what I do when on the shitter at work.

I couldn't agree with you more, for the most part I'll download new apps as they come out but they don't last long.

I love Tangram Pro, I prefer the apps that offer more than entertainment. Utlities are what drive the iPhone for me such as WhatTheFont, Shazam, Converter, TipStar to name a few.

That doesn't mean I don't have a page filled with games I enjoyed at one time that I keep onboard for an unseen circumstance such as the bus, subway or "shitter".

[Furrybeagle]

I wonder if the data about ad-supported versions takes into account that there may be people who use the ad-supported version of an app like a software trial. Perhaps these are people who wouldn’t initially want to pay for the app, but after trying the free, ad-supported version, they are more likely to pay full price to upgrade and get rid of unsightly ads.

The software devs may not see revenue from the ads, but they probably *do* see revenue from users upgrading from the ad version to the “premium” version of the app (who wouldn’t have bought the premium version had there not been a free version).

[Yarg]

I agree with Kilamite. My phone is fine without the 3rd party additions however I wish apple would release some "skins" so we're not stuck with the same icons all the time.

[kornyboy]

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Very interesting. Some of the stuff was obvious but still interesting to see.

[jhilla]

Originally Posted by Furrybeagle

I wonder if the data about ad-supported versions takes into account that there may be people who use the ad-supported version of an app like a software trial. Perhaps these are people who wouldn’t initially want to pay for the app, but after trying the free, ad-supported version, they are more likely to pay full price to upgrade and get rid of unsightly ads.

The software devs may not see revenue from the ads, but they probably *do* see revenue from users upgrading from the ad version to the “premium” version of the app (who wouldn’t have bought the premium version had there not been a free version).

I agree, it's like downloading a demo from PSN. I'm not sure if I actually wanna buy Resident Evil 5 but by playing the buggy demo, I'll get a taste of the gameplay and what not then I might be more inclined to purchase or decide it's not for me.

Originally Posted by Yarg

I agree with Kilamite. My phone is fine without the 3rd party additions however I wish apple would release some "skins" so we're not stuck with the same icons all the time.

I wish they would release themes just like my old moto and SE used to have. More user driven content that could be released through the AppStore. Although I saw footage of a jailborken iPhone and they had custom skin/theme.

[kas23]

All very interesting stuff (except for the part above not dropping your price if your sales are increasing. really? ), particularly about useage. iPhone users end up using about 1% of their total apps on a long term basis. Makes sense. This is also a reason why people don't want to drop money on an app - they won't likely use it every again.

This is also why we should have a 24 hour period of testing an app. I know developers don't want to hear this, but this would clear the App Store out of a LOT of crap.

[SolRayz]

Well I am certainly not surprised by all this. For me the most useful programs are found in Cydia for my jb iphone such as the iPhone Video Recorder and Qik.

The usefulness of the majority of programs offered in the appstore clearly remains to be seen.

[jc46]

This reminds me of the days of HyperCard. Within a short period of time there were a Gillions of "stacks" (That's what they called programs) posted. Most of them worthless, but fun never the less.

[shiseiryu1]

This isn't too surprising. Some of the apps I download I also only use once. However, I have found Logmein, Firebox, and Pocketmoney to be apps that I do use on a regular basis. Once the Slingbox app is available I'll probably use that a lot too.

[ewoods]

Is there anything stopping a developer from charging for their app and then later, when sales have significantly declined, releasing an "update" that includes ads? To the best of my knowledge, having already paid for the app and with no easy way to revert to a previous version, there wouldn't be anything the consumer could do about it other than stop using it, right?

[marksandvig]

Interesting.. I just did a sync of my iPhone last night and boringly looked through all the apps I had downloaded.. Mind you I only like to have 2 pages total (id have one if I could delete some of apples default apps XD.) I counted 50-something apps.. Even though the majority were probably in the first week when I was a downloading machine.. Interesting article though

[manhattanboy]

This confirms what most people already know... most of the apps on the store are useless.
Now if we can just get a streaming 3G hulu app..........

[manhattanboy]

Originally Posted by ewoods

Is there anything stopping a developer from charging for their app and then later, when sales have significantly declined, releasing an "update" that includes ads? To the best of my knowledge, having already paid for the app and with no easy way to revert to a previous version, there wouldn't be anything the consumer could do about it other than stop using it, right?

You could chose not to update!

[Michael73]

What I'd love to see is a correlation of AppStore app data with data about dashboard widgets. Sounds odd at first, but I bet the same thing happens with widget usage. Lots of downloads but most get tossed after a day or less. Very few see true long-term usage.

[manhattanboy]

Originally Posted by Enuratique

It doesn't take a rocket scientist to realize that there's no consequence to free apps. In general, you get what you pay for. There are notable exceptions (RolandoLite, etc) however a lot of apps are just buggy or not worth the paid version... People realize this after the first use.

The only free app I can recall using on a regular basis is Sudoku by Mighty Mighty Good Games. It's what I do when on the shitter at work.

I disagree to a certain extent. I use my internet radio free apps and weather/radar app quite a bunch and use them consistently...well except for when the sh*tty AT&T network isn't cooperating

[Bonte]

Originally Posted by bacaramac

I would say that this trend applies to me on usage. I wonder if the app store will slowly calm down or if people will continue to buy apps they won't use long term.

Do the apps need to be used long term?
We pay $3 to rent a movie that has 2 hours of entertainment, 99 cent for a fun app is a no brainer for most users.

[wooo]

Originally Posted by manhattanboy

I disagree to a certain extent. I use my internet radio free apps and weather/radar app quite a bunch and use them consistently...well except for when the sh*tty AT&T network isn't cooperating

I'd have to agree here, sure the fart and beer apps etc. are going to be collecting dust and are really just a fad (a lucrative one of course) but some apps that provide real utility (radio apps, ssh access, air sharing, etc.) have real staying power.

From just under 2 weeks of being in the store, my own app (ooTunes Radio) has shown me that it has a quite a bit more "staying" power and useage time than the average (which is of course brought down by the gimicky stuff that is really only funny or fun for a few minutes). Of course, the downside of that is that It's increasing my server/hosting costs, but if it comes with > 100 downloads a day, it's gonna feed my family, which is nice.

[kmcrawford]

Now I feel dumb for making my one of my apps ad-supported.

But I went from just a few downloads a day to 1000s.

[jhsfosho]

I can't say that graph surprises me much. I'd say that I fall into the category of download and forget, though there are a couple games that were free that I tend to play every once in awhile.