Free vs. Paid Apps

The rise of smart phones as a result of mass production and marketing of quality mobile phones and quality software from global giants like Apple Inc, Samsung and Google has created a big economy for indie developers as well as the traditional software companies.  This development has created a new ecosystem during the last few years that makes it a lot easier for the independent developers to market and sell their apps directly on the app stores and market places like Google play, Apple and Amazon app store to the end users.  Mobile software and apps development companies had to learn to do business in different ways, departing from the traditions of the industry.   One of the most important question, apps developers have to face is what revenue model they should choose, premium or freemium.  Here by freemium apps we mean the paid apps while free apps are either totally free supported by ads or are launched with a free limited version supported by in app purchases of resources or extra levels.

According to the stats shared on Gigaom from a two year long study, freemium accounts for the 69% of apps revenue on Apple iOS alone and about 75% for the global Android apps revenue. It has reached 3.5X over this period. Premium model is generating revenue but it does not seem to be as popular and productive as freemium model.

Selection of revenue model for app may depend on the confidence of a developer on their app. If the developers believe that their app is unique and stands out in the crowd in quality and the entertainment factors for the users, they can start with the premium model that is one time upfront payment for the download.  Developers of quality games apps like Lost city have proved that one can make good revenue through this model.  Developers of premium apps should have freemium version ready as a back up though. If the premium model does not achieve the minimum expected targets, they should be ready to switch to freemium version by providing basic game or app free but charge on extra resources or levels.  One should be ready to try different models, as one formula does not work for every one. It depends on certain factors like contents, quality and the market.