Apps; What Are Consumers Willing to Pay?


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As someone who closley follows the play industry, I find tracking apps to
be a bit frustrating
for three reasons:

  1. They
    challenge the notion of perceived value

    In other words, is that bag of plastic horses still worth $5.00 if I can get a horse game app for  free?

  2. It
    is difficult to quantify just how many dollars apps take from the other play
    industries
    when the choice of getting a free app rather than purchasing a toy
    does not show up as a monetary gain for apps so much as a revenue loss for video games and traditional toys.

  3. We have no clear idea as to how much time apps take away from other forms of play?  We need to know.  Why, because the loss of play time to apps,
    which I suspect is currently far larger than the loss of dollars, could be a
    harbinger of a future comparable drop in revenue.

That was why an article on Retailing Today
caught my interest.  Entitled, “Survey:
Apps offer too much for too little
,” the article maintains that app providers
could get more money for their free and low priced apps than they are currently
asking
consumers to pay.  According to
the article:  “The survey by Simon-Kucher
& Partners – a global marketing and strategy consultancy specializing in
pricing – investigated which apps consumers want, how much consumers will pay
for apps and how app makers can turn apps into cash.”

The survey found that a large majority of
consumers would pay on average $1.99 per month ($23.88 annualized) for an app
they now can get for free
or close to it. 
Games were cited as one of the app categories that could demand this
price.

This creates an interesting opportunity for
app makers and their play competitors. 
If app makers charge more, their revenue should go up and their unit
sales should go down.  If that happens
then perceived value of apps and by default competing products goes up. 
It’s a win for everyone.

Still, there is that time thing.

 

2 thoughts

  1. We may cry that the free or below market price app model is eating the cheese off our sandwich. However, the impact is effecting other industries even more servilely. The publishers of big budget titles are falling like flies, we’ve already lost LucasArts, Radical, Eurocom, Psygnosis, Rockstar Vancouver, THQ and the list goes on. Then there are a lucky few that have starved off the axe through mergers and acquisitions, they include Vigil, Big Huge Games and too many to mention here. Perhaps the biggest unnoticed side-effect is these free app have small budgets which mean no money for creatives and therefore we are seeing the same game play just re-skinned. Game quality and depth have become roadkill in the rear view mirror of the free app steamroller.
    Not all is death and gloom. The horse maybe out of the barn but there is a new model that is evolving and the volume of downloads along with the increase in those consuming is a market well worth investing, just ask gree-corp.com. This is a growth industry, we must adapt and find new ways to mine this gold.

  2. Time will bring this about, and quality apps will not be free for too long.
    The free stuff, if it is not on a marketing department budget, will die back (not out)as it will not be worth designing and producing for no return.

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