So many possibilities
A recent evaluation of a pricing experiment by iPhone developer Team iBokan, presented as a guest blog on TechCrunch, reveals some of the things app developers should try to avoid.
Armed with app download tracking tools and a post-hoc common sense, developer Bo Wang shares insight into the cogs of app development, as well as lessons learned from a pricing experiment on the company's first iPhone application: a brick game called Galaxy Impact.
The game was introduced to the iTunes App Store on Oct 27, 2008 as a free download. In the first two weeks, it was downloaded 220,000 times, ranking No. 10 in the top free apps category, and No. 20 in the overall top free apps.
But on November 9th 2008, the company began charging a $.99 fee for the game. Before the change, average downloads per day topped 10,000; afterwards, downloads plummeted to little more than 20 per day. The company quickly reverted to the free model, and the average rebounded to about 1,000 per day, remaining there for a long period.
Then it tried advertising. Team iBokan updated Galaxy Impact with new features and ads from Admob, a mobile ad firm that launched Download Tracking for iPhone Apps in January. This resulted in a huge spike of update downloads, with a peak of 30,647 on November 22 — two days after the update release.
Still, the increase did not translate into new purchases, despite the $0 pricetag.
As of his writing, the total number of downloads was around 500,000, with about 160,000 updates — with ads at a 3 to 1 ratio, Wang reported.
The current rate of free downloads for Galaxy Impact, about 120 per day, means that 0.3 per day are being bought for $0.99 (applying the for-fee ratio). The company makes $.21 on each purchase, just 8.4% of what it makes daily from ad revenue ($2.50).
Wang concluded that app developers should not suddenly charge for an application that was free. And given that ad revenue generates more profit in the long run than sales revenue, developers should go with the ad-supported model from the beginning, rather than add it to a later update.
In other ad/mobile app news, Google recently began testing an ad program on Urbanspoon, an iPhone application that introduces local restaurants to users; and on Backgrounds, a mobile wallpaper directory.
On the latter, text ads appear on a bottom overlay as users browse the image library. The ads disappear once Background images are saved as wallpaper.
