Subscription app developers might be better off charging more

Counterintuitively, subscription app developers are likely to find greater success by charging users more for their apps than less, according to a new report from Liftoff.

The app marketing firm analyzed data gathered between June 2016 and June 2017, and categorized app subscriptions into low-cost monthly subscriptions ($0.99 to $7), medium-cost monthly subscriptions ($7 to $20), and high-cost monthly subscriptions ($20 to $50). The findings suggest that lower-priced subscription apps don’t necessarily draw in users more than high-cost ones do.

Subscription apps are becoming increasingly popular among developers, in part because they are a more stable revenue generator. Rather than having to rely on the purchasing behavior of app users for things like in-app purchases, subscriptions comes in on a regular basis. Moreover, for iOS developers, Apple has increased the revenue cut for subscription app developers from 70/30 to 85/15. It’s worth noting that while Google announced it would also make these changes, it’s unclear whether the revenue cut has changed.

Developers need to take into consideration things like the cost benefit of charging more or less for an app, the type of app, and their target platform:

Overall, the Goldilocks principle holds well for the subscription app model.
The app's function is a key factor in consumers' willingness to spend.
iOS users are more expensive to acquire than Android users.

App developers long considered the "pay once and play" model — in which users pay up front an app and aren't prompted to make in-app purchases — the best way to generate revenue. But as more "free-to-download" apps entered the market, users increasingly opted for these experiences. These apps offer microtransactions for in-app goods and services, and in-app ads.

As the app ecosystem expands further, it will become increasingly challenging for developers to compete in a crowded market. Overall, global gross app revenue will double to reach $102 billion by 2020, according to recent projections by App Annie. As a result, app monetization strategies need to shift at least as quickly as consumer trends and preferences in order for developers to capture a piece of this growing market.

Laurie Beaver, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on app monetization that:

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