What is the Best Pricing Strategy for Your Mobile Games?

Wednesday 6/22/11 02:42pm
Posted By Adam Riggs-Zeigen
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When considering the development of a mobile application, you are faced with very similar questions that most businesses have:

  • What to produce (product)
  • Where to sell what you produce (placement)
  • How to create awareness about what you produced (promotion)

and of course

  • How to price what you produced (pricing)

In business circles these questions are affectionately referred to as "The Four P's" (not to be confused with a great Irish pub in the DC area). They are amongst some of the most critical elements to get right in order to have a successful, viable business.

Along these lines, to help provide insight on the best way to price your newly minted mobile masterpiece, we've recently published a white paper looking at the effects of different pricing strategies for a set of mobile games. Basically we looked at a set of mobile games over the course of 4 weeks, reducing the prices each week and measuring the results. While the paper looked at games developed for Brew, the study has takeaways that could be valuable independent of your target platform.

For example, one of the key things we looked at was fluctuations in demand as the price of an app changes – the price elasticity of demand. While we all know that in most cases the lower the price the higher the demand, the question that is always raised is:

  • How much MORE demand will I get if I lower my prices?

and, therefore,

  • What is the right price to maximize revenues?

The cool thing is, we didn't stop by just looking at elasticity for a list of titles in aggregate: We also segmented both the type of game (in this case "casual" vs. "premium") as well as the type of consumer ("pre-paid" vs. "post-paid"). After all, as you might expect, not all types of consumers react in the same way to pricing changes and not all types of games experienced the same elasticity.

Without giving away too many spoilers, our pricing study found that it is possible to identify a sweet spot for a certain style of game for a segment of consumers. There was a certain discount percentage that, in our study, raised demand to such a level that overall revenue was increased, despite the lower cost per purchase.

Our hope is that as a developer, this information can help you to better understand how changes in your pricing will affect the demand for your products and, in the end, help you get more applications into the market and at the same time generate more revenue.

Once you've given the report a look, meet me over in the Brew MP forums or on twitter @AdamRZ and we can discuss.