Just 10% of all apps downloaded on Apple’s iOS are paid-for, as free ad-funded apps rose 6% in the past year, according to new research. The study, from app analytics provider Flurry, looked at app price changes over time. Results indicated that between 80 to 84 percent of iOS apps were free between 2010 and […]
Just 10% of all apps downloaded on Apple’s iOS are paid-for, as free ad-funded apps rose 6% in the past year, according to new research.
The study, from app analytics provider Flurry, looked at app price changes over time.
Results indicated that between 80 to 84 percent of iOS apps were free between 2010 and 2012, but by 2013, 90 percent of iOS apps in its network were now free.
Free apps still generate money via ads, in-app purchases or promoting users to upgrade to higher-spec or ad-free paid versions.
Mary Ellen Gordon, Director, Industry Insights and Analysis at Flurry report author, said: “People want free content more than they want to avoid ads or to have the absolute highest quality content possible,”
Android apps
The report also found that Android users are even less willing to pay for mobile apps than their iOS counterparts.
In April 2013, the average price of Android apps (factoring in free and paid) was $0.06, while on iPhone it was $0.19 and on iPad it came to $0.50, the report found.
Pricing experiments
On the surface, the rise of free apps could be seen as herding behavior: maybe app developers saw how much free competition there was and decided to make their apps free too. Flurry looked at historical iOS app data (again because iOS apps have a longer history) to identify apps that have been the subjects of pricing experiments.
That typically took the form of A/B testing, where an app was one price for a period of time then the price was raised or lowered for a period of time, then raised or lowered again. This lets developers assess users’ willingness to pay (i.e., price elasticity of demand) based on the number of downloads at different price points.
The chart below shows the percentage of tested and untested apps that were free (weighted by user numbers). The vast majority of untested apps in green were free all along, so it’s most interesting to look at the trend among apps that were subject to pricing experiments, in blue. As shown, there was an upward trend in the proportion of price-tested apps that went from paid to free. This implies that many of the developers who ran pricing experiments concluded that charging even $.99 significantly reduced demand for their apps.
The report concludes that mobile users are increasingly willing to accept app ads in exchange for free content, just as we have in radio, TV and online for decades. In light of that, it seems that the conversation about whether apps should have ads ‘is largely over’ according to Flurry.
Read the full report here
