Neil Hughes
Price drops on Apple's App Store can be an effective tool used to gain interest and boost revenue in the short term, a new study has found.
In its latest report, mobile app analytics firm Distimo took a look at the effect of price changes on mobile software. Their data found that a total of 850 unique iPhone applications, and 930 iPad applications, changed their price at least once in the month of December.
The data collected by Distimo found that price changes have a much greater effect on iPhone software than iPad. For example, downloads of iPhone apps increased by 1,665 percent five days after a price cut, while iPad software downloads grew by 871 percent.
Distimo also found that price cuts resulted in revenue growth rates continuing to grow the longer than the application was on sale. For example, revenue for an iPhone app increased 137 percent five days after a price drop, and 159 percent a full week after the discount was enacted.
"There is a two-fold explanation for this lagged revenue growth effect: either an increase in income from one-off fees or an increase in income generated by in-app purchases," they explained.
Going in the opposite direction and increasing the price caused cumulative downloads to drop by 46 percent over five days on the iPhone, and 57 percent after five days on the iPad.
In all, the data shows that customers are more sensitive to price changes on the iPhone than they are on the iPad. Distimo came to the conclusion that price drops — particularly ones sustained for at least a week — are a smart play for developers looking to increase downloads and revenue.
AppleInsider Staff
Malcolm Owen
Oliver Haslam
Andrew O'Hara
Wesley Hilliard
William Gallagher
Christine McKee
24 Comments
No, no, no, no... Any back room analyst worth their salt can interpret this correctly. Lower app prices means a precipitous drop in iOS device sales, hence the need to slash prices. Apple is doomed!
That's incredible. I wouldn't have guessed it was by that much.
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If there's an app or game that I want, and it looks good, it makes no difference to me if it's 99 cents or $1.99 or $2.99 or whatever. The only apps I will specifically wait for price drops on are more expensive apps, like when something drops from $50 to $25 for a short period of time. That will definitely influence my decision. An app going from $1.99 to 99 cents will not. If it wasn't attractive at $1.99, 99 cents won't make it any more attractive.
Not mentioned here is the fact that there are many sites and apps dedicated to tracking price drops. The additional attention these apps receive has to be a contributing factor. I get a daily e-mail on app price drops to watch for apps that change to free, but I do find myself once in awhile purchasing an app that comes up as a price drop because I am now aware of its existence.