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In this episode we talk about pricing and more generically about market testing. I know, I know, marketing is probably not every coders favorite subject. I bring it up as I’ve noticed many apps in the marketplace that are underpriced. Apps that are cool, differentiated or do something of great value to the consumer can clearly support higher price points. No user is ever going to ask you to charge them more for your app so the task of picking the right price point falls on you. The easiest way to do that is to do market testing aka A/B testing (or split testing, bucket testing etc). In this episode I refer specifically to price testing for paid apps but this technique could easily be used to test for other things that might increase revenue in paid apps or downloads in free apps. All sorts of things like categories, descriptions, keywords, or artwork can be affect the performance of your app and so could be optimized.
As I mentioned above, from what I’ve seen in the marketplace many developers will underprice their apps. They seem to be optimizing for number of downloads. That is indeed what you want for free or ad-supported apps but for paid apps you probably want to optimize for revenue and that formula is a simple one everyone knows: revenue = paid downloads x price. If you optimize for downloads then likely you are in a race to the bottom; i.e. how fast you can get to the $0.99 price point.
Since you have 2 variables to optimize and only one which you have any control over, the easiest way to optimize for revenue is to test different price points and watch the number of paid downloads at each point. Obviously if you want to maximize revenue then you want to get the highest price possible for your app. To do that start at a high price. Over time you may need to drop the price (e.g. for competitive reasons or for sales or promotional events).
So the obvious question is: how do I do market testing on the Windows Phone marketplace? Since you cannot vary pricing by market in the marketplace the way I recommend is to submit the same app with the same metadata twice. You would do that to two different markets that have very similar buying behavior. Examples of markets that have similar buying behavior are US/Canada, France/Belgium, Germany/Austria, or Australia/New Zealand. By doing this you can do your A/B testing; i.e. by maintaining all things equal except for pricing then you can figure out what price the market will bear for your app.
Let me know what you think about this episode of Top Ranked.
If you have questions about any of the videos, about problems or issues you’re hitting or if you have topics that you think would be of interest to other devs on the Windows Phone platform then drop me a note. I’d be particularly interested in hearing about some of the best practices you’ve adopted that you think have raised your quality or your ratings/ranking in the Marketplace. I’ll be sure to give full credit and link love whenever I can.
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