Study: Do app discounts and being featured boost app revenue?

by Andreas Rothe

27.01.2012 15:22

Distimo had a closer look at two things known to boost app sales (and ideally app revenue): discounting your app and being featured in the Apple App Store or the Android Market. The study found that this is generally true, but not to the same degree for all stores and categories. Sometimes, it even leads to loss.

Having your app featured in the large app stores is basically the best a developer could hope (and work) for. It's like having your hardware product put next to the cashier point of each and every Walmart, Tesco or whatever large supermarket chains there are.

There is for sure not one standard recipe how to get there, but several approaches from using classic marketing & PR to making use personal contacts in the industry. In most cases it will take a lot of time and/or cash to get there. So, assuming you've got a great app, is it worth all that to get featured?

Research house Distimo did look at apps being featured in the Android Market as well as the Apple App Store for iPad and for iPhone and their answer is: Yes, most of the time.

Being featured in the "New and Noteworthy" category or in "Staff Favorites" pushed up iPhone apps by 15 ranks, iPad apps by 27 and Android app even by 42 ranks - in average. (Distimo was only looking at apps that already made it to the Top 100 most popular apps).

Being featured most positive at Android Market

However, some apps did not gain anything - some even went down the ranking. For iPhone apps this is 33% and 4%, respectively. Android Market, which has also seen the largest positive effect of being featured, is comparably safe from these ills, only 6% of featured apps stagnate or lose in rank.

Distimo_FeaturedApps_GainLoss

Source: Distimo

As there is a difference in importance between jumping from 9 to 1 and jumping from 99 to 91, Distimo also created another, percentage-based way to look at the effect. However, the results are similar, showing the largest positive effect in the Android Market. Details can be found in the publication itself.

Noteworthy: apparently the effect of being featured also continues after the feature ends, at least for the following 5 days, the period Distimo surveyed.

Sale! Sale! Sale!

Easier to influence whether or not you are featured, is to simply put you app on sale to get noticed and boost your revenue. Again, Distimo looked at apps that are already popular, being the 100 highest grossing apps in any category. Main outcome: The revenue in the Apple Stores (phone, pad) rose by 41% (52%) in the first day of sale, and by 22% (19%) during the whole sale period. In the Android Market the effect seems to be less sudden, with a first-day-increase of 7%, but an overall increase of 29%.

Distimo_AppsOnSale_GainLoss

Source: Distimo

But you've gotta be careful, the effect is not always positive. In all stores, about a third of apps on sales had a loss of revenue, especially in the iOS world (44% / 49%). A chance of 51% for a positive effect is basically just 1% better than random coincidence.

Half price!

However, there are some rules that should raise your chances. In general, your discount has to be significant.

"For example, offering a discount of one dollar on an application that normally costs $7.99, lowers the revenue, whereas offering a discount of three dollars on average increased the revenue by 131%."

Distimo suggests cutting the price in half of offering the app in tier 1 ($0.99) or tier 2 ($1.99).

You can see the more complex effect of price cuts on the gain/loss in the graphic below. Distimo points out that it did not look at the long term effects though. In other words: Maybe people might refrain from buying your product for the full price, once they saw they might get it cheaper.

Distimo_AppsOnSale_GainLoss_PriceCut

Source: Distimo

Price per category

Interesting information to orient your pricing along might be the graphic below, showing the average price amongst the top grossing apps per category as well as the category popularity by revenue. You can see that e.g. games are a category making quite some revenue with rather medium-priced apps. All data in this article and the report by Distimo refer to the US version of the stores.