NEW YORK — More than half of consumers believe that apps are not expensive, according to a new survey by consulting firm Simon-Kucher & Partners.
“It takes a long time to upgrade free users to the paid product and app makers need to strike a better balance between free and paid offerings. It needs more time and management attention to get right.”
“Apps today are stuck where music was a few years ago and newspapers were until recently,” argues Andre Weber, partner at Simon-Kucher. “The music industry made a bold move on the assumption that people would pay more, and it worked wonderfully. App makers are not pioneers in convincing consumers to pay for content. They need to learn from what’s worked and act accordingly.”
The survey by Simon-Kucher & Partners – a global marketing and strategy consultancy specializing in pricing – investigated which apps consumers want, how much consumers will pay for apps and how app makers can turn apps into cash.
A large majority of consumers in Simon-Kucher’s survey believe that $1.99 or more per month is an acceptable price to pay for an app – far higher than most app makers charge today. The figure was highest for streaming video, followed by games, and magazines.
The rise of tablets is good news for app makers because people are willing to pay a premium to put content on premium devices.
Kyle Poyar, senior consultant at Simon-Kucher, commented: “If you buy an expensive new TV, you’re willing to spend the extra money on HD and premium cable. We’re seeing the same thing happen with tablets and apps. The question is - why aren’t app makers capitalizing on this extra value?”
Tablet owners on average download more apps than smartphone owners, according to the survey. Tablet owners are also more likely to be paying for apps today. Three-quarters of tablet owners and more than half of smartphone owners have already paid for an app despite the abundance of free and freemium apps on the market.
Games and publications were the most popular categories of apps on tablets. The average tablet owner downloaded nine games and four publications. If publishers price their apps at parity or sell them as an upgrade to print, they will create a tremendous revenue opportunity. If they price too aggressively, though, they may end up making much less money than they do today.