Let's say you've had a fabulously successful iOS app launch. Your ad campaigns have been impeccably scheduled. You've A/B tested your metadata, and you're routinely updating keywords and copy to increase visibility and generate conversions. Apple gave you the famous 'seven day boost' to help you get off the ground, and it worked like a charm.
Now a few months have passed, and you're wondering how to recreate that magnificent boost in high value users you saw during week one. One strategy that many publishers of paid apps utilize is a temporary price reduction. This takes some planning (and courage) to execute correctly, so our data science team has created a close-up on five apps that reduced their prices in order to bolster their user base.
First, let's take a look at popular app Tiny Wings, released in February of 2011. It's important to note that this app has no in-app purchases. Also, be aware that the data in our graphs displays indexed downloads and revenue for the United States only.
In July of 2013, the app's price changed from $0.99 to FREE for eight days. Downloads saw an impressive spike, while revenue obviously dropped to zero due to the lack of in-app purchases. This strategy paid off for the publisher in the long-run, however. Look at the percentage increase in revenue after the app price returned to $0.99. The popularity and awareness this one-week price reduction generated resulted in renewed interest in the product during following months.
With Angry Birds, we see a different pattern in the download and revenue velocity during and after price reduction. The price drop is also from $0.99 to FREE, but in the case of this app, Angry Birds offers several in-app purchases that assist with the standard gameplay.
Thanks to the IAPs, revenue saw an increase during the price reduction. This means that the influx of new users, who didn't pay for the app itself, were willing to spend money on some bonus items to enhance their experience. All of the revenue that was earned during the price reduction came directly from IAP spend.
What's even more interesting is that revenue continued its upward trend well past the end of the price reduction, meaning the users acquired during the reduction were very valuable acquisitions. After the reduction, revenue saw an approximate 51% increase. 24% of this increase can be attributed to the corresponding increase in downloads, while around 27% of that increase appears to be in-app purchases made by the new users.
Like Tiny Wings, Goat Simulator offers no in-app purchases. In order to prevent a period of zero revenue during the price drop, Goat Simulator's price was reduced from $4.99 to $1.99 for seven days.
Looking strictly at downloads, we see the expected spike in conversions during the reduced pricing period. In this case, however, the popularity didn't last beyond its return to $4.99. This can likely be attributed to the steeper price point than we saw with the other apps in this study. When considering implementing a price reduction, the sizable difference between the regular price and the reduced price is clearly something to take into consideration when predicting impact or conducting a post-mortem analysis.
Warner Bros.' wildly popular app Heads Up offers a unique insight into the price reduction process thanks to some unexpected circumstances. The price was reduced from $0.99 to FREE, and the app has several expansion packs that can be purchased to add more audience challenges.
During the price reduction, downloads initially grew by over 5,000% and revenue grew by over 300%. Not bad at all! However, towards the end of the FREE period, there is a dramatic decrease in downloads. Using a combination of our App Update Timeline and Review History modules, we discovered that Warner Bros. updated the app just before the promotional period ended. And it didn't go well. Check out these reviews from the U.S. user base:
This update was causing the app to crash repeatedly, rendering the app largely unusable according to most reviews::. The Warner Bros. team acted quickly to fix the problematic bug, but the timing seems to have taken a toll on the velocity that was generated by the price reduction.
Make sure to isolate a price reduction strategy, and don't run any other tests during the specified window. After all, you'll want to be able to attribute any increased downloads or revenue accordingly, and making risky version changes might ruin the good thing you've got going.
Finally, let's take a look at our favorite wheeling-and-dealing avatars: The Sims! What we're looking at here are two things: a pricey app reduced not to FREE but to $0.99 (similar to what we saw with Goat Simulator), but with the addition of in-app purchases.
Due to the combination of in-app purchases and the new $0.99 cost, revenue took an impressive up-swing during the price reduction along with the download spike. Downloads did see increased popularity after the price returned to $6.99, but not enough to account for a fantastic increase in on-going revenue. This means that the users on-boarded during the pricing reduction were heavy IAP spenders. The LTV here is really impressive; publisher Electronic Arts clearly found a great combo of circumstances to get the most "bang for their buck" via strategic price reduction.
Each of these apps represents a slightly varied approach to the price reduction strategy for paid apps. Using the examples we've provided, remember to carefully consider things like timed version updates, whether or not to include in-app purchases, and overall price differentiation in order to maximize efficacy!
For more information on how to change an app's price in iTunes Connect, and how to generate buzz about the price change, check out this great post on the APPDK Blog.