Tuesday, December 14, 2010

Switching an iPhone app from Free to Paid - postmortum

A little more than a year ago, I created a free iPhone app called Tunemark Radio. After more than a year of being a free download (with no banner ads), I decided to see how the app would fare if I switched it to a 99 cent app. It has now spent 2 months as a paid app and I detail the results in this post.

Background

Tunemark Radio is, as the name implies, and Internet radio stream playing app. It includes support for browsing and playing all the stations in the SHOUTcast database (over 30,000 of them!) as well as the entry of custom URLs for any mp3 or AAC stream you might happen to have which isn’t in the SHOUTcast database. The “tunemark” part of the name was intended as a play-on-words for bookmark, but applied to music. The app supports the concept of “tunemarking” songs that are playing - you can save the artist/title info to a list for later reference, look for it to purchase on iTunes, send the song info via email, share it on Facebook, Twitter, or Last.fm.

When I originally released the app, it did not included all of the features it includes today. The initial release was pretty barebones. I figured I’d release the app for free, hoping it would be good publicity for my iPhone app development business. I had a focus on developing iPhone apps for radio stations and thought this app might be a decent demonstration vehicle for future clients. They could see whether they liked the performance of the audio streaming code I wrote, and even would be able to enter the URL for their own station to test how their audio stream would behave in their own custom app.

Over time, I added more and more features (a music visualizer, iPad support, the social sharing aspects for Facebook/Twitter, and Last.fm scrobbling support are some examples). Even though the app was free, I also vowed to never have any ad banners. As the app matured, I began to get occasional email messages and app reviews on iTunes where someone would say something like “I can’t believe this app is free!”. But still, since the app had evolved over time, I still thought of it not having enough features to justify a paid price.

Even though the app was free, the download numbers were fairly modest - for the first 3 months, the average download was about 150 copies per day. Then, after the Christmas bonanza of new iDevice owners, average downloads increased to about 250 copies per day for the next several months. Slowly, the app was gaining in downloads, perhaps as a result of the iPhone user base itself growing. After the first 6 months, average downloads had climbed to 500 per day and were still climbing.

Then, in late July 2010, Tunemark Radio was featured in a special Radio Apps category on iTunes. This initially caused daily download numbers to more than double. The Radio Apps category was on the iTunes desktop app, on the iPhone, as well as on the iPad. After about a month, Apple revised the iPhone Radio Apps category and cut the number of apps featured down from 30+ to 17, and unfortunately Tunemark was dropped from the iPhone special feature. It was, however, still featured in the shortlist of 11 Radio Apps for the iPad.

Tunemark continued to be available for free, and after a couple of months of the Radio Apps category hanging around in iTunes special features for iPad, the average downloads for Tunemark had appeared to be fairly steady at 700 copies per day. About a month later, as the special Radio Apps category migrated to the end of the list of special features, the downloads were slowly falling. By mid-October, the download average was closer to 500 copies per day and was still falling.

The Switch to a Paid App

It is at this point in time, after getting a few more “I can’t believe this app is free” messages, I decided to switch Tunemark to a paid 99 cent app. I was mainly curious what would happen. Daily downloads as a free app were falling anyhow. How much would daily sales drop as a paid app? Surprisingly, for an app which had been free already for a year, the numbers weren’t too bad, as can be seen by the following graph.


PastedGraphic-2010-12-14-22-47.tiff
Initially after the switch from free to paid, the daily downloads dropped from about 500 to 100. I found this number surprisingly good. The day after setting the 99 cent price, I had feared I’d be seeing a number more like 10 downloads on the following day. Seeing the numbers drop to 20% of the free numbers was OK with me. Sure, an 80% reduction in sales is significant, but 100 paid sales per day is still pretty good.

Granted, the app did still have an artificial boost of being featured in the Radio Apps feature which appeared on iTunes for the iPad. That feature was finally rotated out of iTunes by Apple in mid-November as can be seen by the drop in numbers in the graph. But still, the drop was not as dramatic as I had feared and for an app now with absolutely no advertising, averaging more than 60 downloads per day, after having been available for free for a year, they seem like good numbers to me.

The Paid Effect on Ranking

What I found especially interesting was as a paid app, Tunemark Radio ranked far higher in the Music category than it ever did as a free app. You can see this with the following graph from AppAnnie.com:
Safari1-2010-12-14-22-47.png

As a free app, it was ranked around 200 in the music category. When it switched to a paid app, there were a few days initially where the app had no rank, since you do not carry over your sales or ranking info when switching from free to paid. After 2 days of sales at 99 cents, it began to appear in the paid rankings and quickly climbed within the top 100 paid music apps.

Best I can tell, the free music app category is much more competitive than the paid app music category. Is this true for all app categories in iTunes? Unfortunately, I have no definitive answer. I suspect that would be the case, but it could be a unique situation with the music category. Perhaps someone else can shed some light on this.

Another interesting data point in the above graph is in late November, a day after I posted a new update of Tunemark on iTunes, the app was cracked and posted to various app pirate sites and there were several tweets made with a link to the cracked ipa. As far as sales go, app downloads dropped 36% that day. While sales recovered the following day, the app had the most dramatic ranking drop ever. I can’t really tell for sure if this is a direct cause of the app piracy, but it is suspicious. It was also the day before Thanksgiving here in the US, but this graph is showing app ranking, not sales, so if app downloads in general on iTunes were reduced around Thanksgiving, I would have suspected all apps would maintain their relative rankings.

The Paid Effect on App Ratings

One other benefit of switching from free to paid is the quality of app reviews. For the prior year, as was the case with most free apps, Tunemark Radio had an average rating of 3 stars. The vast majority of written reviews were 4 or 5 stars, however there were plenty of ratings that were 1 star, mainly due to the pre-iOS 4 feature of “rate-on-delete”. After switching to a paid app, the app’s average rating is now 4.5 stars with its most recent update from a few weeks ago. It has 17 five star reviews, 2 four star reviews, and only 1 one star review.

Conclusion

Overall, I can’t really think of any negative from switching from a free to paid app. When the app was free and was bringing in no income (other than a few iTunes referral commissions), it was not practical to be spending money on the development of the app. I was happy to spend some of my own free time, but I couldn’t justify the cost of paying “real” money to make other improvements to an app that was essentially a hobby.

Now that the app is earning decent daily income it will help justify spending more time on future feature enhancements. There are a lot of new features I have on the wish list and these features will require some significant code writing in the coming months. I also hope to at some point hire a graphic artist to improve the look of the app. I am not a designer, and the user interface for the app could be greatly improved. And finally, even though the app is only available in English, it has been surprisingly popular Japan. I hope to pay someone to assist with a Japanese language localization of the app, and perhaps some other languages.

I’ll be sure to follow up this post with more analysis of how the app does in the coming year.

2 comments:

David Nixon said...

Thanks for sharing

Hblegg said...

Thanks for sharing. I have an app in the store as well and your article was helpful. I priced mine at 2.99 and am wondering if I should lower to .99cents.


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