Price influences behavior. In order to craft an excellent user experience, the price — and how your users interact with that price — must be central to the development of the product, especially applications. No user will welcome an application if the cost is prohibitive. This makes price every bit as important as design, information architecture and wireframing, and it goes deeper than just getting people to click “Buy.” By focusing on users in setting and maintaining a price, you will increase revenue, lower overhead and, most importantly, significantly improve the user’s (read customer’s) experience.
For just about a year now, between designing and developing client’s websites, I have been running a little app that I created with co-workers. In that time, we have launched, added features, raised the price, added more features and just now begun the early stages of marketing the product. So far, we have done all of this without borrowing a cent, and we have managed to at least cover our costs, if not generate some modest profit. I have no doubt that this success comes from our choices of model and price point.
This article is not about “How to price your app.” There are plenty of good resources for learning how to find the right number. Pricing for use is a framework for continually adjusting your price, when needed, to suit your profit goals and the experience of your users.
Your price is the nail from which you hang your masterpiece. Image source
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In any pricing endeavor, think of yourself first. Many people think that apps have no overhead. They basically believe that “selling an app is free money, pure profit!” (ahem, Mr. Anderson). As a professional who has been running a application for just under a year now, I can tell you, this is patently untrue.
Digital goods and services have a very tangible overhead: time — time to innovate over competitors, time for customer support and time to cultivate your unique point of view. Each of these requires constant effort if you want to succeed. If you cannot afford this time, you will sacrifice your product, and possibly your livelihood.
Keeping the app running is the only imperative in pricing, so first make sure that your price covers your costs. After that, pricing is really a matter of how much you can gain — and not just in profit, although that will affect your bottom line.
Matt Linderman of 37signals said it best: “Pricing can be usable, too.” I would only add that pricing not only can be but should be usable. Predict (or just ask) what price point would feel reasonable to your target users, and when they will want to pay for your product. You already agonize over how users interact with your product; why not agonize about how they interact with you at so sensitive a time as when money is involved?
With so much being offered for free these days, paying for an app can be considered an annoyance. Ease this pain as much as possible by making it simple for customers to work payment into the flow of their lives. This could be as basic as setting up an automatic payment system, or it could require a complete re-evaluation of your pricing model.
An Attractive Price
Somewhere between covering overhead and your zeal for profit (Go on, admit it), there is a sweet spot of what you can realistically charge for your product. This is where it gets dangerous — and where many tend to undervalue. Set your price too low and you leave money behind that could be used for growth and reinvestment. Too high a price could be an insurmountable barrier to potential customers.
Ask yourself, “Does this price feel right?” Feel plays a major role here, and intuition is the perfect barrier to push against. If the price feels right, the product will feel right. In Human Action, Austrian economist Ludwig von Mises writes that prices are social phenomena. According to him, “the ultimate source of the determination of prices is the value judgment of the consumers.” So, what would a reasonable customer pay for your product? Sigue leyendo