John Dinsmore, MBA, PhD

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A Simple Way to Get People to Pay for Your App

If you follow the mobile app space, you know that getting people to actually pay for something for an electronic good is like pulling teeth. There's just too much free stuff. It's a key reason why the very large majority of app developers are losing money. 

So, what can you do? 

The pricing model of choice for mobile apps has become "Freemium"--having some free version of an app to encourage people to at least try the app. THEN, the hope is that the user will engage enough to be willing to pay to either:

1. Enhance the service in some way, or

2. Keep the features they have if there is a time limit on the availability of the free version. 

It's a tough road to hoe. Even success stories like Candy Crush only see 2-5% of their customers actually pay for anything.

So, a couple of researchers did an experiment to see if it was better to:

1. give a free, but limited feature version of an app, OR

2. to give a time limited version of the full-featured app. 

Based on the concept of loss aversion (originated by these guys), it was theorized that people would be more likely to pay to avoid losing a full-featured app than pay to add features to a limited app. And, sure enough, people were 6X more likely to pay to avoid losing access to a full-featured app than they were to add features to a feature-limited version. 

So, if you are in the app business, release a time-limited but full-featured version of your app and it should perform dramatically better. Further proof that there are no trivial decisions in marketing.