As I’m sure you have heard Amazon has released there “AppStore” on to the world for Android. Many developers are up in arms over the strange terms that Amazon has required of publishers. There was a pretty good article today why publishers should stay away from the current Amazon AppStore.
I just wanted to add one more comment about the topic. Google makes money from Android in two ways. One is selling the Android + Google Services (like maps/market) to manufactures. The other way is by taking a cut of market sales. Their cut is 30% off the top. But for the 30% they distribute, market, track and most importantly they use some of that money to improve both Android and the services built on top of Android. Frankly its a good value for me. Even if Amazon perfectly matched Google’s terms, I wouldn’t use them. They just don’t give back to the Android development community like Google does.
I have noticed lately that I have been getting more and more sales that canceled after a few minutes. I believe that users are starting to learn that they can try out a paid application for 24 hours (soon to be changed to 15 minutes) and get a refund if they uninstall it. There are a few other reasons this might happen:
- A user doesn’t like the application, or it doesn’t provide value for the whole return window
- A user wants to review the application, but not buy it.
- A user can strip the DRM and get a refund (i.e. piracy)
- A website could download the application to learn about it, (i.e. the unofficial android application websites)
- People might hate Google and are trying to raise the charge backs.
Regarding the last point, When you buy an app on the market, Google charges the card and waits for authorization. You can verify this by looking at the declines, I get about one decline a week. If a user uninstalls in 24 hours, then Google will have to do a charge back, which credit card companies hate to do. Maybe its a way for Google’s competitors to cost Google some extra cash. (If you can’t tell this last point is tongue in cheek).
I found another great Android Monetization Blog called Independent Web Developer’s Blog. The developer is doing very well, he has quit his day job and is quite open with how he is making his money and how much. The site has a lot of great posts, so check it out!
I have read online that its best to publish your app as soon as possible and do updates as much as possible. Think the mantra “deploy early and often”. Initial I subscribed to this idea, because its super easy to push out updates via Android Market, but I have found its not a good idea, and here is why.
The majority of my sales happen on days I do updates, the reason is Google tends to promote them. I have noticed that apps that have a good ranking (4+ stars) tend to get promoted longer and get much more play. Which makes you a lot more money.
The market doesn’t facilitate feedback to developers very well, so to file a bug report, users leave feed back and a ranking. If you have a bad bug, you might get a bunch of one start ratings, and even if you fix the bug in minutes, the users aren’t going to download your app again, and aren’t going to change their ranking. These poor rankings really hurt long term, especially for new applications that don’t have a lot of marketing behind them.
Lesson learned, TEST TEST TEST, your reputation on Android market counts!
AT&T just started allowing users to pay for market purchases as part of cell bill. This should significantly raise the amount that AT&T users are willing to pay for an application. This change and the refund time window should cause all developers to reevaluate how much they are charging for current apps, and how they want to monetize future applications. You might want to look at the Pricing Android Apps for Profit Maximization post.
If your going to make money in Android you need to know how to price your application. Android applications can be priced from $0.99 to $200, what number do you pick. The most popular seems to be $0.99, $1.99 and $2.99 at least in the US market. But why do people pick these prices? I think they pick them because everyone else does!
If your going to price your apps, you need to know a little bit of economics, in particular profit maximization. If your not familiar with it, Wikipedia has a great article on profit maximization.
Basicly as your price goes up, sales go down, so you need to find the local maxium price that gives you the most profit for your product. This graph from the wikipedia artical is a good example:
In the graph above, you can see that the profit is maximized at Price A, so for your product how can you quickly find your max profit point? You can try random price points, and then create a pricing model, but I have noticed that sales of Android apps decrease linearly after a given price, which means you can use a binary search to find your maximum profit.
Here is an example of how to using a binary search to find your price.
You will need to pick your minimum price, max price and time to wait. I recommend starting with $0.99, $50.00 and one week.
Create your product listing and and price it for $0.99, and then let the sales settle for a few days, so you don’t skew the results.
Then record the sales you have for that week, and your computed profit.
For the next week price your app at maximum price. If your maximum price has higher profit then your lowest price, then you might want to consider raising your maximum price. If its lower, the initial price, change the price to half way between the highest and lowest price and wait a week.
Keep reviewing your prices sales and profit, each week and raising and lowering the price as you see fit until you reach the point where you have maxium profit.
When does this method not work? If your profit curve is poly-model, meaning if you have several local maximums, you may not find the global maximum, since we assumed the sales will increase as the price decreased. Also, if your advertising your application it may skew the results, and this includes word of mouth advertising. In addition reviews of your application will skew the results, so use your head and think about what your doing.
In my case, I have made the most profit pricing Digital Drug at $0.99, and Private Browser at $1.99. Digital Drug’s sales droped by 150% when priced at $1.99! Private Browsers sales decreased by only 25% when price at $1.99 from $0.99.