The pressure to price apps right – Luxury Daily – Columns

By Mike Truskowski

The honeymoon of the mobile application industry is over. The fight for users – and the challenge of building a sustainable flow of money from them – has arrived. And it will only get tougher.

Raise your hand if you have a smartphone. Now think about your friends, family and colleagues. More hands up, right?

The popularity of these devices has ballooned from 9 percent of mobile phone sales in 2009 to a projected 50 percent by 2013, according to Gartner.

Hardware manufacturers and service providers are having a great time trading up their users to higher-margin handsets and contracts.

But perhaps the greatest untapped opportunity afforded by the smartphone revolution belongs to a third party: the providers of mobile apps and mobile content.

In the balance

With only one small screen to navigate, the mobile user is a captive audience. However, as the number of competing platforms, channels and applications grows, and the fight for consumers’ attention intensifies, turning a mobile app into a sustainable, profitable venture will become increasingly difficult.

Will ad revenues alone be enough for app backers to achieve this sustainability?

For apps built around the freemium model, how will developers know and establish the right balance between paid and ad-supported users?

Where firms do decide to charge for their software, content and other features, what will the most successful pricing models look like?

Those are just a few of the fundamental questions facing someone who wants to make money with apps.

In 2001, our firm explored the challenges of selling content online. Back then, those who were brave enough to put a price tag on their offering based their decisions more on “gut feeling and guesswork than hard data.”

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