This transcript was generated from the episode audio and may contain minor errors.
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If you have a smartphone, you have probably been to the App Store, either the Apple App Store or the Google Play Store, and you have probably seen lots of apps for download. Some free, some paid, and some that are free to download, and this is increasingly the case, free to download, but then they offer in-app payments. So what's the deal with those payments? Well, the deal is they're making a lot of money for app developers, and of course for Apple as well, which takes its cut of everything on an iPhone. So it's much more common these days to have that model, with limited features, and then you pay to unlock its full capabilities.
We've got a listener here who is making his first app, pretty cool, he'll tell you more about it, and he's wondering about the best way to structure payments. So I'll talk about the pros and cons and such. Also, just an idea here, could there be a subscription that unsubscribes you from subscriptions? Because there's just so many of them. He's gonna talk about it too in his question.
But, you know, like some app that unsubscribes you from subscriptions or looks for discounts on subscriptions, I'm just kind of thinking out loud here, so let me know if you're the one to come up with it. In the meantime, this question, why does every app have in-app payments? What's the best way to structure your payments if you're making an app? Question and my answer coming right up. [Music]
Hey Chris, this is Sky, and I'm developing my first app.
It's a tool to help people with specific activity goals. So I've been thinking about this for years. And when I first had the idea, I assumed that I'd sell the app for a single low price, like a couple of dollars. Apps are an easy purchase and they reach a big audience. So if I got a couple of hundred people downloading mine every day, that'd add up to some real money over time, you know?
Course, now every app is a subscription. So I'm wondering about how to account for that. Lot of people are tired of so many subscription payments, you know, your Hulu, your Netflix, your games, your services, whatever. I know my wallet's tired of it. So right now I was thinking that I just stick with a single low purchase price and then, you know, you buy it and you own it forever.
However, no matter which way I go with that decision, it seems like there's other pricing decisions to make now as well. For example, some apps are free to download, but then you pay to unlock certain features with the microtransactions. What's the advantage of offering an app that way, as opposed to just buy it now and access everything? I'm really looking forward to what you have to say about this. - Hey Sky, thank you for the question.
Congratulations as well on developing your first app. And I also totally hear you about all those subscriptions. I think I have something like 17 active subscriptions on my phone at the moment. And I probably have a lot more than that in terms of web services that I'm paying for, just, you know, various personal and business stuff. But let's talk about this from a business perspective, your business perspective.
You know, yes, if you had a couple hundred people a day, each paying a couple of dollars, you know, to download and pay for your app, you know, that definitely adds up for sure. And when it works out that way, you know, amazing. Just be aware that that's the dream of pretty much every app developer. You know, everyone who makes an app and is like, "Oh, it'll cost a couple of bucks. All I need is, you know, X number of people to download it.
And then I'm going to be a billionaire tomorrow." However, it doesn't always work out that way. In fact, most of the time it doesn't. But one of the things that Apple has done and just the whole industry in general is shift towards these in-app payments. And so you're like, "Well, what's the advantage?" Well, the advantage is that you get far more downloads of people, you know, when you offer something for free, at least in terms of the initial download. You're going to have a massively higher number of people downloading the app if it's free and has some limited features versus if you have to pay for it upfront.
Then of course your job, the job of the app developer is to convert them to the in-app payment or subscription or whatever. 'Cause they've just downloaded this free app. Maybe they downloaded a bunch of free apps, most likely. So, you know, you have to kind of show them that this app is so cool that it's really worth paying for these additional features or again, the subscription or whatever it is. So definitely a clear advantage for that.
In terms of how to set the pricing and the various options and stuff, my number one advice there is like, there are a lot of people who are engineering this. Okay, there's a science to it. Like I'm sure there's an art as well, but in particular, there is a science. So in a situation like this, you want to learn from those who have gone before or even better those who are in the midst of it right now. So I would go look at the forums.
Like there are subreddits or other forums specifically of app developers who are tackling this very issue, other issues as well, but you're going to get some very real world specific data there. You'll also get really specific information by testing. So ultimately what you want to do is land on something that customers love and is easy for you. The price that they are happy to pay, the system or the process or the method that is easiest for you and hopefully the most profitable version of that scenario, assuming that it could exist at different price points. So that is the goal.
Sky, any other app developers out there, good luck. Let us know how it goes and feel free to take my idea. The subscription app to help you unsubscribe from subscriptions. Maybe it's a little meta, but I think it has promise. All right, that's it for today.
Listeners, if you've got a question, sidehustleschool.com/questions. I'd love to know what you're working on, what's going well and what you're struggling with. We'll continue to build out this show in response to real time feedback. Thank you so much for tuning in today. This is Chris Guillebeau for Side Hustle School.
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From the Onward Project.
