Apps want to be free

We all love free apps, but they often come with a different price... ads. While these ads are the bane of some people's existence, a recent study shows that most mobile users are fine with it. Flurry Analytics reports that there is a trend toward more free apps. 80 percent of apps were free in 2011; that number has jumped to 90 percent today.

Some might argue that this supports the idea that “content wants to be free”. We don’t see it quite that way. Instead, we simply see this as the outcome of consumer choice: people want free content more than they want to avoid ads or to have the absolute highest quality content possible. This is a collective choice that could have played out differently and could still in particular contexts (e.g., enterprise apps or highly specialized apps such as those tracking medical or financial information).

Flurry shows that the percentage of free apps is increasing. 

Flurry has taken the majority of its data from the Apple App Store because it has been in operation longer than Google's Play Store. 

The average price of apps between app stores was also examined. Not surprisingly, iPad apps tend to be the most expensive. On average, iPad apps are $0.50; compare this to average iPhone app at $0.19, and average Google Play app at $0.06. There is a considerable gap here.

Conventional wisdom (backed by a variety of non-Flurry surveys) is that Android users tend to be less affluent and less willing to pay for things than iOS users. Does the app pricing data support that theory? Resoundingly.

As of April 2013, the average price paid for Android apps (including those where the price was free) was significantly less than for iPhone and iPad apps as shown below. This suggests that Android owners want app content to be free even more than iOS device users, implying that Android users are more tolerant of in-app advertising to subsidize the cost of developing apps.   

Average app price on Google Play, iPhone, and iPad

Flurry is careful to point out that this trend toward free apps is no coincidence. It's driven by data. Looking at the App Store, Flurry was able to identify apps that have gone through pricing experiments - using A/B testing, or looking at apps that have raised and lowered their price over time. The chart below decribes this. "Green" apps were always free, but the "Blue" apps started out as paid and eventually became free. 

As shown, there was an upward trend in the proportion of price-tested apps that went from paid to free. This implies that many of the developers who ran pricing experiments concluded that charging even $.99 significantly reduced demand for their apps.

Apps pricing experiments.

Flurry thinks the conversation should change from "paid apps vs. add supported apps," to "how do we make ad supported apps more interesting and appealing to consumers. 

The report is really quite fascinating. Check out Flurry's full report and Venture Beat's coverage below.