How to Price a Mobile App

Pricing Is a Product Decision

Your price is not just a number on a payment screen. It signals quality, defines your audience, and shapes your entire business model. A $0.99 app attracts casual users who churn quickly. A $9.99/month subscription attracts committed users who expect ongoing value. Price wisely.

The Four Pricing Models

Free (Ad-Supported)

The app is free to download and use. Revenue comes from advertising.

Revenue math: You need massive scale. At $2 eCPM (a reasonable average across ad formats), you need 500,000 ad impressions per month to earn $1,000. That translates to roughly 15,000-20,000 daily active users.

Best for: Social apps, games, weather apps, news readers, and any app with high daily engagement and broad appeal.

Worst for: Niche apps, professional tools, apps handling sensitive data, and apps with small addressable markets.

Paid (One-Time Purchase)

Users pay once to download the app. No recurring revenue.

Pricing ranges:

$0.99-1.99: Impulse buy. High volume needed.
$2.99-4.99: Standard range for utilities and tools.
$4.99-9.99: Premium range. Users expect quality.
$9.99-29.99: Professional tools. Small audience, high expectations.

Best for: Utility apps, creative tools, and professional software where the value is delivered immediately.

Worst for: Apps with ongoing server costs. You collect revenue once but pay hosting bills forever.

Freemium (Free + In-App Purchases)

The app is free. Premium features or content require a one-time in-app purchase.

Common freemium splits:

Free: 3 projects. Paid ($4.99): Unlimited projects.
Free: basic features. Paid ($9.99): Advanced features + no ads.
Free: limited daily uses. Paid ($2.99): Unlimited uses.

Best for: Apps where core functionality is valuable even in limited form, and premium features provide clear additional value.

Conversion benchmarks: Expect 2-5% of free users to purchase in consumer apps, 5-15% in productivity apps.

Subscription

Users pay weekly, monthly, or annually for ongoing access.

Common pricing:

$2.99-4.99/month: Entry-level subscriptions
$4.99-9.99/month: Mid-range (most common)
$9.99-19.99/month: Premium tier
Annual plans: 30-50% discount vs. monthly

Best for: Apps that provide ongoing value, require server infrastructure, or deliver new content regularly.

Worst for: Apps users open once a month. Hard to justify recurring payment for infrequent use.

How to Choose Your Price Point

Step 1: Research Competitor Pricing

Open the App Store and Google Play. Find the top 10 apps in your category. Document their pricing:

| App | Model | Price | Rating | Downloads | |-----|-------|-------|--------|-----------| | Competitor A | Subscription | $7.99/mo | 4.6 | 1M+ | | Competitor B | Freemium | $4.99 unlock | 4.3 | 500K+ | | Competitor C | Free + ads | Free | 3.9 | 5M+ |

This gives you the market's price range and shows what users are already paying.

Step 2: Calculate Your Costs

What does it cost to run your app per user per month?

Supabase: Free tier covers ~50,000 monthly active users. Pro plan is $25/month.
RevenueCat: Free up to $2,500/month in tracked revenue.
Hosting (edge functions): Usually $5-25/month for indie apps.
Apple/Google commission: 15-30% of revenue.
Your time: The biggest cost. What hourly rate makes this sustainable?

If your app costs $50/month to run and you need it to be sustainable, you need enough paying users to cover that plus your time. At $4.99/month (after Apple's 15% small business cut, that is ~$4.24 per user), you need about 12 paying users just to cover hosting. For a full-time income of $5,000/month, you need roughly 1,200 paying subscribers.

Step 3: Determine Value to Users

What is your app worth to the user? Think about what it replaces or saves:

Saves money: A budgeting app that helps users save $200/month is easily worth $9.99/month.
Saves time: A meal planning app that saves 2 hours per week is worth more than a cup of coffee.
Replaces something expensive: A $9.99/month fitness app replaces a $50/month gym membership for some users.
Provides entertainment: Harder to price high. Entertainment competes with Netflix at $15/month.

Price relative to the value delivered, not the cost to build.

Step 4: Consider Your Audience

Different audiences have different price sensitivities:

Students and young adults: Very price-sensitive. Free or low-cost.
Working professionals: Willing to pay for tools that save time.
Businesses (B2B): Price-insensitive if the tool solves a real problem. Can charge premium.
Hobbyists: Moderate price tolerance for tools they are passionate about.
Parents: Willing to pay for apps that help their kids or simplify parenting.

Subscription Pricing Strategy

Offer Annual Plans

Always offer an annual option alongside monthly. Annual plans:

Increase lifetime value (users commit for a year)
Reduce churn (users do not make a monthly decision)
Provide upfront cash flow

Annual pricing formula: Monthly price x 12 x 0.6 (40% discount) to 0.7 (30% discount).

Example: $7.99/month becomes $57.99/year (40% off) or $66.99/year (30% off).

The Right Number of Tiers

Two tiers work for most indie apps:

Free: Core features with limits
Pro: Everything, no limits

Three tiers work when you have distinct user segments:

Free: Basic features
Pro: Full features for individuals ($4.99-9.99/mo)
Team/Business: Collaboration features ($14.99-29.99/mo)

More than three tiers causes decision paralysis. Keep it simple.

Free Trial Strategy

7-day trials are the industry standard. They create enough time for users to see value without being so long that they forget about the app.

3-day trials create urgency but risk not giving users enough time.

14-day or 30-day trials reduce conversion rates. Users procrastinate and then cancel without trying the features.

No-trial paywall: Shows the paywall immediately after onboarding. Converts fewer users but those who convert have higher intent and lower churn. Works well when the value proposition is very clear.

Introductory Pricing

Offer a reduced price for the first billing period:

"First month $1.99, then $7.99/month"
"50% off your first year"

This lowers the barrier to trying your premium features. Just make sure the regular price is clearly displayed to avoid trust issues.

Pricing Psychology

Anchoring

Show the most expensive option first. When users see a $19.99/month plan followed by a $7.99/month plan, the $7.99 feels like a deal. Without the anchor, $7.99 might feel expensive.

Price Endings

$4.99 converts significantly better than $5.00. This is one of the most well-studied effects in pricing psychology. Always use .99 endings.

Framing

"Less than a cup of coffee per day" reframes $4.99/month in terms users understand. Connect your price to familiar purchases:

"Costs less than a movie ticket each month"
"For the price of one lunch, get a full year"

The Decoy Effect

If you want users to choose the annual plan, add a slightly irrational option:

| Plan | Price | Per Month | |------|-------|-----------| | Monthly | $9.99 | $9.99 | | 6-month | $49.99 | $8.33 | | Annual | $59.99 | $5.00 |

The 6-month plan is the decoy. It makes the annual plan look like the obvious choice.

When to Change Your Price

Raising Prices

You can raise prices for new subscribers at any time. Existing subscribers should be notified well in advance (30+ days) and ideally locked in at their current rate for a period.

Raise prices when:

You have added significant new features
Your conversion rate is very high (suggests you are underpriced)
Competitors charge more for less

Lowering Prices

Lower prices if:

Conversion rates are low and you have ruled out other causes
User interviews reveal price as the primary objection
You want to grow volume and can support more users

A/B Testing Prices

Test different price points by showing different prices to different user cohorts. Measure:

Conversion rate at each price point
Revenue per user
Churn rate at each price point

The optimal price maximizes total revenue (conversion rate x price), not just conversion rate.

App Store Commission Rules

Apple App Store

30% commission on in-app purchases and subscriptions (year 1)
15% commission on subscription renewals after year 1
15% commission through the Small Business Program (if earning under $1M/year, which covers most indie developers)

Google Play

15% commission on the first $1M in annual revenue
30% commission above $1M

Practical Impact

If you charge $9.99/month and qualify for Apple's Small Business Program:

Apple takes 15% = $1.50
You receive $8.49 per subscriber per month

Factor this into your pricing calculations.

Common Pricing Mistakes

Underpricing

The most common mistake indie developers make. If your app saves users time, money, or frustration, it has real value. Price accordingly. Users who will not pay $4.99/month for a tool they use daily are not your target audience.

Racing to the Bottom

If a competitor charges $4.99, do not charge $2.99 to undercut them. Compete on value, not price. Users who choose the cheapest option are the least loyal and most likely to churn.

Pricing by Development Effort

"I spent 200 hours building this, so it should cost..." No. Users do not care how long it took to build. They care what it does for them. A simple app that solves an expensive problem is worth more than a complex app that solves a trivial one.

Waiting Too Long to Monetize

Users who join expecting a free app resist paying later. Add monetization from day one, even if the premium features are minimal initially.

Too Many Pricing Options

Choice paralysis is real. If users spend more time comparing plans than using your app, simplify your pricing.

The Pricing Launch Checklist

[ ] Competitor pricing is documented
[ ] Monthly costs per user are calculated
[ ] Value to user is articulated
[ ] Two or three pricing tiers defined
[ ] Annual plan offers 30-50% discount
[ ] Free trial length decided (or no-trial paywall)
[ ] App store commission factored in
[ ] Paywall screen designed with clear value proposition
[ ] Revenue targets calculated (users needed at each price point)

Price is a hypothesis, just like your product. Set it, measure it, and adjust based on data.