Ninety-Nine Problems: the Psychology of Mobile App Pricing

February 15, 2016 - 3 minutes read

Scroll through the Apple App Store or Google Play and you’ll quickly notice that 99% of the top apps have something very conspicuous in common; they’re all priced in 99 cent increments. You don’t have to be a mathematician or iPhone app developer to notice that something’s afoot.

While freemium pricing is undeniably on the rise, the same phenomena holds true for those pesky in-app purchases and membership fees, with prices outside of $0.99–$4.99 few and far between.

For NYC iPhone app developers, pricing your mobile app is a question of psychology, perhaps even more so than economics. Studies have shown that the forces determining how we spend our hard-earned money are murkier than we’d like to think, with emotions and associations playing a huge part in the process.

It comes as a surprise to some iPhone app developers that 99 cent apps are so successful in the Apple App Store; particularly since the trick of pricing a product at one cent under the dollar has a stronger association with cheap dollar stores than a high-class brand like Apple.

The data disagrees. Studies on consumer spending habits have shown the trick to work again and again, with prices including the number 99 outperforming alternative figures — both higher and lower — by as much as 24%.

iPhone app development companies have also found that 99 cent apps perform well due to the lack of “free trial” capability in the Apple App Store. From a psychological standpoint, 99 cents seems like throwaway money compared to an even dollar, even though the difference is a single penny.

Meanwhile, on the higher end of the pricing spectrum, iPhone app developers will find that the reverse can sometimes be true. In the right context, mobile app users favor rounded “uncluttered” pricing to specific, complex decimal points. It’s the same thinking that separates fancy restaurants with whole-dollar pricing from cheap diners with messy menus including the decimals.

Take a look at AirBnB, for example. In a clever analysis on Medium, UX designer Aaron Otani illustrated how something as simple as including a coma in figures over 1,000 adds clutter and deters shoppers. (While AirBnB doesn’t take it this far, removing the dollar sign has also been shown to boost conversions for luxury goods.)

The lesson for iPhone app developers is clear: always use data to back up your app pricing decisions, and measure how minor “arbitrary” changes affect your users’ spending habits. You never know — nudging a penny or moving a comma could make a surprising difference to your bottom line.

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