Saturday, May 9, 2009

How to Charge for an Application

I'm in a real quandary at the moment. I mentioned a little while ago that I'm working on a new application that is part iPhone app and part web site.

First and foremost, I'm building this application to help patients get better care from doctors. That means I want as many people to use it as possible, because it will mean people are getting better care.

I really don't expect to make a ton of money off of this application, but it would be nice to be re-numerated in some way. At the very least, I need to cover the cost of hosting the web application. I also have a designer who is helping me on this with some expectation of getting paid based on return. I'd like there to be a return to do that.

The quandary that I have is how best to do that.

I've thought about a few options. I'm hoping somebody, somewhere, might be able to give me some feedback on what could work best.

Paid iPhone App, Free Web Site

This model is very appealing because it is the least amount of work for me. Put a price tag on the app and be done with it.

I see a couple of problems with this model, though. First, prices in the app store are so depressed that I doubt I could charge more than a dollar or two for the app. I don't believe my target market is such that I'll make it up in volume.

The second problem is that it will likely reduce the penetration of the application. Remember, one of my goals is to help patients get better health care. I'd hate for a couple of dollars to stand in the way.

Free iPhone App, Basic Ads on Web Site

This would alleviate the concerns about the penetration, as the app is free. However, I'm not convinced that I'll see enough revenue to cover the cost of hosting. Maybe a couple of years ago this would have worked, but today? I'm not so sure.

Free iPhone App, Affiliate Programs on Web Site

This is strongly related to the previous one, but instead of "random" ads, I go find affiliates who will pay better money for more qualified leads. Given my users will be very tightly defined, this is possible.

My concern here is how much time do I have to put into managing affiliate programs? Is this something that is a few days to set up, then self sustaining, or am I going to need to spend time daily on it?

Others

There are other options in there, such as paid app and affiliate programs. There may be other options that I'm not even familiar with. An ideal would be some sort of subscription model, but I have not been able to figure out how that would work.

If you have ideas here, I'd love to hear them. I don't expect anybody to come up with my business plan, but I'd love to here is I missed something.

2 comments:

Anonymous said...

If you put the app on a site with ads then have a link for donations, that could work (good ads though not the sh*ty ones that are obviously for "scams" or "loose weight 50lb in 30sec" kind of crap )
... I find that if a program is free and I use it and find that it really helps in my productivity or what ever that i am more inclined to donate then shell out money for the app in the first place.

Darren Ehlers said...

Can you put together a freemium model that works?
- Free iPhone app
- Free basic service on the website
- Paid premium service on the website

Is there a value proposition for providers and/or payors? Can you get them to pay something and take the burden off the end-user?

Good luck!
-Darren