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TECHNOLOGY

To Charge, Or Not to Charge?

You have decided to create an app, but now you have to decide whether to charge for it.

It may be tempting to charge for an app, but take note of the industry's conventional wisdom on the matter: "Apps are either free or fantastic," says William Clark, research vice president for Gartner. In other words, unless your app is unbelievably novel or incredibly useful, it's very difficult to get customers to reach for their wallets. Close to two-thirds of the apps in Apple's App Store are free or sell for 99 cents, and more than a third of all paid apps are either games or books.

Perhaps that explains why none of the four businesses featured in this story charge for customers to download their apps. Thrillist, for example, never considered doing so; the company considers the app an extension of its existing service, which is also free to users. Instead, Thrillist makes money on its iPhone app the same way it does on its e-mail newsletters -- by selling ad space. Similarly, HeadBlade, which designed its app largely to raise brand awareness, avoids charging because a price tag -- even one as low as a dollar -- kills any chance of explosive, viral growth. "We could probably charge 99 cents," says Todd Greene, HeadBlade's CEO. "But then we're already putting up a barrier."

If you are still determined to put a price tag on your app, keep in mind that Apple, Google, and RIM take 30 percent of all app sales.

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Last updated: Dec 1, 2010




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