Research has demonstrated that, by 2021, the total app downloads number will jump to 352 billion worldwide. This fact, coupled with how much time we're spending on our smartphones these days, demonstrates why it's a good idea for any company to have an app. Whether you're hiring Agent Beta (my company) to design a hybrid app that works for you, or your designing your own, it's worth investing in.

But it can be expensive to design the right app. According to some research, it can cost up to $150 per hour to develop an iOS app in North America. And the more complex it is, the more it will cost to make. 

I often see new entrepreneurs struggle to find audiences for their applications; issues arise because they don't take the time to first sit down and formulate a clear-cut plan based on their short and long-term application goals.

Depending on what your app offers and who your ideal consumer is, the ideal price for your app varies. So how do you decide how much to charge? Review the options below to decide what's best for you.

1. Consider selling your app for free.

Especially if you're a new company, you may want to consider making your app free for users. After all, according to surveys, it's in-app purchases--not the purchases of the apps themselves--that account for 80 percent of the revenue apps earn. So if you offer attractive content to users, and draw them in that way, you'll be able to offer additional content or merchandise within the app.

2. Use a freemium model.

Because many users aren't willing to pay immediately for an app, it's a smart idea to sell two versions: the full version and the lite version. By offering a lite version (and less expensive to develop), you'll be able to get new consumers. Then, if they like what you're offering and want more, they'll be more likely to download the full version, which is paid.

And it's not just new companies that are making lite versions. According to IronSource cofounder Omer Kaplan, "The increase of Lite apps being developed by important players in the app industry is a clear identifier that this is a growing field with the potential to become a key factor in successfully accessing emerging markets."

3. Include ads in your apps.

If you're smart about using ads in your free app, it's another way to make money. Using ads the wrong way can turn users off, especially those that belong to Generation Z, so you'll want to use the right strategies. You'll want to ensure that you put the user in control, and design for the medium, too.

An example of a company that does this well is Spotify. By having a combination of ad formats--audio and display--their ads are 25 percent more effective than the average.

Another creative way Spotify uses ads is by offering Sponsored Sessions: they provide listeners with the option to watch a 15 to 30 second spot video in exchange for 30 minutes of ad-free, uninterrupted music. By making it an option, users don't feel like they're being forced to watch an ad--instead, they feel like Spotify is providing them with an improved listening experience.

4. If you do charge, charge the right amount.

Believe it or not, it's not always a good idea to charge the bare minimum for an app. Why? The sunk-cost fallacy is a large part of it.

Sometimes, subscription-based apps sell better at a higher price because that price makes users value them more. According to a study from the app marketing and retargeting startup Liftoff:

"It's human nature to value things based on costs and commitment -- and apps at the low end of the pricing scale naturally have the toughest time tapping into this psyche...It may be you can win more users by asking for more."

To help decide what price to set, you'll want to consider the right factors. This includes researching similar apps and setting prices based on how complex your app is.

ou should also consider varying the price of your app--selling it at a higher price, seeing if people buy it, and if they don't, slowly lowering it over time. You'll also want to research your demographic: How often do they pay, and how much?

Whether you're creatively making money with a free or freemium app, or selling at a price users will pay for, you'll want to ensure you don't undersell your product. Not only because you'll have to pay for developing the app, but also because it's a smart business idea to sell at a price that's attractive to consumers.

Published on: Oct 31, 2017
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.