Tag: price segmentation

Now that it has been tried, tested and vetted, I can discuss Opera Mobile Store’s Subscription Service available exclusively to developers with premium (paid) apps.   A lot of this goes hand in hand with the past few weeks of posts relating to global mobile.

In summary, Opera Mobile Store’s subscription service is an “All You Can Eat” model tested and proven to work in emerging markets.  Our findings indicate that developers generate over times more revenue via our subscription model compared to individual sales in developing markets.   There are a few reasons for that and I will get into them shortly.

The subscription service is carried by Mobile Carriers to offer to their paying mobile users.  We worked with a few early adopters and are now actively expanding our carrier base.  In this regard, both mobile carriers and Opera Mobile Store are constantly engaging to reach more subscribers and to improve the performance of the Subscription Service.

The mobile carriers effectively function as the retailer, Opera Mobile Store is the distributor and the App Developer can be likened to the manufacturer.  Each receives a portion of the sales revenue.   App developer revenue share is based upon the number of their apps downloaded in relation to the total downloads.   Pulling some numbers out of the air – if you had apps that generated 20,000 of 500,000 downloads, you would receive a 4% share of the total developer revenue.  If the total revenue was just $100,000, you would receive $4,000.

Economy of Scale - The first thing that any developer will point out is that the price for each download is lower than what you would get through individual sales.  Yes – but the primary dynamic is Volume, with digital products all revenue accrues to your bottom line and profitability.

Recurring Opportunity – Two points to make here.  First, as this is a subscription service, there is no barrier for subscribers to download and try your premium app.  If they don’t try it this week, they may try it next week.  Second, mobile apps are not just about generating sales, but reaching customers.  So, when customers register their product with you, you then have the means to promote your next release.

Emerging Markets & Price Segmentation – Most premium apps do not sell well in emerging markets because few developers apply to price segmentation.  If you aren’t familiar with this term, please take a look at Wikipedia’s entry on the Big Mac Index.   Companies like McDonalds that do apply to price segmentation sell their products for different prices in different locations taking into consideration a wide range of factors, including purchasing power parity, logistical factors, wages, etc.  So, the Big Mac that sells for roughly $2.30 in Ukraine might sell for nearly $10 in Norway.

Multiple Points of Presence – The more places you are, the greater your reach, the more people are likely to try your app.  Better than this, you will have mobile carriers promoting your apps along with others to all of their customers.

Low Maintenance – Perhaps the best part of the program is that the only thing you need to do is add your product to the service to establish a short-to-medium term recurring revenue.

Offsetting the Paywall – The one thing that I think is best about the subscription service is that you are able to reach paying customers who may not have a credit card, Paypal account, or access to other financial services to purchase your app.  Presently, aside from issues of price segmentation, this is what I believe to be the #1 barrier.  It is a barrier that is gradually coming down, for one, the mobile carrier brings it down for you in this program.

If you would like more information about the Opera Mobile Store Subscription Program – please write us for our PowerPoint Presentation and to talk with a member of our team.