Estimating Demand for Mobile Applications in the New Economy
App monetization design choices carry large, quantifiable revenue trade-offs, with in-app purchase options boosting demand while in-app ads depress it.
Summary
Ghose and Han build a structural demand model for mobile apps across the Apple and Google platforms. They find that offering in-app purchases increases app demand, equivalent to a 28% price cut, while in-app advertising reduces it, equivalent to an 8% price increase, and that discounting strategies work better on Google Play than the Apple App Store. The findings offer app developers concrete guidance on how to design monetization and pricing
Editor's opinion
Useful, quantified app-monetization design trade-offs, though the scope is narrow (platform-specific business model tuning).
Key concepts
Mobile app demand · in-app purchases versus advertising · platform pricing