Alan Mendelevich, a Windows Phone 7 developer, has carried out a small experiment involving his Tic-Tac-Toe 3D app to see which performs superior in terms of downloads and usage out of a free or paid offering. Before getting into detail with his findings, one would think that the free app would come out on tops with usage compared to the paid version, and one would be correct.
The graphs above (visits) illustrate just how large the difference can be. But what causes this, and why are people more likely to download an app that's free as opposed to a trial? It's psychological. Like any software store or marketplace, or even searching for software through a search engine, majority of people will attempt to find a free (or next to nothing) offering.
Microsoft has implemented a trial system as opposed to Apple's mass Lite invasion. You literally get swarmed with duplicates upon duplicates of apps and games on the app store, which can prove to become a slight annoyance. This is something the Marketplace does not suffer from, but not everyone is fully aware of trials, and look for either a Lite or free version.
If they can, they will avoid venturing down the paid route unless it's an absolute must. What’s more, trials are generally associated with set time allowance until it ends or have some (or major) functionality removed. In Alan's test, he witnessed a whopping 40x increase in stabilised traffic for the free version of the Tic-Tac-Toe 3D app, which aids in proving the theory mentioned earlier. However, although the traffic may be greater, the revenue generated may not reflect the usage statistics.
Alan moved on to explain, "Despite huge difference in usage the economics of both versions could be pretty similar. The paid version sold 22 copies in 7 weeks which is about $15", which isn't too bad for what the app is. In comparison to the above earning, the free version of his app displays adverts that accumulated around 23,000 views in seven weeks. This would earn him "$23 which is comparable to the revenue from the paid version" he concludes.
So even though downloads of a free app may over shadow a paid counterpart fairly effectively, the revenue a developer can potentially earn isn't much different. Does the trial API work, or should we expect more "Lite" apps in the Marketplace?
Source: Ailon; via @AdDuplex