One key aspect of a successful app is its revenue model – and deciding how people pay is just as crucial as having a solution that people will pay for.

When it comes to subscription-based apps, there's a million-dollar question: Do you make your profits from high prices or high sales volume? Can't have both, so which is the right choice for your app?

To explore this further, let's examine three equally successful apps with different price points – $0.99, $9.99, and $99. By the end of this article, you'll have a better idea what kind of price point is best for your app.

But before we dive into our examples, it's essential to understand the factors that affect app revenue models.

Factors Affecting App Revenue Model

When choosing an app monetization model, several factors come into play. Let's take a look at four key ones:

User Persona

Your user persona is a snapshot of your primary customer's key details – including age range, income bracket, and typical personality traits. To put it bluntly, do they have money, and what do they normally spend it on?

Many founders start with a solution, and that's fine, as long as it's ultimately mapped to a real user persona and the right price point.

Market Size

How many potential customers are out there? For example, say we wanted to target all pet owners in the US – our market size would be over 85 million. Now say we wanted to target only German Shepherd owners in the US – our market size has now shrunk all the way down to about 3.5 million.

While bigger markets sound more lucrative, in reality, they're a lot more competitive. Unless you can really scale your product to deliver unbeatable prices, smaller markets tend to be better.

Barrier to Entry / Competition

Whatever you're doing, how difficult would it be for someone else to do the same? Here's the thing about having a successful business: everyone will want to copy it.

If your product can't be copied, congratulations; you're now in a powerful position where you pretty much don't have to worry about competition.

Price Elasticity

Your app could be really popular at a certain price, let's call it $10. And you're an entrepreneur, so of course you try to make more money by raising the price to $11.

At the new price, demand stays the same – that's a 10% increase in revenue and it's all profit. You get greedy – whoops, we meant to say entrepreneurial – and try raising it to $12, causing your demand to drop by half.

You make more per sale, but overall way less revenue. That's price elasticity of demand at work.

The higher the elasticity, the more you can increase price without seeing a drop in demand – this mainly applies to essential goods like gas and food.

Let's just be clear, though: nobody likes price increases. It's just that if your app is essential (say, a critical business service provider) you have a lot of leverage over customers.

$0.99 App Revenue Model: Camcard

This is CamCard – it costs $0.99, and has 10 million downloads, with a total revenue of $6.6 million.

CamCard lets users store a digital business card inside their phone. Instead of carrying a bunch of single-use physical cards, with CamCard you just fill in your details on your phone and it gets saved as a shareable QR code that someone can scan.

A basic digital business card is free-to-use, and there's a premium version where they offer unlimited scans and the ability to export your list of contact information.

This app startup idea shows us that sometimes, lower prices can be just as effective as higher ones – especially when you're targeting a large user base.