Alphabet Inc (NASDAQ:GOOG)’s Google has lowered the prices of apps in emerging markets as part of adapting to the economic conditions and affordability.
Google’s price adaptations especially target the third world regions. The company has 1.4 billion Android users, and most of them live in developing countries in Asia, Eastern Europe, Africa and South America. Most of these people have low incomes and, therefore, spending on apps would be the last of their concerns.
The company has identified these problems and thus come up with different pricing strategies that will accommodate the people in the upcoming markets. This decision might limit the amount of revenue that the company will raise, but Google believes the decision will help attract more users.
Google has reduced the charges by more than half what developers would have charged in more than 17 countries including Indonesia, Turkey, Brazil, Russia, and Mexico. The price changes also affect in-app products and games. The lowest price that the company will charge for apps is $0.26, more than half the minimum prices charged for apps in the UK and the US.
The company claims that the newly reviewed app prices have been implemented after a successful pilot phase through similar app pricing in India this year. The minimum prices charged for apps in India was 10 Rupee (15 cents) as a strategy to encourage users to purchase apps sold by local developers.
Google stated in a blog post that there are different challenges in different markets. These markets all have different purchasing habits. Therefore, there is a need to achieve the right mix between price access and other app-related factors. The new prices are also a great opportunity for app developers to leverage growth particularly from new smartphone owners with smartphones that cost less than $100 in upcoming markets.
Critics feel that the decision to lower prices greatly dents app revenue competition with App Store. According to a mobile analytics firm App Annie, Google Play’s revenues were less than the revenues Apple Inc. (NASDAQ:AAPL) made from the App Store in the third quarter of 2015. Google’s approach is largely about empowering others and providing fair opportunities rather than providing services that are out of reach while Apple targets premium devices.