App store analytics firm Distimo analysed the impact of price cuts on app revenue, and the impact of being a featured app in stores. While there are clear gains to be made from both, not all apps gain equally, and there are losers as well as winners.

Discount details
According to the company, one of the ways to attract attention to an app is to put it on sale. In Apple’s App Store for iPhone, the average revenue rose by 41 percent on the first day of the sale, for apps that were already among the 100 highest grossing. Over the whole sale period, the increase was 22 percent.

Similar results were also seen in the App Store for iPad (up 52 percent on the first day and 19 percent over the life of the campaign), and Android Market (up 7 percent initially and 29 percent over the sale period).

The company found that it is important to offer a “significant” price reduction in order to actually earn more revenue when putting an application on sale. In general, it was noted that the optimum was when the price was cut in half, or the application was offered in tier 1 (US$0.99) or tier 2 (US$1.99) price categories.

However, it is not all positive. While average revenue for discounted apps rose, Distimo noted that 30 percent to 50 percent of applications on sale experienced a decrease. It also noted that it had not monitored the long-term implications of a revenue cut.

Some 44 percent of the iPhone applications on sale lost revenue through discounting, with 23 percent seeing a decline of more than 20 percent. It noted: “offering a discount of US$1 on an application that normally costs US$7.99 lowers the revenue, whereas offering a discount of three dollars on average increased the revenue by 131 percent.”

The company concludes that “despite the risk of loss of revenue, putting your app on sale once in a while seems to pay off for the majority of applications and their developers. It is important to offer a significant price reduction to actually earn more revenue, however.”

Featured focus
For top 100 apps which become a “featured” product in an app store, there was a notable effect.

The average gain in the first three days in Google’s Android Market was 42 places in the chart, followed by a 27 place uplift in the App Store for iPad, and a 15 place hike in the App Store for iPhone. Looking at the full seven days an app was featured, the results remained similar to the initial gain for the Apple Stores, although Android Market apps climbed an additional 23 places – 65 in total.

There were also “significant effects” after an app lost its featured status over the position before this took place. The benefits are most pronounced in Android Market, meaning that “getting featured in Google is very beneficial for publishers.”

As with all average figures, Distimo noted that some apps gained less than the norm, including some which “barely see any effect from being featured.”  The company noted “it is clear that getting featured does not necessarily imply more downloads.”

In addition, not all rises in rank are equal. The company said that “a rank jump from 10 to 5 means a substantial uptake in downloads, while a rank jump from 50 to 45 is significantly less beneficial.”

The review excluded categories such as Apple’s “What’s Hot,” because this is populated by apps which are already popular, and the Android Market “Editors’ Choice,” which is not updated regularly. It is also focused on apps which were already listed in the top 100 charts before being featured, because it was possible to track the gain for these titles.