Westis App Friting Strategy Mobile Ad Estimated RPM (revenue per $0.46 $1.15 $2.07 thousand ads shown) Mobile Ads served per user per year 50 100 160 Number of users 4,000 20,000 88,346 TOTAL REVENUE Strategy 2: FREEMIUM \begin{tabular}{lccc} \hline & Conservative & Most Likely & Optimistic \\ \hline Total vimber of users & 6,000 & 20,000 & 65,638 \\ \begin{tabular}{l} Numb of users who \\ upgrade \end{tabular} & 120 & 800 & 3,938 \\ \begin{tabular}{l} Avg. Revenue per \\ upgrading user \end{tabular} & $0.70 & $2.00 & $8.00 \end{tabular} TOTAL REVENUE Strategy 3: PAID (\$0.99 pricing) \begin{tabular}{lccc} \hline & Conservative & Most Likely & Optimistic \\ \hline Total number of users & 750 & 5,000 & 29,906 \\ Price & $0.99 & $0.99 & $0.99 \\ TOTAL REVENUE & & & \\ \hline \end{tabular} Strategy 4: PAID (\$3.99 pricing) \begin{tabular}{|c|c|c|c|} \hline & Conservative & Most Likely & Optimistic \\ \hline \begin{tabular}{l} Total number of users \\ Price \end{tabular} & \begin{tabular}{c} 100 \\ $3.99 \end{tabular} & \begin{tabular}{l} 1,000 \\ $3.99 \end{tabular} & 11,220 \\ \hline \end{tabular} Summary of pricing strategies: 1. The first strategy is to strictly give away the app for free. Money will be made by serving mobile ads to users. 2. The second strategy is to use a "freemium" model. The app will be given away for free (without ads), but useability will be somewhat restricted in the free version. Users are allowed to unlock various features by paying money. 3. The third strategy is to simply charge $0.99 for a completely unlocked ad-free version of the app. 4. The fourth strategy is to charge $3.99 for the unlocked, ad-free app. While the fourth strategy would make more revenue per person, fewer people would be willing to pay $3.99. Although mainy other pricing strategies could be considered, the CEO has already decided that only these fof C strategies will be considered. The spreadsheet included has the information the marketing research company provided you for each of the four pricing strategies. For the first strategy, the estimated number of users, the number of ads you will be able to serve to each user, and the likely price per thousand mobile banner ad impressions is given for a conservative, most likely, and optimistic scenario. The second strategy includes both the total number of users as well as the number of user who will by upgraded features. Strategies three and four estimate the total number of app purchasers
