A New Way to Price Social Apps

WhatsApp made the news last week when it was bought by Facebook for $19 billion. People started questioning whether or not this was a smart move, and if WhatsApp was even worth that much. My thoughts went straight to how this would affect their stance on advertisements. WhatsApp had previously stated that they would not sell ads and that they were against personal information collection, two things which Facebook does extensively. Personally, I believe they were a little naive to think that they could shun advertising forever. Many social and mobile apps use the advertising model simply because it is the easiest way to turn a profit for the business, while providing a free app for the consumers. In most of these apps, consumers can opt to upgrade to a paid version, which takes away the frequent advertisements. However, many consumers are reluctant to upgrade if they think they'll be the only one using said app or if they think the lifecycle of that app will be very short.

What I propose is a new pricing model for these social apps. The apps foster a sense of community, so why not provide a pricing option that treats them as a community. Many businesses will provide customers with group discounts if a large enough party takes advantage of the product/service, so why shouldn't a group based app utilize this same ideal? Community based pricing discounts could be offered depending on the size of the group that downloaded the app, which is a double win for the app developers. They get a revenue stream without needing to spam users with advertisements, and they also get a consumer base that will be more likely to continue to use the app so that they can stay connected with their friends. The consumers win since they will be paying less for the app than they would individually, and they don't have to deal with advertisements.

This type of pricing would be most effective for social apps, like WhatsApp, or for mobile games with a strong sense of community. I've gone through several game phases with some of my friends, such as Words With Friends or Flappy Bird, and having a pricing option like this would have been very appealing. It's always more fun to challenge friends to mobile games, but they're not always willing to shell out the dollar or so that some games cost. If group pricing could reduce this cost to 50 cents, the app would seem like a bargain compared to many others, and users would be more drawn to it. The concept of group pricing still needs some tweaking before it should be implemented, but ultimately I think it would be a viable alternative to many apps' current strategy of spamming users with advertisements.