A while ago I built an Android app that solves a very specific need for a very niche audience. It does it well and it is the only app that does it. I put it on the Google Play Store, for free, and after a month, it had about 50 installs and a single, 5 star, review that said: “Nice”. I was satisfied.

I find money useful. And so I thought of ways to make money off my app. I didn’t want to put advertisement in it, because I didn’t want to compromise the quality of the product. So I decided to put a price on the app itself.

Because Google Play does not let you convert a free app into a paid one, I had to delete the free app and re-upload it under a different name. I set the price to three Euro.

It has been a week, and I have 0 installs.

(Well, I have one, from my brother. I had asked him to test it. He is a nice guy and rated it 5 stars.)

I am well aware that zero is a very special price. People are disproportionally more likely to take something if it is for free than if it costs even a single cent. And one should be cautious to guess demand for the paid product from the demand for the free version.

Yet it seems that this gap in demand between free and paid goods is even bigger online than in the real world.

There are hundreds of reasons for this. The purchase process is more cumbersome online, there is more competition, people are more distracted.

But I also think that it has to do with the fact that the cost of free things online is basically zero, whereas this does not hold for the real world.

Imagine you are making plans to go to a concert. Initially, you think that the entrance is free, but then you learn it costs three Euro. Next, imagine your friend recommends you an app. While you are about to install it, you discover it is not free, but costs three Euro.

I claim that all things being equal, most people would still go to the concert, but pass up on the app.

This is because the cost of something consists of more than its price. Going to the concert already requires a significant commitment of personal time. If you are willing to spend that, chances are you are also willing to spend three Euro more.

The cost of a free app, however, is about 10 seconds of attention plus 20 megabite of phone storage. At virtually zero cost, people will install a lot of apps that they do not really need. Adding three Euro to this is a much bigger relative change.

This leaves me at the painful insight that the market for my app is even smaller than I thought. 50 people needed it enough to press the install button, but that means basically nothing. It surely does not mean that anyone needs it enough to pay three Euro for it.

tl;dr: Even if people install my free app, it does not mean that they actually need it.