8 ms·

IOS app store has created unrealistic pricing expectations

24 points by kgutteridge 15y ago

Erodeo 15y ago
I would try this: start at a low price, then increase the price as good reviews come in.
MBCook 15y ago
The kick the tires problem is a big one for me. I've downloaded enough free apps that are junk. Downloading a paid app that has all sorts of problems is very annoying, so I usually wait quite a while before buying something for review to come in. This makes me a little hesitant to try $ and $2 apps, even though realistically that's a trivial amount of money. But if an app is $5 or $10, then I really want a chance to try it first. Many apps don't have 'lite' versions (since, IIRC, demos are forbidden). Just having some kind of 2 hour return/refund policy would really help.
technoslut 15y ago
From the post: >Because of this, most developers I spoke with at WWDC (even the VERY successful ones) were looking to spread risk among several small apps rather than creating one amazing app. This is their loss. This garbage of having 15 different apps to accomplish a job that can be done with one will eventually be finished whether it is on the iPhone or iPad. Much of the App Store is about word of mouth and less about price. If you give a comprehensive app that is worth the price and has proper dev support, the payers will be there. Today, I need an incredible amount of apps just to do what would take 5 minutes on Photoshop. An opening is left on iOS by Adobe to fill the solution. Virtually no one is doing this. Jobs' intention was not to hurt devs, but to kill piracy, reduce software pricing and make it safe for people to get apps without worrying about malware. Some devs may no longer exist because they can't adapt but that is not his fault. The main mistake Apple has made so far is not allowing a trial period for apps or offering refunds within a certain window.
- rogerchucker 15y ago
  I thought those "lite" versions are essentially the "trial period" apps. Refund window is problematic as Google witnessed (and thus stopped it); but then again, if your app cannot provide me long term value then may be you deserve a refund.
  - jiaaro 15y ago
    What they really need is a way to link the demo and full version together in the app store. Apps with a "demo" version should have a seamless upgrade-to-paid-version experience. Some apps have done this with via in-app purchases (check out living language for example http://itunes.apple.com/us/app/living-language-spanish-for/id453341418?mt=8 http://itunes.apple.com/us/app/living-language-spanish-for/i...) which does a great job of this and manages to get $15 out of you by demonstrating the value the app provides very effectively before asking for money.
  - technoslut 15y ago
    I don't use Android. Did Google stop this? Maybe the answer s Amazon's solution in which they demo it on the web. All I can say is that what iOS is doing is not the correct solution. Even though Omnifocus is the best to-do app, no one is going to spend $20 just to understand that.
jeremymcanally 15y ago
I think I prefer an open market with prices that have naturally fallen to this point than something with artificially inflated prices. There are two things at play here. One, the competition in the app store right now is so voluminous and so fierce that it's driving prices down. It's a natural phenomenon that will happen in nearly any "free" market. To complain about it is to complain about the essence of free market pricing. Second, these lower prices allow for higher volume of sales. The prices have settled here because this is what users see as the value of these apps. No offense to these guys/gals, but I wouldn't pay $10 for something to track my gas mileage. I'd find a free web app (if they exist) or just keep it in a note. I get the value-add of IRS compliant reporting and such, but that's a niche problem to solve. Charging $10 for that is fine, but don't expect mass market appeal or uptake. I think the biggest problem is that people who write niche apps like these apps expect to see numbers like "Fart-O-Matic 9000" or "Angry Birds." You won't. Accept that and then figure out what's going to make you the most money. The trick is figuring out if pricing at $10 and making (x) sales is more profitable than pricing at $1 and making (y) sales. For some developers, pricing higher with lower volume is much, much better, and these developers are typically niche applications (take a look at some of the "pro" audio apps on iPad especially) that can handle the price difference because the people seeking them REALLY need the value that they're offering. An MPG tracking app that gives me nice Excel sheets might not be enough to warrant $10 in the eyes of users, and I don't think that's necessarily Apple's fault or the market's fault. Maybe it's just that the niche you're targeting won't sustain the price you want, and unfortunately, that's the way the cookie crumbles when selling software like this.
- cageface 15y ago
  As an author of one semi-pro audio app, I can tell you that even the "pro" apps are selling for as little as 1/10th of the price of a similar app on a Mac. I really doubt the sales volumes compensate for that. The big problem with the app store is that the people on the very high end of the power distribution dictate a pricing structure for everyone that only really works for those moving huge volumes. People now have a preconceived idea of what an app should cost that often has nothing to do with how much it must actually sell for in order to turn a profit.
crazygringo 15y ago
I think a lot of people may have a "mental budget" for apps -- e.g. spending $5/mo. on apps seems reasonable to me, while spending $50/mo. is not. So if apps were $10, I would buy 1 every couple months, instead of 2-3/mo like I do now. For example, I'll buy a $0.99 remote desktop connection app to connect to my server from anywhere, that I will use maybe 3 times ever. But I will not buy it for $10. So I'm not convinced that higher app prices would necessarily translate into higher revenue. Also, remember that we can't compare piracy-free iPhone app pricing (ignoring jailbreakers) with normal software pricing. Every purchased copy of Photoshop "subsidizes" n other people who use it for free. So on any piracy-free platform, you might expect prices to be lower.
NameNickHN 15y ago
It has nothing to do with pricing in itself and all with competition. Look at the gps navigation software. They cost more than the average app. Obviously because there is no real or very little competition in that area.
- geon 15y ago
  Map databases are very expensive. You can't just use Google Maps for navigation, because of the licensing.
crazygringo 15y ago
Also, I'd love to have a way to pay for apps after I've been using them for a while. For example, I would never have bought Instapaper in the first place for $10, but now that I use it every day, I would be very happy to contribute even $20. It would be fascinating from a psychology standpoint to see what kinds of results this might have.
- gharbad 15y ago
  At a large scale, it approaches $0/user.
  - crazygringo 15y ago
    Citation? For example, the business model of Evernote would seem to suggest otherwise.
jemeshsu 15y ago
App programmers are turning into like recording artists, where tunes are at 99cents a pop. The only way to survive then is to have hit app, like in hit songs. Maybe there will be a billboard type of chart for apps soon.
- rogerchucker 15y ago
  If you wanna stick to that analogy, what would be the equivalent of a "live concert" in the app world?
gdilla 15y ago
This article was written over 2 years ago, before Apple introduced in-app purchasing. Downward price pressure is a lot worse now than then. It's more accurate to say Freemium is the new $5. But bundling, and try and buy is now available.
PhuFighter 15y ago
Bah. There are so many apps that I purchased that are complete junk, that, IMO, paying a $0.99 for an app that I do use seems to even itself out. And what about completely fraudulent apps (e.g. search for "blacklist" in the App Store). How are they even getting in? Given the huge amount of crap in the App store, the only real way of finding things that are decent is to go to specialized aggregators. I go to BoardGameGeek in order to find reviews of games. The detailed reviews there mean more to me than the huge stinking pile of games in the App Store. There needs to be a better way of sifting through the stuff in the App Store than using the App Store Application itself.
- drbarnard 15y ago
  Don't you see the problem there. The developers who build crap apps end up being rewarded the same as those who build great apps. Essentially, you're saying that you do pay $5 for a great app because you buy 5 and keep 1, but the developer who built the app you like gets just $1. That sucks.
  - erichocean 15y ago
    That's the situation with "entertainment" content generally., e.g. all movies at the theater cost the same. And just like with movies, review sites, massive advertising to move units and create awareness, and a general distrust of new things is where I'd expect the App Store model to continue to go.
jyap 15y ago
Firstly, as someone else pointed out, this was written over 2 years ago. Pricing must also take into account the distribution power of the app store and the actual usage medium. iPad app prices are higher is a good example but then again this was written pre-iPad.
huhtenberg 15y ago
That's a very well designed blog if you don't mind me saying.
- drbarnard 15y ago
  I don't mind. Thanks! Since the site is mostly an ad for my apps, I thought I'd have some fun with a graphics heavy approach.
jiaaro 15y ago
This will fix itself -- if he is correct that people want iOS apps (read: games) that reach parity with other handheld devices. 1. Developers will start making simpler games to maintain profitability at the $5 price point. 2. Once the vast majority of iOS games are $5 and relatively shallow in comparison with other devices, deeper more complex games will once again contrast in value to the $5 games, allowing them to charge more money. 3. Because of the "monthly budget" effect, I'm guessing the way this will work is in-app purchases. X-Box has been very successful with this model. Sell a full (but somewhat short) game for $5. Then allow the users to buy more "content" for $2 per unit. a $5 game That allows you to buy multiplayer content, additional story, or other mods for a dollar or 2 at at time could easily get their average lifetime sales per game up to 7 or 8 dollars. (and the big name games could start at $10 and total 12 to 15) One more thing -------------- I think it's worth pointing out that price decreases in the longer term don't prove anything. This happens everywhere. Even on game consoles (Xbox, PS3, wii, etc) where the games start out costing upwards to $40. You can always to to a game store and find older games on sale for $15.
gcanyon 15y ago
Everyone realizes this article is from 2009, right?
prpatel 15y ago
There's one thing that everyone has missed so far, and I've said it to anyone who will listen: free apps are undermining both the app store(s) and the developer. Before you brush me off as crazy, please think it through...
- drbarnard 15y ago
  I started to reply to your comment and ended up writing a whole blog post in agreement: http://appcubby.com/blog/free-and-low-cost-apps/ http://appcubby.com/blog/free-and-low-cost-apps/
drbarnard 15y ago
I just finished a followup post, since the one originally linked is over 2 years old. http://appcubby.com/blog/free-and-low-cost-apps/ http://appcubby.com/blog/free-and-low-cost-apps/

24 points by kgutteridge 15y ago

I would try this: start at a low price, then increase the price as good reviews come in.

The kick the tires problem is a big one for me. I've downloaded enough free apps that are junk. Downloading a paid app that has all sorts of problems is very annoying, so I usually wait quite a while before buying something for review to come in. This makes me a little hesitant to try $ and $2 apps, even though realistically that's a trivial amount of money. But if an app is $5 or $10, then I really want a chance to try it first. Many apps don't have 'lite' versions (since, IIRC, demos are forbidden). Just having some kind of 2 hour return/refund policy would really help.

technoslut 15y ago

From the post: >Because of this, most developers I spoke with at WWDC (even the VERY successful ones) were looking to spread risk among several small apps rather than creating one amazing app. This is their loss. This garbage of having 15 different apps to accomplish a job that can be done with one will eventually be finished whether it is on the iPhone or iPad. Much of the App Store is about word of mouth and less about price. If you give a comprehensive app that is worth the price and has proper dev support, the payers will be there. Today, I need an incredible amount of apps just to do what would take 5 minutes on Photoshop. An opening is left on iOS by Adobe to fill the solution. Virtually no one is doing this. Jobs' intention was not to hurt devs, but to kill piracy, reduce software pricing and make it safe for people to get apps without worrying about malware. Some devs may no longer exist because they can't adapt but that is not his fault. The main mistake Apple has made so far is not allowing a trial period for apps or offering refunds within a certain window.

rogerchucker 15y ago
I thought those "lite" versions are essentially the "trial period" apps. Refund window is problematic as Google witnessed (and thus stopped it); but then again, if your app cannot provide me long term value then may be you deserve a refund.
- jiaaro 15y ago
  What they really need is a way to link the demo and full version together in the app store. Apps with a "demo" version should have a seamless upgrade-to-paid-version experience. Some apps have done this with via in-app purchases (check out living language for example http://itunes.apple.com/us/app/living-language-spanish-for/id453341418?mt=8 http://itunes.apple.com/us/app/living-language-spanish-for/i...) which does a great job of this and manages to get $15 out of you by demonstrating the value the app provides very effectively before asking for money.
- technoslut 15y ago
  I don't use Android. Did Google stop this? Maybe the answer s Amazon's solution in which they demo it on the web. All I can say is that what iOS is doing is not the correct solution. Even though Omnifocus is the best to-do app, no one is going to spend $20 just to understand that.

jeremymcanally 15y ago

I think I prefer an open market with prices that have naturally fallen to this point than something with artificially inflated prices. There are two things at play here. One, the competition in the app store right now is so voluminous and so fierce that it's driving prices down. It's a natural phenomenon that will happen in nearly any "free" market. To complain about it is to complain about the essence of free market pricing. Second, these lower prices allow for higher volume of sales. The prices have settled here because this is what users see as the value of these apps. No offense to these guys/gals, but I wouldn't pay $10 for something to track my gas mileage. I'd find a free web app (if they exist) or just keep it in a note. I get the value-add of IRS compliant reporting and such, but that's a niche problem to solve. Charging $10 for that is fine, but don't expect mass market appeal or uptake. I think the biggest problem is that people who write niche apps like these apps expect to see numbers like "Fart-O-Matic 9000" or "Angry Birds." You won't. Accept that and then figure out what's going to make you the most money. The trick is figuring out if pricing at $10 and making (x) sales is more profitable than pricing at $1 and making (y) sales. For some developers, pricing higher with lower volume is much, much better, and these developers are typically niche applications (take a look at some of the "pro" audio apps on iPad especially) that can handle the price difference because the people seeking them REALLY need the value that they're offering. An MPG tracking app that gives me nice Excel sheets might not be enough to warrant $10 in the eyes of users, and I don't think that's necessarily Apple's fault or the market's fault. Maybe it's just that the niche you're targeting won't sustain the price you want, and unfortunately, that's the way the cookie crumbles when selling software like this.

cageface 15y ago
As an author of one semi-pro audio app, I can tell you that even the "pro" apps are selling for as little as 1/10th of the price of a similar app on a Mac. I really doubt the sales volumes compensate for that. The big problem with the app store is that the people on the very high end of the power distribution dictate a pricing structure for everyone that only really works for those moving huge volumes. People now have a preconceived idea of what an app should cost that often has nothing to do with how much it must actually sell for in order to turn a profit.

crazygringo 15y ago

I think a lot of people may have a "mental budget" for apps -- e.g. spending $5/mo. on apps seems reasonable to me, while spending $50/mo. is not. So if apps were $10, I would buy 1 every couple months, instead of 2-3/mo like I do now. For example, I'll buy a $0.99 remote desktop connection app to connect to my server from anywhere, that I will use maybe 3 times ever. But I will not buy it for $10. So I'm not convinced that higher app prices would necessarily translate into higher revenue. Also, remember that we can't compare piracy-free iPhone app pricing (ignoring jailbreakers) with normal software pricing. Every purchased copy of Photoshop "subsidizes" n other people who use it for free. So on any piracy-free platform, you might expect prices to be lower.

NameNickHN 15y ago

It has nothing to do with pricing in itself and all with competition. Look at the gps navigation software. They cost more than the average app. Obviously because there is no real or very little competition in that area.

geon 15y ago
Map databases are very expensive. You can't just use Google Maps for navigation, because of the licensing.

crazygringo 15y ago

Also, I'd love to have a way to pay for apps after I've been using them for a while. For example, I would never have bought Instapaper in the first place for $10, but now that I use it every day, I would be very happy to contribute even $20. It would be fascinating from a psychology standpoint to see what kinds of results this might have.

gharbad 15y ago
At a large scale, it approaches $0/user.
- crazygringo 15y ago
  Citation? For example, the business model of Evernote would seem to suggest otherwise.

jemeshsu 15y ago

App programmers are turning into like recording artists, where tunes are at 99cents a pop. The only way to survive then is to have hit app, like in hit songs. Maybe there will be a billboard type of chart for apps soon.

rogerchucker 15y ago
If you wanna stick to that analogy, what would be the equivalent of a "live concert" in the app world?

gdilla 15y ago

This article was written over 2 years ago, before Apple introduced in-app purchasing. Downward price pressure is a lot worse now than then. It's more accurate to say Freemium is the new $5. But bundling, and try and buy is now available.

PhuFighter 15y ago

Bah. There are so many apps that I purchased that are complete junk, that, IMO, paying a $0.99 for an app that I do use seems to even itself out. And what about completely fraudulent apps (e.g. search for "blacklist" in the App Store). How are they even getting in? Given the huge amount of crap in the App store, the only real way of finding things that are decent is to go to specialized aggregators. I go to BoardGameGeek in order to find reviews of games. The detailed reviews there mean more to me than the huge stinking pile of games in the App Store. There needs to be a better way of sifting through the stuff in the App Store than using the App Store Application itself.

drbarnard 15y ago
Don't you see the problem there. The developers who build crap apps end up being rewarded the same as those who build great apps. Essentially, you're saying that you do pay $5 for a great app because you buy 5 and keep 1, but the developer who built the app you like gets just $1. That sucks.
- erichocean 15y ago
  That's the situation with "entertainment" content generally., e.g. all movies at the theater cost the same. And just like with movies, review sites, massive advertising to move units and create awareness, and a general distrust of new things is where I'd expect the App Store model to continue to go.

jyap 15y ago

Firstly, as someone else pointed out, this was written over 2 years ago. Pricing must also take into account the distribution power of the app store and the actual usage medium. iPad app prices are higher is a good example but then again this was written pre-iPad.

huhtenberg 15y ago

That's a very well designed blog if you don't mind me saying.

drbarnard 15y ago
I don't mind. Thanks! Since the site is mostly an ad for my apps, I thought I'd have some fun with a graphics heavy approach.

jiaaro 15y ago

This will fix itself -- if he is correct that people want iOS apps (read: games) that reach parity with other handheld devices. 1. Developers will start making simpler games to maintain profitability at the $5 price point. 2. Once the vast majority of iOS games are $5 and relatively shallow in comparison with other devices, deeper more complex games will once again contrast in value to the $5 games, allowing them to charge more money. 3. Because of the "monthly budget" effect, I'm guessing the way this will work is in-app purchases. X-Box has been very successful with this model. Sell a full (but somewhat short) game for $5. Then allow the users to buy more "content" for $2 per unit. a $5 game That allows you to buy multiplayer content, additional story, or other mods for a dollar or 2 at at time could easily get their average lifetime sales per game up to 7 or 8 dollars. (and the big name games could start at $10 and total 12 to 15) One more thing -------------- I think it's worth pointing out that price decreases in the longer term don't prove anything. This happens everywhere. Even on game consoles (Xbox, PS3, wii, etc) where the games start out costing upwards to $40. You can always to to a game store and find older games on sale for $15.

gcanyon 15y ago

Everyone realizes this article is from 2009, right?

prpatel 15y ago

There's one thing that everyone has missed so far, and I've said it to anyone who will listen: free apps are undermining both the app store(s) and the developer. Before you brush me off as crazy, please think it through...

drbarnard 15y ago
I started to reply to your comment and ended up writing a whole blog post in agreement: http://appcubby.com/blog/free-and-low-cost-apps/ http://appcubby.com/blog/free-and-low-cost-apps/

drbarnard 15y ago

I just finished a followup post, since the one originally linked is over 2 years old. http://appcubby.com/blog/free-and-low-cost-apps/ http://appcubby.com/blog/free-and-low-cost-apps/