6 ms·

How to price your iPhone app out of existence

35 points by boucher 18y ago

ryanwaggoner 18y ago
He may be right but I would have liked to see a deeper understanding of price elasticity of demand, as well as some data to back up some of his claims.
- drusenko 18y ago
  right, i'm not sure why the author feels like he has a god-given right to make $50,000/year no matter what kind of iphone app he/she develops. go ask any of the top 10 iphone application developers -- i don't think any of them are having trouble with the 50k/year barrier. the marketplace will be the same as the web: the majority of attention goes to a small number of sites. just because i put out a website of marginal value and charge $9.99 doesn't automatically mean i'll be making $50k/year -- the issue is a lot more difficult than that.
  - briansmith 18y ago
    He didn't say that he has a right to make $50,000 year no matter what. He said that if you are not going to make $50,000 a year then your company is not going to survive, so you need to find a way to make at least that much money. How much money the top 10 developers make is inconsequential to all the other developers that aren't in the top 10. The top 10 will always be filled mass-market applications. Most developers aren't developing applications with mass-market appeal.
    - natrius 18y ago
      He's still assuming that maintaining one app will consume a person's entire capacity for the lifetime of the app. One app does not have to be your sole source of income.
    - frankus 18y ago
      It's a lot like how one-off pieces of art always seem really expensive, but the fact of the matter is that to make that art someone has to be able to support themselves doing something that typically doesn't really scale.
mellow 18y ago
I don't think I have a ceiling on the price I would pay for an iPhone business/productivity app. I would pay hundreds of £/$/€ if the app made me that much in return.
- Balsamic 18y ago
  Target market comes into play in this case. Businesses make decisions this way, individuals don't.
  - LPTS 18y ago
    smart ones do.
ajkirwin 18y ago
This post seems to gloss over the point about VALUE. Sure, sell your app for $9.99 if you want. But it'd better be worth it. And almost all of the apps ON the app store are little quick pieces of fluff, barely even worth 99 cents. Even the better pieces of software are mostly timesavers or memory aids, games notwithstanding. The problem seems to stem from the fact that there is this expection to spend a few weeks and crank out an app, then live on it for a year, when I just don't think this could be the case. iPhone apps just aren't as big or useful as desktop apps. I'm not saying there aren't useful apps, but come on, you're not gonna see Photoshop or Visual Studio or.. World or Warcraft for the iPhone any time soon. And this doesn't even get into the fact that a lot of apps I could use can be replicated just by opening the browser and going to a website. And that one app I WOULD buy, I can't, without jailbreaking. (Ah, Podcaster. C'est la vie. And that app is only 4.99 too.)
- Raphael 18y ago
  Is a ring tone worth $3? To many people, it is.
- potatolicious 18y ago
  Some of the apps are genuinely useful - there's an app that will capture a sample of a song and identify it. I would pay at least a few bucks for that. Maybe not $10, but $5 easily. But on the store it's free, without ads. I don't get it. That's throwing money away.
  - briansmith 18y ago
    Don't they use affiliate links for when you purchase the song from the (iTunes?) music store.
    - potatolicious 18y ago
      They could've done both...
- LPTS 18y ago
  Omnifocus for iPhone was 19.99 and worth every penny. I could of paid 199.99 and it would of been good value. This app lets me offload the kinds of thinking my brain is bad at into something I always carry. You can't put a price on having that in your pocket. I'd hesitate to say I had any desktop apps more useful then omnifocus iPhone, which effects me more like a neural upgrade from a sci fi novel then a cell phone app. iPhone apps could be like primitive cyborg upgrades with a primitive MMI solution grafted onto the part where the human interacts with the machine part. I hope people support apps with high prices and really cool stuff gets developed. the problem isn't price or value or anything like that, it's that no one has any interesting vision of what the future of this phone could hold.
DenisM 18y ago
The other post by the same author is a lot better: http://www.losingfight.com/blog/2008/11/07/can-you-make-a-living-off-an-iphone-app/ http://www.losingfight.com/blog/2008/11/07/can-you-make-a-li...
DenisM 18y ago
What the appstore needs is not higher prices, it needs fewer developers: if there are 20 apps doing X then each only makes enough money to get by, but if there were 2 apps doing X they both could invest into making new features. What we need is a serious recession with a healthy round of bakrupcies and mergers.
- briansmith 18y ago
  More people losing their jobs means more people with free time to build an iPhone app while they look for a new new job. Plus, a poor economy lowers the market for these unnecessary goods. So it is likely the result of a serious recession is more competition for fewer customers. Apple could reduce the number of iPhone developers by charging more for the SDK, or by charging a larger transaction fee. I wouldn't be surprised if Apple did increase the costs substantially sometime soon. In particular, I wouldn't be surprised to see the standard transaction fee increase substantially, with tiered percentages based on price and/or volume (e.g. start $1 flat transaction fee + 30% of the price for the first 1,000 copies, then reduce the percentage gradually for each 10^nth copy).
  - DenisM 18y ago
    More people losing their jobs means more people with free time to build an iPhone app while they look for a new new job It could swing either way, I agree.
- potatolicious 18y ago
  I disagree. Having fewer developers does nobody any good - you would have to introduce artificial barriers to the App Store, which is unfair to small businesses. Customers also lose the ability to have competing apps. What we need is a better visibility system. Similar to HN, Digg, etc, where the best apps find a way to "float to the top", but never permanently (i.e. an extremely popular app won't sit on the Top 50 list forever). We also need better integration with this system from the web side of things - so app authors can generate exposure for their app not only on the App Store, but also by themselves through their own marketing.
zack 18y ago
i bought beejiveIM for $16, it kicks ass and is worth every penny
vaksel 18y ago
I don't think its possible to raise the prices. I mean sure you are supposed to compete on things other than price...but most iPhone apps aren't rocket science. Anything you can come up with, can get copied very quickly. So why would someone pay $9.99 for your app, when they can pay $.99 for an app that has all your features, on top of whatever else they come up with
- briansmith 18y ago
  If you build a good app for $20.00 then somebody might clone it for $2.00. But, will they survive on their clone? Probably not, if they are living in a rich country. You just need to outlast these cheap knock-offs until their developers get bored and move onto something else. It might be a constant stream of knock-offs, but the longer you last, the better the reputation you build. Reputation is worth a lot, especially with people whose lives don't revolve around software development. A good developer in SW Asia, SE Asia, Africa, or Eastern Europe will always have an advantage over you regarding price. $10,000 or $20,000 a year goes a long way in those places (I lived in Thailand for $1K a month without even trying to be cheap). But, that is the case with other parts of the software market and somehow Asian, African, and Eastern European companies haven't taken over the while software development market yet. Probably in the long term they will, but that is years off.
  - HeyLaughingBoy 18y ago
    Right, but the same could be said about the USA. My monthly burn is much higher than $1000 :-( BUT, living in rural Minnesota as I do, it really isn't hard to lower your living cost below $1000 if you want to and are single (When I lived in the city of Minneapolis, my monthly bills including mortgage totalled probably around $1,500). Being American and living here in the US gives me a huge advantage on understanding our culture and being able to design a UI that appeals to Americans and to be able to support them that a smart Thai doesn't have. I am seriously thinking of getting into iPhone development even though I've only seen one once :-) Why? Because I already design & build mobile Bluetooth hardware and I can see many apps where the mobility of an iPhone would result in a great product. I don't care about consumer apps, but there are tons of small business applications that have been waiting for this kind of connectivity in your pocket!
mattmaroon 18y ago
His comments on undercutting Sega are exactly incorrect. You, a random developer, have little expenses and can stand to make $50k off of an app. Sega, on the other hand, has a ton of expenses, spends probably millions just to make a Super Monkey Ball, and can't afford that.

35 points by boucher 18y ago

He may be right but I would have liked to see a deeper understanding of price elasticity of demand, as well as some data to back up some of his claims.

drusenko 18y ago
right, i'm not sure why the author feels like he has a god-given right to make $50,000/year no matter what kind of iphone app he/she develops. go ask any of the top 10 iphone application developers -- i don't think any of them are having trouble with the 50k/year barrier. the marketplace will be the same as the web: the majority of attention goes to a small number of sites. just because i put out a website of marginal value and charge $9.99 doesn't automatically mean i'll be making $50k/year -- the issue is a lot more difficult than that.
- briansmith 18y ago
  He didn't say that he has a right to make $50,000 year no matter what. He said that if you are not going to make $50,000 a year then your company is not going to survive, so you need to find a way to make at least that much money. How much money the top 10 developers make is inconsequential to all the other developers that aren't in the top 10. The top 10 will always be filled mass-market applications. Most developers aren't developing applications with mass-market appeal.
  - natrius 18y ago
    He's still assuming that maintaining one app will consume a person's entire capacity for the lifetime of the app. One app does not have to be your sole source of income.
  - frankus 18y ago
    It's a lot like how one-off pieces of art always seem really expensive, but the fact of the matter is that to make that art someone has to be able to support themselves doing something that typically doesn't really scale.

mellow 18y ago

I don't think I have a ceiling on the price I would pay for an iPhone business/productivity app. I would pay hundreds of £/$/€ if the app made me that much in return.

Balsamic 18y ago
Target market comes into play in this case. Businesses make decisions this way, individuals don't.
- LPTS 18y ago
  smart ones do.

ajkirwin 18y ago

This post seems to gloss over the point about VALUE. Sure, sell your app for $9.99 if you want. But it'd better be worth it. And almost all of the apps ON the app store are little quick pieces of fluff, barely even worth 99 cents. Even the better pieces of software are mostly timesavers or memory aids, games notwithstanding. The problem seems to stem from the fact that there is this expection to spend a few weeks and crank out an app, then live on it for a year, when I just don't think this could be the case. iPhone apps just aren't as big or useful as desktop apps. I'm not saying there aren't useful apps, but come on, you're not gonna see Photoshop or Visual Studio or.. World or Warcraft for the iPhone any time soon. And this doesn't even get into the fact that a lot of apps I could use can be replicated just by opening the browser and going to a website. And that one app I WOULD buy, I can't, without jailbreaking. (Ah, Podcaster. C'est la vie. And that app is only 4.99 too.)

Raphael 18y ago
Is a ring tone worth $3? To many people, it is.
potatolicious 18y ago
Some of the apps are genuinely useful - there's an app that will capture a sample of a song and identify it. I would pay at least a few bucks for that. Maybe not $10, but $5 easily. But on the store it's free, without ads. I don't get it. That's throwing money away.
- briansmith 18y ago
  Don't they use affiliate links for when you purchase the song from the (iTunes?) music store.
  - potatolicious 18y ago
    They could've done both...
LPTS 18y ago
Omnifocus for iPhone was 19.99 and worth every penny. I could of paid 199.99 and it would of been good value. This app lets me offload the kinds of thinking my brain is bad at into something I always carry. You can't put a price on having that in your pocket. I'd hesitate to say I had any desktop apps more useful then omnifocus iPhone, which effects me more like a neural upgrade from a sci fi novel then a cell phone app. iPhone apps could be like primitive cyborg upgrades with a primitive MMI solution grafted onto the part where the human interacts with the machine part. I hope people support apps with high prices and really cool stuff gets developed. the problem isn't price or value or anything like that, it's that no one has any interesting vision of what the future of this phone could hold.

DenisM 18y ago

The other post by the same author is a lot better: http://www.losingfight.com/blog/2008/11/07/can-you-make-a-living-off-an-iphone-app/ http://www.losingfight.com/blog/2008/11/07/can-you-make-a-li...

DenisM 18y ago

What the appstore needs is not higher prices, it needs fewer developers: if there are 20 apps doing X then each only makes enough money to get by, but if there were 2 apps doing X they both could invest into making new features. What we need is a serious recession with a healthy round of bakrupcies and mergers.

briansmith 18y ago
More people losing their jobs means more people with free time to build an iPhone app while they look for a new new job. Plus, a poor economy lowers the market for these unnecessary goods. So it is likely the result of a serious recession is more competition for fewer customers. Apple could reduce the number of iPhone developers by charging more for the SDK, or by charging a larger transaction fee. I wouldn't be surprised if Apple did increase the costs substantially sometime soon. In particular, I wouldn't be surprised to see the standard transaction fee increase substantially, with tiered percentages based on price and/or volume (e.g. start $1 flat transaction fee + 30% of the price for the first 1,000 copies, then reduce the percentage gradually for each 10^nth copy).
- DenisM 18y ago
  More people losing their jobs means more people with free time to build an iPhone app while they look for a new new job It could swing either way, I agree.
potatolicious 18y ago
I disagree. Having fewer developers does nobody any good - you would have to introduce artificial barriers to the App Store, which is unfair to small businesses. Customers also lose the ability to have competing apps. What we need is a better visibility system. Similar to HN, Digg, etc, where the best apps find a way to "float to the top", but never permanently (i.e. an extremely popular app won't sit on the Top 50 list forever). We also need better integration with this system from the web side of things - so app authors can generate exposure for their app not only on the App Store, but also by themselves through their own marketing.

zack 18y ago

i bought beejiveIM for $16, it kicks ass and is worth every penny

vaksel 18y ago

I don't think its possible to raise the prices. I mean sure you are supposed to compete on things other than price...but most iPhone apps aren't rocket science. Anything you can come up with, can get copied very quickly. So why would someone pay $9.99 for your app, when they can pay $.99 for an app that has all your features, on top of whatever else they come up with

briansmith 18y ago
If you build a good app for $20.00 then somebody might clone it for $2.00. But, will they survive on their clone? Probably not, if they are living in a rich country. You just need to outlast these cheap knock-offs until their developers get bored and move onto something else. It might be a constant stream of knock-offs, but the longer you last, the better the reputation you build. Reputation is worth a lot, especially with people whose lives don't revolve around software development. A good developer in SW Asia, SE Asia, Africa, or Eastern Europe will always have an advantage over you regarding price. $10,000 or $20,000 a year goes a long way in those places (I lived in Thailand for $1K a month without even trying to be cheap). But, that is the case with other parts of the software market and somehow Asian, African, and Eastern European companies haven't taken over the while software development market yet. Probably in the long term they will, but that is years off.
- HeyLaughingBoy 18y ago
  Right, but the same could be said about the USA. My monthly burn is much higher than $1000 :-( BUT, living in rural Minnesota as I do, it really isn't hard to lower your living cost below $1000 if you want to and are single (When I lived in the city of Minneapolis, my monthly bills including mortgage totalled probably around $1,500). Being American and living here in the US gives me a huge advantage on understanding our culture and being able to design a UI that appeals to Americans and to be able to support them that a smart Thai doesn't have. I am seriously thinking of getting into iPhone development even though I've only seen one once :-) Why? Because I already design & build mobile Bluetooth hardware and I can see many apps where the mobility of an iPhone would result in a great product. I don't care about consumer apps, but there are tons of small business applications that have been waiting for this kind of connectivity in your pocket!

mattmaroon 18y ago

His comments on undercutting Sega are exactly incorrect. You, a random developer, have little expenses and can stand to make $50k off of an app. Sega, on the other hand, has a ton of expenses, spends probably millions just to make a Super Monkey Ball, and can't afford that.