13 ms·

The Sparrow Problem

310 points by kirillzubovsky 14y ago

LoganCale 14y ago
Apple seriously needs to implement support for paid upgrades on major version releases without having to add an entirely new, separate product. If that were easily done, this point is moot. No one seriously discussing this really expects free updates for life. I'm happy to pay for a major new release every year or so.
- taligent 14y ago
  That's what in app purchases are for. If you want to add new functionality then allow people to purchase it separately. That way existing users still have a core product that will see upgrades.
  - zachwill 14y ago
    I've yet to really think about it like this, but your comment seems spot on. Has any app really gone the route of already being established before introducing in-app purchases? The only utility app I can remember paying for an in-app was Paper — but even then, a large chunk of functionality wasn't available without it (the different brushes) and it wasn't an established app beforehand.
    - brc 14y ago
      I listened to a talk by a game developer last week, and their thrust was exactly in this direction. The app is free and revenue is made from in-app purchases. The basic app is structured so that upgrades are infrequent, because of the time lag. However, the app connects to back-end servers which contain much of the smarts of the app. Thus they can upgrade them whenever they like, without having to upgrade the app. Then can also introduce premium features to be sold with the existing in-app purchases. How you achieve this in a non-game setting is a challenge, but I believe it is the key.
  - majormajor 14y ago
    I'm not a big phone/tablet app user, so I'm ignorant about this: how does that work for new purchasers? Is there a way to say "anyone who buys this from date X on gets these additional purchases included free"? For instance, if I buy Photoshop today, I get all the features. If I had bought the last version, I'd have an upgrade price to pay for the new features. In the in-app purchase world, does everyone always have to pay the original price + in-app purchase price? Do you just make the new base price lower (but with the low prices of apps in the first place, there's not room for many versions if you knock a buck off each one...)? And even that seems to still be new-user-unfriendly: I would be bummed if I bought an app for $1 and found out that the coolest features required another $3 in purchases, even if the app cost $4 when it first came out a couple of years ago (I probably don't even know that).
  - abruzzi 14y ago
    That works if all the upgrade entails is the addittion of new features, but frequently news version are different than just features. They are frequently a rework of the UI or other core code (Apple's Logic 7->8 upgrade jumps to mind, as do most upgrades to 'large' software applications like MS Office.)
  - suresk 14y ago
    I think IAP is a pretty kludgy way of solving the upgrade problem in a lot of cases. As a user, I don't want to be nickel-and-dimed for every little feature. As a developer, I don't want to shoehorn every change I make into an IAP feature. Can you imagine if you had to "upgrade" OS X, Aperture, Photoshop, or Office by purchasing a bunch of "features"?
    - jimbokun 14y ago
      What's the granularity of an In App Purchase? Could you make the next version of OS X a single IAP? (Serious question, I'm not familiar with the mechanics of IAPs.)
      - suresk 14y ago
        IAP is (roughly) limited to unlocking functionality that exists in the app, offering a subscription of some sort, or offering new content. You sort of could deal with something like OS X Mountain Lion as an IAP, but it would be incredibly ugly - you'd essentially have to ship both code bases, and "unlock" the new one based on whether or not they purchased the "upgrade". IAP works pretty well if you have new features that are fairly discrete and are worth paying for individually. As a substitute for an actual upgrade, it is an ugly hack.
  - nirvdrum 14y ago
    I'm pretty anti-IAP. The core problem is I don't know what the purchases are or for until I've already committed to using the app. So, I naturally assume it's hobbled shareware. I'd much rather have a price and feature list in front of me, like what Tweetie did.
- PufferBuffer 14y ago
  Paid upgrades are allright, but if they had a subscription model, that'd be even better. Imagine if you could just pay $5/month for Sparrow? If you live inside your email, that's $60/year well spent and for the developers it's a significant boost in $ generated.
  - LoganCale 14y ago
    I wouldn't pay a subscription fee for desktop software I relied on. As a customer, I want to buy something and own it. If Sparrow had been under a subscription model and they killed off the product, we'd all actually totally lose access to the product we had been paying for rather than just having it go undeveloped in the future. Paid upgrades at semi-regular intervals give the developer money for work they've completed when they finish a new set of features.
    - PufferBuffer 14y ago
      The point is that under a subscription model these developers would be able to provide you with ongoing updates and quality service, w/out having to surrender to Google.
      - MatthewPhillips 14y ago
        How many ongoing updates do you want from an email client? I don't know about you, but I want a pretty consistent experience when dealing with email; email is a chore more than a pleasure after all. And I don't exactly want to dish out $5/month for bug fixes. What is the value-add for the end user here?
        stcredzero 14y ago
        > How many ongoing updates do you want from an email client? Because of Spam? Perhaps indefinite. Because of new file types? New authentication schemes? New mobile platforms? New user interface technology? Perhaps indefinite.
    - deleted 14y ago
jsz0 14y ago
Sparrow did everything right. They built an incredible email app I would say they did everything right except choosing to build an e-mail client. The days of paying for e-mail clients is long gone. The days of even using a local mail client are over for most people. It's just a tough sell to make money selling a paid client to a free service. I use Sparrow and will continue to use it but I can understand why they were going to have difficulties making any real money off it. Way too small of a market.
- wmf 14y ago
  I took a more general message: a $3 app cannot sustain a funded startup in any field.
  - k-mcgrady 14y ago
    Why was this even funded? It could have been a nice business if they built the app and sold it through the app store, it seemed to be making enough money to support the team (based on the fact if was highly ranked in the top grossing sections of the App Stores).
    - 3pt14159 14y ago
      Because some investors don't mind 4x returns when the company exits to Google.
      - robryan 14y ago
        It is an interesting point, investors may have been looking for this type of exit from the start.
      - k-mcgrady 14y ago
        I understand why investors might want to get in but why would a company like this take investment? It seems like it would be pretty easy to bootstrap and build a sustainable business from. If they had given it away for free I could understand the need for investment but not when they were making money from the day it launched.
carsongross 14y ago
I've said it in two previous threads and gotten down-voted for it, but it's the truth: apps must have a recurring revenue model. The upgrade-train model is over for a lot of software out there. Those of us who want good desktop software should be begging our favorites (I'm looking at you, JetBrains) to charge on a subscription basis.
- macspoofing 14y ago
  I disagreed with you in a previous thread, but I have another point to make. I think the SaaS model applied to desktop software would run into some problems. I think people would react with hostility if their desktop software stopped working once they stopped paying a license fee, even though they may very well accept this model for browser-based apps. I think the sparrow guys charged too little for their email client, personally. People will pay for beautiful and quality, productivity tools.
  - tmosleyIII 14y ago
    Isn't Microsoft using the SaaS model for desktop software like Office?
  - carsongross 14y ago
    I think you are right for most pure-play desktop software, which is why desktop/mobile people should be looking for a service aspect to their apps: syncing between devices, backups, publishing, etc. It's unfortunate, but the desktop model just doesn't pencil out in many places in todays world. That means that stuff will end up in the cloud and on the web, not because that's where it can be best implemented (I far prefer a good thick client over a good web app) but rather because that's where the economics force it. And users will end up being held ransom by a cloud service anyway. It's a funny economics problem.
    - MatthewPhillips 14y ago
      It's not really an economics problem. It's unfortunate but an email client is a feature of a platform, it's not a service itself. You can become an email provider and make a kickass client the differentiator, but that won't happen with a 3 person team either.
3pt14159 14y ago
I've been saying this for years. It is easier, way easier, to sell someone a 12 dollar a month subscription to a traditional SaaS app that stores their sales leads. Get your monthly churn rate down to 2% over time and you have a client with a life time value of $600.[1] Now, you could spend the same time making an app that you sell for $0.99 but you would need to sell about a thousand of them just to break even (since Apple takes such a huge cut, plus it costs more money to service a thousand people than it does to serve one). Furthermore your cash flow is much more predictable under a SaaS model (hence, easier to raise on, exit with, hire on, or just plain sleep at night with) so it isn't even a 1:1000 ratio. More like 1:2000. The psychology behind this is pretty simple. Most business owners know that saving time increases their billable hours. If you can do that, then great. They would be thrilled to hear that they will be paying you that 12 bucks for the next 4 years, because it would mean that they survived at least that long! Most of them think there is a good chance that they will be toast in their first 3 or 4 months, and what's $40 bucks compared to their other expenses? Whereas a general app purchaser isn't costing in their saved time (for business or productivity apps), since they don't view their mobile device as a work tool, and consumers don't usually care that your game is good because their are plenty of alternatives to choose from when it comes to wasting time on the internet. Where I would build an app: For an existing product that exists in a browser, mostly as a sales gen tool. Possibly for functionality that people would like to be mobile but doesn't work in a traditional SaaS app (check-ins for a ticketing app, for example, could be done on an iPad). Most other cases I just wouldn't bother. [1] I'd say 1.5 to 2% is basically the floor because that is roughly what small businesses close at.
- theoj 14y ago
  >> Whereas a general app purchaser isn't costing in their saved time (for business or productivity apps), since they don't view their mobile device as a work tool, and consumers don't usually care that your game is good because their are plenty of alternatives to choose from when it comes to wasting time on the internet. I like the way you identify the costing "point of reference" for various segments (web/mobile and business/consumer). To add to that, it seems the costing point of reference for mobile is the monthly phone bill. In comparison with that $1 is negligible (in the ballpark of carrier overage charges), but $10 or $20 extra is a "major expense".
bigfrakkinghero 14y ago
Eventual payout from Google aside, I wonder if the team ever regretted the fact that taking funding "changed the yardstick" for success. I'd guess that going back to work for a big company (even with a big payout) wasn't really the original goal. But then again, maybe it was.
- jusben1369 14y ago
  Remember. The "changed yardstick" is 100% conjecture. It's undeniable that taking outside investment increases the number of people who expect a return from your venture. However, we can't presume to know what the investors were really thinking. They may have known that a talented web and mobile email team will always be a talent buy irrespective of revenues and just sat back and waited to double or tripe their money in 12 - 24 months. Point is - we really don't know if that changed the game that much for them.
MediaSquirrel 14y ago
In March, I emailed the CEO of Sparrow begging him to offer premium SaaS features on a subscription basis that integrated the functionality of "was my email opened?" services like Toutapp.com and automated follow up services like followup.cc into the email client. http://mattmireles.com/post/27676258826/what-sparrow-could-have-been http://mattmireles.com/post/27676258826/what-sparrow-could-h... The market wants it. I still believe.
- PufferBuffer 14y ago
  I think you're right. It's really bazaar why Google hasnt implemented those features into Gmail, but if they were seamlessly integrated into Sparrow, I'd pay.
  - PufferBuffer 14y ago
    Oh, and for all the SaaS-for-desktop-haters, Adobe has recently launched Creative Cloud where anyone could pay $40/month to access any of the Creative Suit softwares. It works great and it 120% worth the money. No reason great companies (like Sparrow) couldn't get together to be a part of a 3rd party store like that (oh! a free startup idea). Alternatively, Apple could simply enable monthly subscriptions.
  - youngtaff 14y ago
    If gmail starts notifying people I've read their email I'll be switching email services... At the last full-time gig I had we had a plugin installed on the mail server to strip out external read-receipts
- AmericanOP 14y ago
  We're doing something along those lines. I'll let you know how it goes if you're curious.
- chmike 14y ago
  When using mail most people don't want to let know when they read a mail. I do for instance because it hurts my privacy. If the notification was delayed so that the sender doesn't have the precise time when I red the mail, it could reduce the problem. Though in other context, like intra-work, beeing able to know when someone opened a mail might be of value for both ends. Add to the equation the spammers who would be delighted to know if their mail was red.
kposehn 14y ago
Interesting. I may have to revise some of my opinions about Sparrow's sale. New data means new conclusions.
gojomo 14y ago
How long until some team, with an acqui-hire offer in hand from one of the big boys, opens a Kickstarter campaign to collect a 'community crowdsourced counteroffer'?
- jusben1369 14y ago
  A bird in the hand is worth a crowd in the bush?
  - coryl 14y ago
    I believe "flock" is the correct terminology
    - jusben1369 14y ago
      Well it's a bird in the hand is worth two in the bush. At least where I grew up.
- uptown 14y ago
  Won't happen. Their suitor would simply walk.
mikehoward 14y ago
nailed it. period
js2 14y ago
And yet Mailplane continues to pay the salary of a sole developer. Maybe Sparrow's aspirations were too big for an email client? The interesting thing about Mailplane is that it targets an arguably different user base (gmail power users?) at a higher price point ($24.95). Personally I'm a Mailplane user because I prefer gmail's web-interface and I have three accounts to juggle. I never saw the appeal of Sparrow over OS X's Mail.app. And I'm still waiting for something like Mailplane for the iPad.
- jbigelow76 14y ago
  Maybe Sparrow's aspirations were too big for an email client? Why is it people keep painting a $25 million dollar exit and jobs at Google for a year and half's work as some kind of failure? It looks like like a home run to me.
  - robryan 14y ago
    Because it is, in terms of the goal of building an awesome app and a sustainable business solving peoples problems with email. It is a personal win for the founders but not the one I imagine they were hoping for when they set out.
- dvhh 14y ago
  and what is the difference between mailplane and the much hated Gmail for iOS (both of them are webview wrapper as far as I can see).
jlft 14y ago
The price of the desktop app seemed too cheap to me. Why only $10 for such great piece of software? So, it seems they made around $1,000k in two years. That's about $100k per employee per year. Google bought them for $25,000k which gives $5,000k per employee. That's 50 years of work at the rate they were.
dave1619 14y ago
I wonder if Sparrow had a subscription model... let's say you had to pay $2/month to use it across any platform. How many people would have signed up? Sparrow seemed more complex than a typical 0.99c app, and it seems like they had their fans. I wonder if they followed the subscription model if their finances would have looked better and gave them the ground to stay independent.
astral303 14y ago
The value obtained from the application should mirror the value received by the developer. For games, one-time app payment makes more sense: usually, you complete the game or there is finite set of game rules that is implemented. For most apps one uses day to day, one-time-pay model works against the user by mis-incentivizing the developer, just like TFA said. It's somewhat ironic that AppCubby itself is an illustration of the same problem: their GasCubby app, which I use several times a month, has been effectively abandoned. Now, I would gladly pay at least $4 a year for that app, if it were actively developed, as it continuously delivers value AND getting improvements is important to me. However, since I've paid for the app once and that's the end of story, the app's own development reflects the same. Pay to get updates is really the way to go. Now, I am afraid to go shopping on the App Store for the same kind of app, as I'm wary of another disappointment. If I were to develop a competing app that filled the same need, but was critically more usable on several subtle, but important fronts, I would have a very uphill battle against the established stalwarts, which have been reviewed and rated since the early days of the App Store. Thus, we are stuck in a situation where, given a popular app category, existing/old school apps tend to dominate based on reputation, but stagnate due to the lack of incentive to update or innovate, and the new apps a tough time breaking through.
tonetheman 14y ago
Yup a 3 dollar app will not make enough money to sustain a company. It seems foolish to think it would. Now if you sell 10 of those apps you are getting closer. The app store and the mentality behind it is a race to the bottom. So unless you are insanely lucky (angry birds), app store devs will be living with their moms just like drug dealers. :)
ChuckMcM 14y ago
"The age of selling software to users at a fixed, one-time price is coming to an end. It’s just not sustainable at the absurdly low prices users have come to expect." While it is fun to watch folks figure out that business school is more than just a big party until graduation, watching them draw the wrong conclusions from their experiences hurts. There is an old joke about a scientist who teaches a frog to jump when you yell "Jump!" he then proceeds to cut off the frog's legs and notes that it no longer jumps when he yells "Jump!". From this he concludes that removing a frog's legs makes it go deaf. The same is true about concluding that the age of selling fixed price software is over. It is not economically viable at these prices. So people will go out of business, and the people who remain will raise their prices to the point needed to support themselves. Now it may be that its not economically viable to live off the revenue from a 'simple' application, but its also true its generally not possible to live off the revenue of a single paperback book either. That said, its easier to see how a 'subscription' is a better model for somethings, but people aren't too excited about those either.
- carsongross 14y ago
  It's more like noting that cutting off the frogs legs makes the frog unable to jump: after cutting off all future revenue from a user, you no longer receive revenue from that user. Regarding your second point, software is plagued by the zombie minimal-viable product. Sparrow is a pretty damned good email client right now. What could they offer to make me upgrade? This is why smart developers and good software will move into SaaS, whether users are excited about it or not.
  - Tloewald 14y ago
    I can buy a lawn mower, why should I have to rent software?
    - stcredzero 14y ago
      The customers you want are the ones that recognize value, and are willing to pay good money for it.
Xcelerate 14y ago
It's a bit hard to buy the "never going to be a millionaire" thing when my friend joined a relatively new start-up and became one overnight. Yeah, I realize a lot of people don't become one, but I still have a good deal of optimism.
Steko 14y ago
Couple important caveats with the provided graphs: The graphs are rankings not revenue (understandably he doesn't want to share). But this introduces the problem that a week in the top 10 and a week at #500 does not equal to two weeks at #250. Not even close. Further 250th place today =/= 250th place in 2009 or 250th place in 2016 or 2030. Ron Nicholson [1] roughly fits the following formula for app store sales: unitSales = totalPaidApps * ((1 + rank) ^ -1.0) - 1.5 This suggests that a week at #5-10 is worth about 23-42 weeks at #250. [1] http://www.musingpaw.com/2011/04/estimating-iphone-app-store-sales-from.html http://www.musingpaw.com/2011/04/estimating-iphone-app-store...
nl 14y ago
I generally agree that the email client market is a hard, hard market to be in. One thing I think could have worked to bring in substantially more revenue is price differentiation. A number of people have claimed that a significant number of Sparrow users were on paid Gmail plans. If Sparrow had split their pricing in a similar way (eg, $3 if you are on the free plan, $20 if you pay to use Gmail) then they might have brought in significantly more revenue. Additionally, the people paying for Gmail are already known to be to be people who spend money on email services. Joel Spolsky's essay is the best resource on this: http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... Of course, some kind of recurring revenue is the real "solution" here.
petercooper 14y ago
Ahh, I hadn't realized Sparrow had taken funding. That explains a lot. Forget revenue, forget breaking even, forget being a well paid lifestyle business.. once you have that funding, you've gotta head for big profits or a big acquisition.
tsunamifury 14y ago
My team makes around $2 to $2.5 million a year on app sales. I'll tell you one thing -- both of these guys and almost everyone I've met in the Valley deeply misunderstand how to make sustained profits in an app store. I'd say, from what I can tell, Gameloft (not my company) is one of the few companies that gets it.
- chmike 14y ago
  That is the point of the discussion. Could you explain ?
- nanijoe 14y ago
  What apps do you guys make? Are they games? I think the general consensus is that it is hard to make any decent money on the app store unless you are selling a game
  - tsunamifury 14y ago
    The problem is, most people I've met don't understand that profitable apps, by and large, are not software platforms. They are: 1) Disposable 2) Timely 3) Shallow 4) Impulsive These can be games, but they can also be many other types of content. Everytime I see a guy betting on one app, on one platform, trying to make it perfect, I try to explain to him it has a snowballs chance in hell of working, he doesn't listen. No one wants to face that profitable apps are mass produced at medium to low quality on every platform.
    - nanijoe 14y ago
      So do you make games ?
      - tsunamifury 14y ago
        We make some trivia games and simple word games. However our 3 top sellers in the Apple App Store make about 120k per year each and are simple reference content. The key is that it is branded with a well recognizable name.
stcredzero 14y ago
My takeaways from this article: If you can't make it with a team of 3 or fewer, you're not going to have a sustainable business. The community needs an "App Escrow" organization which developers can sign copyrights to their software over to. In the event of a "acquhire," the app developers won't be able to kill their app. In essence, the app developers who sign up for this "escrow" have made a precommitment to not killing their app. (Perhaps the app the software can be licensed to a new development team for a fee commensurate with the app's earnings history. Perhaps it could also be open sourced.) http://en.wikipedia.org/wiki/Precommitment http://en.wikipedia.org/wiki/Precommitment
damian2000 14y ago
I see it as something like the historical gold rush - developers flocked to the app store because they sensed there was a lot of money to be made. This vastly increased the supply of apps, which in turn decreased the demand per app, and so decreased revenue per developer. I think there will inevitably be a fall in the rate of apps being added to the app store, and sucesses will continue to be focused on a handful of publishers. PS: This is probably wrong in some fundamental way (I'm not an economist)!
jconley 14y ago
Another thing this OP leaves out is Sparrow was also probably running advertising, and thus burning more capital, to try to get their app store organic coefficient up. The peaks and valleys in the ranking numbers lead me down that train of thought.
zbowling 14y ago
I can tell you, as a developer on Growl, being in the top 100 paid app list at $2.99 is not going to be like being in the top 100 paid apps on iOS by a extremely huge margin. Growl retails at $1.99. We are always around the top 20 paid apps and have been for a long time and even that rate, it's not really sustainable for multiple developers.
chmike 14y ago
What if the Sparrow problem was a too high burn rate ? Apparently they were planing to integrate ads in Sparrow, probably for a free version. This could have worked since the app was very popular.
stevenwei 14y ago
There are some issues with the numbers in this post: Thus, when Dominique revealed to Ellis Hamburger in August 2011 that Sparrow had made at least $350k in it’s first 6 months in the Mac App Store, they had already been working at least a year on the app. The article actually states they made over half a million in the first 6 months DL: In terms of numbers we've made more than half a million dollars in the past six months since Sparrow was introduced in February. I don’t currently have an app in the Mac App Store, so it’s hard for me to estimate sales, but I’d bet the Mac version isn’t generating much more revenue, even at the higher $9.99 price point. I do. You really can't take iOS App Store sales trends and extrapolate them to the Mac App Store, the markets are quite different. 1. Sparrow is first and foremost a Mac app, and its target demographic is (or was) Mac users. The iOS version is supplementary. Without the ability to do push on iOS they wouldn't have been able to deliver as great of a user experience on iOS anyway. I would bet that the vast majority of their sales actually come from the Mac version. 2. Mac apps don't drop out of visibility nearly as quickly as they do on the iOS App Store. Part of this is because it takes a LOT more effort to produce a quality Mac app compared to an iOS app. 3. The Mac version of Sparrow has been pretty consistently in the Top 50 Grossing on the Mac App Store since launch[1]. I would be surprised if they weren't averaging at least $1000-1500/day on sales of the Mac app alone, with much higher spikes when they hit the Top 10 Grossing. That said, I will agree that whatever they were making was probably not sustainable for a team of 5, especially compared to the $25M that Google was offering. [1] http://www.appannie.com/app/mac/sparrow/ranking/history/#view=grossing-ranks&start_date=2011-01-01&end_date=2012-07-20 http://www.appannie.com/app/mac/sparrow/ranking/history/#vie...
- snowch 14y ago
  350k is the net after Apple's 30% cut.
  - stevenwei 14y ago
    Hm, I suppose that's a possible explanation. Although since the sales reports provided by Apple already include the 30% cut, I'm more used to developers reporting their net revenues. And the original quote says "we've made more than half a million dollars", which to me implies that's after Apple's cut, and how much they're actually taking home.
ricardobeat 14y ago
Was the title of this submission changed? I'm pretty sure I read this yesterday as "the gold rush is over" or something. If we are going this way why not simply grab page titles automatically and disallow edits? (because that sucks)
josephlord 14y ago
I find these articles looking at the economics of the app store interesting. I'm still learning mobile (iOS) development having got back to software development last year although I've been doing Rails contract work for much of the time. I released my first real experiment http://itunes.com/apps/fastlists http://itunes.com/apps/fastlists (yes it's another lists app but it is currently free, with no ads and has a couple of useful features making it especially useful for reusable lists for shopping, packing etc. The design is functional rather than beautiful). I'm currently adding some in-app purchase options to test the reactions of the users. My current idea is to offer the following options: 1) No-ads (tier 1 price) 2) Privacy - No anonymous usage collection.(tier 1 price) 3) Raise item limit (by 100 to 200 items) (tier 1 price) 4) Unlimited items (tier 3 price) 5) Everything including future in-app features (tier 5) For me option 5 is important because like several other commenters I hate feeling I will need to keep paying bit by bit for something. It will include everything that doesn't need server side support and expense. I actually hope most customers choose this, the other items are there largely to justify the pricing of this item. Ads and anonymous usage monitoring will come in releases after the purchases have become available and for ads I will probably make the first month of use add free to try and get the user stuck in. I may also add some alternate skins as in-app purchases too later although that is lower priority than using the iOS 6 social framework as a way to try to get users promoting the app for me by sharing lists. There is currently no item limit so I will allow users with more than 50 current items to have their initial limit be 50 higher than the current level. At the moment this is just a small scale test because I haven't done any promotion for the app yet so the current numbers of users is small although the reviews are currently very good (despite a usability issue leading someone not to work out how to reorder items - but I'll add some help in the release after next). To become self sustaining as an independent developer I'm expecting to need to keep a small suite of apps ticking over. Some will be more ambitious than this although others may be even simpler with different unique features or niche target markets. Any thoughts on the pricing model? Or the app?
fallous 14y ago
I think you can still do a one-time purchase app with support for the next X versions and still get the revenue model of a SaaS. Stop thinking about the app as the final product and start thinking about it as a platform. Sell email client for X, then build additional plugins for client that solve a problem for a subset of users and offer that as an upsell. You avoid bloating the original app for those that want a sleek solution but offer enough plugin functionality to let users tailor to their purposes. And each of those plugins can have a paid upgrade cycle as well, a long with the ability to bundle plugins with app for "Enterprise" or "Power User" price points.
akrymski 14y ago
It's not about SaaS vs one-time payments or anything like that. It's about how much value you provide. Mail.app is free, Outlook is free. How much better is Sparrow? Is the improvement worth $60 a year? Cause if it's not worth even $5 a month to your users (2 cups of coffee) - then it's probably not worth doing. No matter how much people say they love your product, if they aren't willing to pay $5 per month, $60 per year or $200 one-off - they are kidding themselves. Think everyone loves Facebook? How many of those folks love Facebook enough to pay $5 per month to use it? People aren't stupid. They will pay for stuff that translates into the bottom line - just like businesses. They may pay for Photoshop - if that's their work tool. They'll pay for a Mac - cause it helps them be more productive and earn more money. My personal benchmark is dating sites. When most guys in the world are prepared to pay north of $20 per month to access a dating site, and if you are charging less you have to ask yourself - if people don't value my product more than a dating site, should I be working on something else? It's kinda sad but true.

310 points by kirillzubovsky 14y ago

Apple seriously needs to implement support for paid upgrades on major version releases without having to add an entirely new, separate product. If that were easily done, this point is moot. No one seriously discussing this really expects free updates for life. I'm happy to pay for a major new release every year or so.

taligent 14y ago
That's what in app purchases are for. If you want to add new functionality then allow people to purchase it separately. That way existing users still have a core product that will see upgrades.
- zachwill 14y ago
  I've yet to really think about it like this, but your comment seems spot on. Has any app really gone the route of already being established before introducing in-app purchases? The only utility app I can remember paying for an in-app was Paper — but even then, a large chunk of functionality wasn't available without it (the different brushes) and it wasn't an established app beforehand.
  - brc 14y ago
    I listened to a talk by a game developer last week, and their thrust was exactly in this direction. The app is free and revenue is made from in-app purchases. The basic app is structured so that upgrades are infrequent, because of the time lag. However, the app connects to back-end servers which contain much of the smarts of the app. Thus they can upgrade them whenever they like, without having to upgrade the app. Then can also introduce premium features to be sold with the existing in-app purchases. How you achieve this in a non-game setting is a challenge, but I believe it is the key.
- majormajor 14y ago
  I'm not a big phone/tablet app user, so I'm ignorant about this: how does that work for new purchasers? Is there a way to say "anyone who buys this from date X on gets these additional purchases included free"? For instance, if I buy Photoshop today, I get all the features. If I had bought the last version, I'd have an upgrade price to pay for the new features. In the in-app purchase world, does everyone always have to pay the original price + in-app purchase price? Do you just make the new base price lower (but with the low prices of apps in the first place, there's not room for many versions if you knock a buck off each one...)? And even that seems to still be new-user-unfriendly: I would be bummed if I bought an app for $1 and found out that the coolest features required another $3 in purchases, even if the app cost $4 when it first came out a couple of years ago (I probably don't even know that).
- abruzzi 14y ago
  That works if all the upgrade entails is the addittion of new features, but frequently news version are different than just features. They are frequently a rework of the UI or other core code (Apple's Logic 7->8 upgrade jumps to mind, as do most upgrades to 'large' software applications like MS Office.)
- suresk 14y ago
  I think IAP is a pretty kludgy way of solving the upgrade problem in a lot of cases. As a user, I don't want to be nickel-and-dimed for every little feature. As a developer, I don't want to shoehorn every change I make into an IAP feature. Can you imagine if you had to "upgrade" OS X, Aperture, Photoshop, or Office by purchasing a bunch of "features"?
  - jimbokun 14y ago
    What's the granularity of an In App Purchase? Could you make the next version of OS X a single IAP? (Serious question, I'm not familiar with the mechanics of IAPs.)
    - suresk 14y ago
      IAP is (roughly) limited to unlocking functionality that exists in the app, offering a subscription of some sort, or offering new content. You sort of could deal with something like OS X Mountain Lion as an IAP, but it would be incredibly ugly - you'd essentially have to ship both code bases, and "unlock" the new one based on whether or not they purchased the "upgrade". IAP works pretty well if you have new features that are fairly discrete and are worth paying for individually. As a substitute for an actual upgrade, it is an ugly hack.
- nirvdrum 14y ago
  I'm pretty anti-IAP. The core problem is I don't know what the purchases are or for until I've already committed to using the app. So, I naturally assume it's hobbled shareware. I'd much rather have a price and feature list in front of me, like what Tweetie did.
PufferBuffer 14y ago
Paid upgrades are allright, but if they had a subscription model, that'd be even better. Imagine if you could just pay $5/month for Sparrow? If you live inside your email, that's $60/year well spent and for the developers it's a significant boost in $ generated.
- LoganCale 14y ago
  I wouldn't pay a subscription fee for desktop software I relied on. As a customer, I want to buy something and own it. If Sparrow had been under a subscription model and they killed off the product, we'd all actually totally lose access to the product we had been paying for rather than just having it go undeveloped in the future. Paid upgrades at semi-regular intervals give the developer money for work they've completed when they finish a new set of features.
  - PufferBuffer 14y ago
    The point is that under a subscription model these developers would be able to provide you with ongoing updates and quality service, w/out having to surrender to Google.
    - MatthewPhillips 14y ago
      How many ongoing updates do you want from an email client? I don't know about you, but I want a pretty consistent experience when dealing with email; email is a chore more than a pleasure after all. And I don't exactly want to dish out $5/month for bug fixes. What is the value-add for the end user here?
      - stcredzero 14y ago
        > How many ongoing updates do you want from an email client? Because of Spam? Perhaps indefinite. Because of new file types? New authentication schemes? New mobile platforms? New user interface technology? Perhaps indefinite.
  - deleted 14y ago

jsz0 14y ago

Sparrow did everything right. They built an incredible email app I would say they did everything right except choosing to build an e-mail client. The days of paying for e-mail clients is long gone. The days of even using a local mail client are over for most people. It's just a tough sell to make money selling a paid client to a free service. I use Sparrow and will continue to use it but I can understand why they were going to have difficulties making any real money off it. Way too small of a market.

wmf 14y ago
I took a more general message: a $3 app cannot sustain a funded startup in any field.
- k-mcgrady 14y ago
  Why was this even funded? It could have been a nice business if they built the app and sold it through the app store, it seemed to be making enough money to support the team (based on the fact if was highly ranked in the top grossing sections of the App Stores).
  - 3pt14159 14y ago
    Because some investors don't mind 4x returns when the company exits to Google.
    - robryan 14y ago
      It is an interesting point, investors may have been looking for this type of exit from the start.
    - k-mcgrady 14y ago
      I understand why investors might want to get in but why would a company like this take investment? It seems like it would be pretty easy to bootstrap and build a sustainable business from. If they had given it away for free I could understand the need for investment but not when they were making money from the day it launched.

carsongross 14y ago

I've said it in two previous threads and gotten down-voted for it, but it's the truth: apps must have a recurring revenue model. The upgrade-train model is over for a lot of software out there. Those of us who want good desktop software should be begging our favorites (I'm looking at you, JetBrains) to charge on a subscription basis.

macspoofing 14y ago
I disagreed with you in a previous thread, but I have another point to make. I think the SaaS model applied to desktop software would run into some problems. I think people would react with hostility if their desktop software stopped working once they stopped paying a license fee, even though they may very well accept this model for browser-based apps. I think the sparrow guys charged too little for their email client, personally. People will pay for beautiful and quality, productivity tools.
- tmosleyIII 14y ago
  Isn't Microsoft using the SaaS model for desktop software like Office?
- carsongross 14y ago
  I think you are right for most pure-play desktop software, which is why desktop/mobile people should be looking for a service aspect to their apps: syncing between devices, backups, publishing, etc. It's unfortunate, but the desktop model just doesn't pencil out in many places in todays world. That means that stuff will end up in the cloud and on the web, not because that's where it can be best implemented (I far prefer a good thick client over a good web app) but rather because that's where the economics force it. And users will end up being held ransom by a cloud service anyway. It's a funny economics problem.
  - MatthewPhillips 14y ago
    It's not really an economics problem. It's unfortunate but an email client is a feature of a platform, it's not a service itself. You can become an email provider and make a kickass client the differentiator, but that won't happen with a 3 person team either.

3pt14159 14y ago

I've been saying this for years. It is easier, way easier, to sell someone a 12 dollar a month subscription to a traditional SaaS app that stores their sales leads. Get your monthly churn rate down to 2% over time and you have a client with a life time value of $600.[1] Now, you could spend the same time making an app that you sell for $0.99 but you would need to sell about a thousand of them just to break even (since Apple takes such a huge cut, plus it costs more money to service a thousand people than it does to serve one). Furthermore your cash flow is much more predictable under a SaaS model (hence, easier to raise on, exit with, hire on, or just plain sleep at night with) so it isn't even a 1:1000 ratio. More like 1:2000. The psychology behind this is pretty simple. Most business owners know that saving time increases their billable hours. If you can do that, then great. They would be thrilled to hear that they will be paying you that 12 bucks for the next 4 years, because it would mean that they survived at least that long! Most of them think there is a good chance that they will be toast in their first 3 or 4 months, and what's $40 bucks compared to their other expenses? Whereas a general app purchaser isn't costing in their saved time (for business or productivity apps), since they don't view their mobile device as a work tool, and consumers don't usually care that your game is good because their are plenty of alternatives to choose from when it comes to wasting time on the internet. Where I would build an app: For an existing product that exists in a browser, mostly as a sales gen tool. Possibly for functionality that people would like to be mobile but doesn't work in a traditional SaaS app (check-ins for a ticketing app, for example, could be done on an iPad). Most other cases I just wouldn't bother. [1] I'd say 1.5 to 2% is basically the floor because that is roughly what small businesses close at.

theoj 14y ago
>> Whereas a general app purchaser isn't costing in their saved time (for business or productivity apps), since they don't view their mobile device as a work tool, and consumers don't usually care that your game is good because their are plenty of alternatives to choose from when it comes to wasting time on the internet. I like the way you identify the costing "point of reference" for various segments (web/mobile and business/consumer). To add to that, it seems the costing point of reference for mobile is the monthly phone bill. In comparison with that $1 is negligible (in the ballpark of carrier overage charges), but $10 or $20 extra is a "major expense".

bigfrakkinghero 14y ago

Eventual payout from Google aside, I wonder if the team ever regretted the fact that taking funding "changed the yardstick" for success. I'd guess that going back to work for a big company (even with a big payout) wasn't really the original goal. But then again, maybe it was.

jusben1369 14y ago
Remember. The "changed yardstick" is 100% conjecture. It's undeniable that taking outside investment increases the number of people who expect a return from your venture. However, we can't presume to know what the investors were really thinking. They may have known that a talented web and mobile email team will always be a talent buy irrespective of revenues and just sat back and waited to double or tripe their money in 12 - 24 months. Point is - we really don't know if that changed the game that much for them.

MediaSquirrel 14y ago

In March, I emailed the CEO of Sparrow begging him to offer premium SaaS features on a subscription basis that integrated the functionality of "was my email opened?" services like Toutapp.com and automated follow up services like followup.cc into the email client. http://mattmireles.com/post/27676258826/what-sparrow-could-have-been http://mattmireles.com/post/27676258826/what-sparrow-could-h... The market wants it. I still believe.

PufferBuffer 14y ago
I think you're right. It's really bazaar why Google hasnt implemented those features into Gmail, but if they were seamlessly integrated into Sparrow, I'd pay.
- PufferBuffer 14y ago
  Oh, and for all the SaaS-for-desktop-haters, Adobe has recently launched Creative Cloud where anyone could pay $40/month to access any of the Creative Suit softwares. It works great and it 120% worth the money. No reason great companies (like Sparrow) couldn't get together to be a part of a 3rd party store like that (oh! a free startup idea). Alternatively, Apple could simply enable monthly subscriptions.
- youngtaff 14y ago
  If gmail starts notifying people I've read their email I'll be switching email services... At the last full-time gig I had we had a plugin installed on the mail server to strip out external read-receipts
AmericanOP 14y ago
We're doing something along those lines. I'll let you know how it goes if you're curious.
chmike 14y ago
When using mail most people don't want to let know when they read a mail. I do for instance because it hurts my privacy. If the notification was delayed so that the sender doesn't have the precise time when I red the mail, it could reduce the problem. Though in other context, like intra-work, beeing able to know when someone opened a mail might be of value for both ends. Add to the equation the spammers who would be delighted to know if their mail was red.

kposehn 14y ago

Interesting. I may have to revise some of my opinions about Sparrow's sale. New data means new conclusions.

gojomo 14y ago

How long until some team, with an acqui-hire offer in hand from one of the big boys, opens a Kickstarter campaign to collect a 'community crowdsourced counteroffer'?

jusben1369 14y ago
A bird in the hand is worth a crowd in the bush?
- coryl 14y ago
  I believe "flock" is the correct terminology
  - jusben1369 14y ago
    Well it's a bird in the hand is worth two in the bush. At least where I grew up.
uptown 14y ago
Won't happen. Their suitor would simply walk.

mikehoward 14y ago

nailed it. period

js2 14y ago

And yet Mailplane continues to pay the salary of a sole developer. Maybe Sparrow's aspirations were too big for an email client? The interesting thing about Mailplane is that it targets an arguably different user base (gmail power users?) at a higher price point ($24.95). Personally I'm a Mailplane user because I prefer gmail's web-interface and I have three accounts to juggle. I never saw the appeal of Sparrow over OS X's Mail.app. And I'm still waiting for something like Mailplane for the iPad.

jbigelow76 14y ago
Maybe Sparrow's aspirations were too big for an email client? Why is it people keep painting a $25 million dollar exit and jobs at Google for a year and half's work as some kind of failure? It looks like like a home run to me.
- robryan 14y ago
  Because it is, in terms of the goal of building an awesome app and a sustainable business solving peoples problems with email. It is a personal win for the founders but not the one I imagine they were hoping for when they set out.
dvhh 14y ago
and what is the difference between mailplane and the much hated Gmail for iOS (both of them are webview wrapper as far as I can see).

jlft 14y ago

The price of the desktop app seemed too cheap to me. Why only $10 for such great piece of software? So, it seems they made around $1,000k in two years. That's about $100k per employee per year. Google bought them for $25,000k which gives $5,000k per employee. That's 50 years of work at the rate they were.

dave1619 14y ago

I wonder if Sparrow had a subscription model... let's say you had to pay $2/month to use it across any platform. How many people would have signed up? Sparrow seemed more complex than a typical 0.99c app, and it seems like they had their fans. I wonder if they followed the subscription model if their finances would have looked better and gave them the ground to stay independent.

astral303 14y ago

The value obtained from the application should mirror the value received by the developer. For games, one-time app payment makes more sense: usually, you complete the game or there is finite set of game rules that is implemented. For most apps one uses day to day, one-time-pay model works against the user by mis-incentivizing the developer, just like TFA said. It's somewhat ironic that AppCubby itself is an illustration of the same problem: their GasCubby app, which I use several times a month, has been effectively abandoned. Now, I would gladly pay at least $4 a year for that app, if it were actively developed, as it continuously delivers value AND getting improvements is important to me. However, since I've paid for the app once and that's the end of story, the app's own development reflects the same. Pay to get updates is really the way to go. Now, I am afraid to go shopping on the App Store for the same kind of app, as I'm wary of another disappointment. If I were to develop a competing app that filled the same need, but was critically more usable on several subtle, but important fronts, I would have a very uphill battle against the established stalwarts, which have been reviewed and rated since the early days of the App Store. Thus, we are stuck in a situation where, given a popular app category, existing/old school apps tend to dominate based on reputation, but stagnate due to the lack of incentive to update or innovate, and the new apps a tough time breaking through.

tonetheman 14y ago

Yup a 3 dollar app will not make enough money to sustain a company. It seems foolish to think it would. Now if you sell 10 of those apps you are getting closer. The app store and the mentality behind it is a race to the bottom. So unless you are insanely lucky (angry birds), app store devs will be living with their moms just like drug dealers. :)

ChuckMcM 14y ago

"The age of selling software to users at a fixed, one-time price is coming to an end. It’s just not sustainable at the absurdly low prices users have come to expect." While it is fun to watch folks figure out that business school is more than just a big party until graduation, watching them draw the wrong conclusions from their experiences hurts. There is an old joke about a scientist who teaches a frog to jump when you yell "Jump!" he then proceeds to cut off the frog's legs and notes that it no longer jumps when he yells "Jump!". From this he concludes that removing a frog's legs makes it go deaf. The same is true about concluding that the age of selling fixed price software is over. It is not economically viable at these prices. So people will go out of business, and the people who remain will raise their prices to the point needed to support themselves. Now it may be that its not economically viable to live off the revenue from a 'simple' application, but its also true its generally not possible to live off the revenue of a single paperback book either. That said, its easier to see how a 'subscription' is a better model for somethings, but people aren't too excited about those either.

carsongross 14y ago
It's more like noting that cutting off the frogs legs makes the frog unable to jump: after cutting off all future revenue from a user, you no longer receive revenue from that user. Regarding your second point, software is plagued by the zombie minimal-viable product. Sparrow is a pretty damned good email client right now. What could they offer to make me upgrade? This is why smart developers and good software will move into SaaS, whether users are excited about it or not.
- Tloewald 14y ago
  I can buy a lawn mower, why should I have to rent software?
  - stcredzero 14y ago
    The customers you want are the ones that recognize value, and are willing to pay good money for it.

Xcelerate 14y ago

It's a bit hard to buy the "never going to be a millionaire" thing when my friend joined a relatively new start-up and became one overnight. Yeah, I realize a lot of people don't become one, but I still have a good deal of optimism.

Steko 14y ago

Couple important caveats with the provided graphs: The graphs are rankings not revenue (understandably he doesn't want to share). But this introduces the problem that a week in the top 10 and a week at #500 does not equal to two weeks at #250. Not even close. Further 250th place today =/= 250th place in 2009 or 250th place in 2016 or 2030. Ron Nicholson [1] roughly fits the following formula for app store sales: unitSales = totalPaidApps * ((1 + rank) ^ -1.0) - 1.5 This suggests that a week at #5-10 is worth about 23-42 weeks at #250. [1] http://www.musingpaw.com/2011/04/estimating-iphone-app-store-sales-from.html http://www.musingpaw.com/2011/04/estimating-iphone-app-store...

nl 14y ago

I generally agree that the email client market is a hard, hard market to be in. One thing I think could have worked to bring in substantially more revenue is price differentiation. A number of people have claimed that a significant number of Sparrow users were on paid Gmail plans. If Sparrow had split their pricing in a similar way (eg, $3 if you are on the free plan, $20 if you pay to use Gmail) then they might have brought in significantly more revenue. Additionally, the people paying for Gmail are already known to be to be people who spend money on email services. Joel Spolsky's essay is the best resource on this: http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... Of course, some kind of recurring revenue is the real "solution" here.

petercooper 14y ago

Ahh, I hadn't realized Sparrow had taken funding. That explains a lot. Forget revenue, forget breaking even, forget being a well paid lifestyle business.. once you have that funding, you've gotta head for big profits or a big acquisition.

tsunamifury 14y ago

My team makes around $2 to $2.5 million a year on app sales. I'll tell you one thing -- both of these guys and almost everyone I've met in the Valley deeply misunderstand how to make sustained profits in an app store. I'd say, from what I can tell, Gameloft (not my company) is one of the few companies that gets it.

chmike 14y ago
That is the point of the discussion. Could you explain ?
nanijoe 14y ago
What apps do you guys make? Are they games? I think the general consensus is that it is hard to make any decent money on the app store unless you are selling a game
- tsunamifury 14y ago
  The problem is, most people I've met don't understand that profitable apps, by and large, are not software platforms. They are: 1) Disposable 2) Timely 3) Shallow 4) Impulsive These can be games, but they can also be many other types of content. Everytime I see a guy betting on one app, on one platform, trying to make it perfect, I try to explain to him it has a snowballs chance in hell of working, he doesn't listen. No one wants to face that profitable apps are mass produced at medium to low quality on every platform.
  - nanijoe 14y ago
    So do you make games ?
    - tsunamifury 14y ago
      We make some trivia games and simple word games. However our 3 top sellers in the Apple App Store make about 120k per year each and are simple reference content. The key is that it is branded with a well recognizable name.

stcredzero 14y ago

My takeaways from this article: If you can't make it with a team of 3 or fewer, you're not going to have a sustainable business. The community needs an "App Escrow" organization which developers can sign copyrights to their software over to. In the event of a "acquhire," the app developers won't be able to kill their app. In essence, the app developers who sign up for this "escrow" have made a precommitment to not killing their app. (Perhaps the app the software can be licensed to a new development team for a fee commensurate with the app's earnings history. Perhaps it could also be open sourced.) http://en.wikipedia.org/wiki/Precommitment http://en.wikipedia.org/wiki/Precommitment

damian2000 14y ago

I see it as something like the historical gold rush - developers flocked to the app store because they sensed there was a lot of money to be made. This vastly increased the supply of apps, which in turn decreased the demand per app, and so decreased revenue per developer. I think there will inevitably be a fall in the rate of apps being added to the app store, and sucesses will continue to be focused on a handful of publishers. PS: This is probably wrong in some fundamental way (I'm not an economist)!

jconley 14y ago

Another thing this OP leaves out is Sparrow was also probably running advertising, and thus burning more capital, to try to get their app store organic coefficient up. The peaks and valleys in the ranking numbers lead me down that train of thought.

zbowling 14y ago

I can tell you, as a developer on Growl, being in the top 100 paid app list at $2.99 is not going to be like being in the top 100 paid apps on iOS by a extremely huge margin. Growl retails at $1.99. We are always around the top 20 paid apps and have been for a long time and even that rate, it's not really sustainable for multiple developers.

chmike 14y ago

What if the Sparrow problem was a too high burn rate ? Apparently they were planing to integrate ads in Sparrow, probably for a free version. This could have worked since the app was very popular.

stevenwei 14y ago

There are some issues with the numbers in this post: Thus, when Dominique revealed to Ellis Hamburger in August 2011 that Sparrow had made at least $350k in it’s first 6 months in the Mac App Store, they had already been working at least a year on the app. The article actually states they made over half a million in the first 6 months DL: In terms of numbers we've made more than half a million dollars in the past six months since Sparrow was introduced in February. I don’t currently have an app in the Mac App Store, so it’s hard for me to estimate sales, but I’d bet the Mac version isn’t generating much more revenue, even at the higher $9.99 price point. I do. You really can't take iOS App Store sales trends and extrapolate them to the Mac App Store, the markets are quite different. 1. Sparrow is first and foremost a Mac app, and its target demographic is (or was) Mac users. The iOS version is supplementary. Without the ability to do push on iOS they wouldn't have been able to deliver as great of a user experience on iOS anyway. I would bet that the vast majority of their sales actually come from the Mac version. 2. Mac apps don't drop out of visibility nearly as quickly as they do on the iOS App Store. Part of this is because it takes a LOT more effort to produce a quality Mac app compared to an iOS app. 3. The Mac version of Sparrow has been pretty consistently in the Top 50 Grossing on the Mac App Store since launch[1]. I would be surprised if they weren't averaging at least $1000-1500/day on sales of the Mac app alone, with much higher spikes when they hit the Top 10 Grossing. That said, I will agree that whatever they were making was probably not sustainable for a team of 5, especially compared to the $25M that Google was offering. [1] http://www.appannie.com/app/mac/sparrow/ranking/history/#view=grossing-ranks&start_date=2011-01-01&end_date=2012-07-20 http://www.appannie.com/app/mac/sparrow/ranking/history/#vie...

snowch 14y ago
350k is the net after Apple's 30% cut.
- stevenwei 14y ago
  Hm, I suppose that's a possible explanation. Although since the sales reports provided by Apple already include the 30% cut, I'm more used to developers reporting their net revenues. And the original quote says "we've made more than half a million dollars", which to me implies that's after Apple's cut, and how much they're actually taking home.

ricardobeat 14y ago

Was the title of this submission changed? I'm pretty sure I read this yesterday as "the gold rush is over" or something. If we are going this way why not simply grab page titles automatically and disallow edits? (because that sucks)

josephlord 14y ago

I find these articles looking at the economics of the app store interesting. I'm still learning mobile (iOS) development having got back to software development last year although I've been doing Rails contract work for much of the time. I released my first real experiment http://itunes.com/apps/fastlists http://itunes.com/apps/fastlists (yes it's another lists app but it is currently free, with no ads and has a couple of useful features making it especially useful for reusable lists for shopping, packing etc. The design is functional rather than beautiful). I'm currently adding some in-app purchase options to test the reactions of the users. My current idea is to offer the following options: 1) No-ads (tier 1 price) 2) Privacy - No anonymous usage collection.(tier 1 price) 3) Raise item limit (by 100 to 200 items) (tier 1 price) 4) Unlimited items (tier 3 price) 5) Everything including future in-app features (tier 5) For me option 5 is important because like several other commenters I hate feeling I will need to keep paying bit by bit for something. It will include everything that doesn't need server side support and expense. I actually hope most customers choose this, the other items are there largely to justify the pricing of this item. Ads and anonymous usage monitoring will come in releases after the purchases have become available and for ads I will probably make the first month of use add free to try and get the user stuck in. I may also add some alternate skins as in-app purchases too later although that is lower priority than using the iOS 6 social framework as a way to try to get users promoting the app for me by sharing lists. There is currently no item limit so I will allow users with more than 50 current items to have their initial limit be 50 higher than the current level. At the moment this is just a small scale test because I haven't done any promotion for the app yet so the current numbers of users is small although the reviews are currently very good (despite a usability issue leading someone not to work out how to reorder items - but I'll add some help in the release after next). To become self sustaining as an independent developer I'm expecting to need to keep a small suite of apps ticking over. Some will be more ambitious than this although others may be even simpler with different unique features or niche target markets. Any thoughts on the pricing model? Or the app?

fallous 14y ago

I think you can still do a one-time purchase app with support for the next X versions and still get the revenue model of a SaaS. Stop thinking about the app as the final product and start thinking about it as a platform. Sell email client for X, then build additional plugins for client that solve a problem for a subset of users and offer that as an upsell. You avoid bloating the original app for those that want a sleek solution but offer enough plugin functionality to let users tailor to their purposes. And each of those plugins can have a paid upgrade cycle as well, a long with the ability to bundle plugins with app for "Enterprise" or "Power User" price points.

akrymski 14y ago

It's not about SaaS vs one-time payments or anything like that. It's about how much value you provide. Mail.app is free, Outlook is free. How much better is Sparrow? Is the improvement worth $60 a year? Cause if it's not worth even $5 a month to your users (2 cups of coffee) - then it's probably not worth doing. No matter how much people say they love your product, if they aren't willing to pay $5 per month, $60 per year or $200 one-off - they are kidding themselves. Think everyone loves Facebook? How many of those folks love Facebook enough to pay $5 per month to use it? People aren't stupid. They will pay for stuff that translates into the bottom line - just like businesses. They may pay for Photoshop - if that's their work tool. They'll pay for a Mac - cause it helps them be more productive and earn more money. My personal benchmark is dating sites. When most guys in the world are prepared to pay north of $20 per month to access a dating site, and if you are charging less you have to ask yourself - if people don't value my product more than a dating site, should I be working on something else? It's kinda sad but true.