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7 Reasons our app costs $99.99

114 points by ryanmcdonough 12y ago

robert_tweed 12y ago
Really good article just for the sales vs income graph alone.
kenrose 12y ago
I'd argue that the charts in Section 4 are the reason to price high. Your overall revenues are higher. Joel Spolsky has his article on market segmentation http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... that provides a more thorough treatment of why increasing the price to "near absurd" levels is actually beneficial from a revenue standpoint. Unfortunately, Apple's app store as a channel makes it difficult (impossible?) to provide differentiated pricing (unless you do the classic free / paid with two apps).
samirmenon 12y ago
The price limit in the App Store is $999. I wonder why they chose $99, and not something higher.
- aluhut 12y ago
  Because crossing over to 3-digits would make even more people look for alternatives.
  - unction 12y ago
    On the Australian app store it is $129.99. The Australian market is small enough that it's unlikely to be worth optimising for but I though I'd mention it all the same. (For the curious AU $129.99 is about US $121 at the moment.)
    - httpwatch 12y ago
      Australia has been one of our best markets for the app. Perhaps a 3 digit price is better :) Does the Australia app store include VAT (or equivalent) that can be claimed back by businesses?
      - lubos 12y ago
        Yes, the price to Australians will always include 10% GST (VAT equivalent)
      - unction 12y ago
        Yes it includes GST (10%) and that can be claimed back. Also it's not uncommon to soft-launch apps in Australia before the US and the rest of the world as a large scale public test. (The market is considered by some to be very similar to the US.) So it might makes sense to roll a different line just for Australia. Maybe. Just throwing the idea out there :)
sbarre 12y ago
$100 for a professional app that helps you in your day-to-day work is a completely reasonable price. Assuming their (rather low compared to North America) rate of $40/hour for a developer, if this app saves you in aggregate more than 2.5 hours of work, you've already made your money back.
- joshcrowder 12y ago
  The average iOS dev in the UK is not $40/hour that works out to be £187 a day! From what we see the going rate is around £300-500
  - lmm 12y ago
    For a freelancer or a consultant via a full-service agency, sure, but you're paying for other things there. For a conventionally employed professional I rather doubt you'd pay 300/day (and if you are, tell me more!)
  - monkeyprojects 12y ago
    That is your average contractor contract rate. The actual cost will be 10-20% more than that to cover agency costs (so £350-£600) a day. Permanent employees will probably cost less than that. Say £50k a year or approx. £250 a day...
- davidjgraph 12y ago
  Regarding this, I've found you need the case to be far more clear cut before people buy an app to save money. My ballpark is more like x10, i.e. they need to feel appropriately 25+ hours worth of work will be saved before purchasing. Remember, also, the fully loaded cost of an employee is at least x2 their salary.
- smackfu 12y ago
  True as long as you are an indie developer.
subudeepak 12y ago
Thanks for the insights. I wonder if a feature by feature in-app purchase on the app would have fared better.
leorocky 12y ago
These may be reasons why you cannot sell lower than $99 but they are not reasons why someone should pay so much. The stated plan to keep updating the app reveals a fear that they are not creating enough value despite the cost to develop. The plan to update is also a shitty thing to say as this is no guarantee and light on specifics about what the updates will feature. $100 for an opaque primise that more is to come is a shit sandwhich usually served with a nice heap of disappointment. xscope 4's price of $50 is another one of these niche narrow doodads that while clearly provide value do so at questionable prices and the user has no idea when they will have to pay for a new version. Apple's lack of an upgrade price sucks but that's not the users fault but they are the ones that get the shit end of the deal with limited time price reductions that you have to know about.
- danbruc 12y ago
  If using this app saves you an hour or two it was already worth its money even if you never receive an update.
- wmt 12y ago
  They most definitely have the right reasons for why someone should pay what they're asking. The reason #1, "we need to make a profit", is the biggest reason for the price. In reason #4 they clarify that reason by having tested that out of $10, $20 and $100 prices they made the biggest profit with the highest price. The flimflam about updating the app just means that they don't wish to fire everyone now that they have a selling app, but instead will keep developing it with the hopes that it would sell even better.
  - hawleyal 12y ago
    > right reasons Maybe the right reasons for stakeholders. Not the right reasons for customers.
    - danielweber 12y ago
      The right customers -- professional developers -- would want the tool to stick around for a while, but of course there is a free-loader problem. Paying $100 a year, let alone $100 once off, for something that improves productivity ought to be below the level of even caring to do the cost-benefit analysis. If your employer won't let you spend $100 on a productivity tool, he's very foolish. (NB: Most employers are foolish. I've always got hemming and hawing about spending that money; can't we just do without?)
Shivetya 12y ago
The constraints of the app store lead me to believe there has to be a better solution for developers of professional apps. However that cut Apple takes really needs to have limits, its almost begging for someone to step in but I doubt its even possible with Apple's ability to lock it down
jblok 12y ago
It's a shame that a company even need to write an article like this. The venture backed economy in most technology companies really warps pricing models and allows companies with huge funding to disregard the actual 'making money' part
- danielweber 12y ago
  I remember my first start-up, where the software we were selling was what was paying for my ability to eat food and have a place to live. And a guy on the phone wondering why the software cost a thousand bucks and not $39.95 like the stuff he saw at Babbage's.[1] I said I probably wasn't the right person to ask about that. [1] TIL Babbage's had already had a name change before the time period in question.
- soundlab 12y ago
  Agreed- all the more reason to not apply mass market, VC-backed product economics to your niche technical application. We are working on a niche desktop OSX app that we will price +200 USD. It's for business users with a budget and has a demonstrable ROI for exactly that kind of buyer, why cater to the $.99 or free crowd?
  - slantyyz 12y ago
    Part of the problem is the App store itself. It's primarily a consumer store, and price expectations are set accordingly. Sadly, Apple hasn't really done much to prevent the race-to-the-bottom pricing. If the app was a sideloaded app only, the OP would be able avoid the questioning from the more frugal app store audience completely (and could conceivably cut his price by 30%). The "even my company won't pay" comment was a bit shocking but also reminds me of Kalzumeus' experience with teachers and the already low price of bingo card creator.
- rstupek 12y ago
  Yeah companies able to continue to lose millions offering their below cost product makes it hard to compete in many markets.
edwintorok 12y ago
What is missing from the article: why you should pay for the app at all. What features does it offer in addition to what you get for free when using Firefox/Chromium and built-in tools or plugins? As it stands the article didn't even convince me that the app would be worth $0.99, not $99.99. Or maybe I'm just not the target audience.
- danielweber 12y ago
  What are the dev tools for Firefox and Chromium like on the iPhone?
  - Fuxy 12y ago
    Valid response however he's right. They should have shown what makes this app worth its price.
  - AlyssaRowan 12y ago
    IE, Firefox and Chromium all have great debug/developer menus, Chrome even has specific developer menus for mobile device tethering/debug. Why would I need extra performance optimisation data on iOS that those wouldn't already show me, for zero cost?
- smanuel 12y ago
  <cough>Fiddler</cough>
joshvm 12y ago
I think one of the best advantages of pricing high is that you have fewer customers and they're all 'useful' to you. Their feedback is far more valuable and you can spend the time to interact with them individually and tailor service towards them. 'Cheap' users spend more a lot of time complaining and demanding support that you can't afford to give them. If the product is good, people will pay.
captainmuon 12y ago
When an app is so expensive, and is targeted to niche/technical users anyway, I wonder why they (or other companies) don't also sell it outside of the app store (and avoid Apple's cut)? Users would get a $99 developer license, download the binaries and a little installer script, and the script would install the app via XCode on the device. For one app alone it would not make sense for the user financially, but I could imagine that some power users or people wanting to use censored stuff already have the license. Any reason why this wouldn't work (I'm only superficially familiar with IOS development)?
- UK-AL 12y ago
  Because people want things to be easy as possible.
- deleted 12y ago
  [deleted]
- xenophonf 12y ago
  I believe that's a violation of Apple's developer license. There was a company using a similar trick to bypass the app store, and they got in hot water for it a while back. (I remember it being reported here but can't find the posting.)
  - eddieroger 12y ago
    Yup, it is. If you're remembering what I was remembering, there was a developer who created a adhoc profiles and would distribute their app 100 at a time, then remove the device and start over. This was before Apple's rolling hundred devices was implemented.
    - captainmuon 12y ago
      But if I understand it right, in that case the developer was distributing the app, signed with his own developer's account, abusing the 100 devices you have for testing. What I meant was to let the users be the developers, and sign and deploy it themselves. If you didn't care about selling it, you could just dump the source somewhere with a little installation script. I can imagine many IOS users who would like to use emulators or other banned apps would happily pay $99 and compile their own stuff.
spartas 12y ago
“Because if we could reasonably charge more, we would”
fmavituna 12y ago
This is a quite bad blog post from marketing point of view. "Tell me the ROI not that you need to make money, I don't care about you. Tell me why your application will make my life easier and why it's better than other cheaper alternative solutions" Classical case of someone is taking user feedback personally.
- danielweber 12y ago
  It's a really useful post for software developers, but I agree his customers don't give a hoot.
- Fuxy 12y ago
  Well I guess that's for the typical selfish user however if you respect your customers and you expect them to respect you back and understand that you need to survive in order to keep pushing updates to the app this seems like a valid response. I certainly value it more. Their target market is developers don't forget.
- deleted 12y ago
  [deleted]
- prawn 12y ago
  If their target market is made up of software developers and this sort of list appeals to under-appreciated software developers, then it's likely to help more than hinder their efforts. It made it on to HN after all and I don't know that the other approach would have.
  - fmavituna 12y ago
    Fair point, I don't know whether they guessed the HN or not but certainly results are quite good :)
danielweber 12y ago
It would be purely performance art on their part, but they should release a "free" version crammed so full of ads they start leaking out the sides of the screen. This fear of paying for software is exactly why the Google/Facebook model of selling all your private data to advertisers is so popular.
TamDenholm 12y ago
The problem with mobile apps priced at $99 is price anchoring. If every other app on the app store is $1 - $10, then putting yours at $99 is going to make you seem really expensive. Its like here in the UK, Marks and Spencer Food (a premium food supermarket) doesn't compete on price with ASDA, Tesco, Sainsbury's etc, because they'd lose, instead their ads are Dine in, for two, £10 [1], which is meant to make you compare it to a restaurant, because then it feels like a very good deal. Its all about context. Search for Rory Sutherland on YouTube [2], absolute genius, he talks about this kind of thing as well as other absolutely brilliant ways to apply behavioral economics to advertising and business. [1] http://www.voucherexpress.co.uk/volatile/ProductBannerImage/M&S_6_months.jpg http://www.voucherexpress.co.uk/volatile/ProductBannerImage/... [2] https://www.youtube.com/results?search_query=rory+sutherland https://www.youtube.com/results?search_query=rory+sutherland
- alextgordon 12y ago
  > Its like here in the UK, Marks and Spencer Food (a premium food supermarket) doesn't compete on price with ASDA, Tesco, Sainsbury's etc, because they'd lose, instead their ads are Dine in, for two, £10 [1], which is meant to make you compare it to a restaurant, because then it feels like a very good deal. Its all about context. It "works", but I've never found those adverts convincing. People don't eat at a restaurant every day, and the food from a restaurant will be better than whatever M&S is offering. It's best not to try and trick your customers into spending more money for an inferior product. It tends to backfire over the long term.
hawkharris 12y ago
I appreciate the developers' honesty, but if the goal is to justify the price to customers, they shouldn't blame external costs and delivery challenges (e.g. Apple's take from App Store sales). Think of it this way: while asking your boss for a raise, you wouldn't mention the cost of rent or your other bills — even if those are prime motivators. You would instead focus on how you bring value to the company. Several of the article's points focus on the value that this app brings to customers. The post would be stronger if all of the points had that tone.
- danielweber 12y ago
  I've known a number of people who have successfully gotten raises by talking about their personal expenses. It's not a rational appeal, it's an emotional appeal, but emotional appeals can and do work. Rationally your labor has a market value. How you negotiate your way into getting paid that (or a little over that) is up to you.
  - ekianjo 12y ago
    > I've known a number of people who have successfully gotten raises by talking about their personal expenses. Like that photographer dude on HN a while ago who defined the cost of one photograph by the equipment cost, and the plane ticket required to go there? With this kind of logic, you should bill your customers your years of education, from the time you started to read, and effectively charge them millions of dollars per product. This is so ridiculous I don't even know if there's a name for this kind of fallacy.
    - hyperpape 12y ago
      Fallacy, or just an application of supply and demand? In general, requiring many years of education reduces the supply of a given profession, which raises salaries (though demand still helps explain why doctors make more than philosophy professors).
      - ekianjo 12y ago
ekianjo 12y ago
"7 reasons our app is overpriced" should be the right title for this post. I love the last point : > A good programmer in the UK costs about $ 40 an hour. If an app sells for $ 10 that only pays for about ten minutes of a programmer’s time. Therefore, spending more than ten minutes interacting with a customer who bought a $ 10 app effectively results in a loss on that app sale. So you define the price based on how much time you interact with a single customer? It just doesn't make any sense at all. And that kind of logic does not scale if you have thousands of paying customers, since your time with each of them drops to zero.
- jbardnz 12y ago
  While I somewhat agree with your post I guess they answer this with number 3. Windows is a mass market app, this is not, you can't really compare the pricing of the two.
  - ekianjo 12y ago
    In the online world you never know if you product is a niche unless you sell very few numbers of it. It's not clear in their post how many sales they are making, so the definition of "niche" is not very clear here. Is it 10 ? 100 ? 1000 ? More ? Every of these numbers would give a very different picture of the situation.
mootothemax 12y ago
Let's not forget reduced support costs as well; vastly fewer customers means vastly fewer tickets. I'd also bet that a $0.99 price attracts a lot of unreasonable customers, and those paying $99.99 would be an awful lot more reasonable. This has been my experience with SaaS and consulting: higher prices mean noticeably more pleasant customers.
leephillips 12y ago
When I was in grad school in the '80s living on my $430/month stipend I bought TeXtures, an implementation of TeX for the (new) Macintosh, for $400 so I could use it to write my thesis (in plain TeX) on my Mac Plus ($1400 with a steep educational discount). Reading the comment of a company that thinks $99 is too much to pay for a tool that they would like to use in their work is pretty funny. I can understand balking at software because the source is not available, but $99 for something to be used as as a professional tool is trivial.
- Someone1234 12y ago
  I suspect they wouldn't need to if that same "app" was sold on the PC, Mac, or similar. The problem is that app-store apps have a price pinned to around the $.99-9.99 mark, so anything more than that is seem as abnormal and needs to be "explained." I suspect people are used to buying app-store apps at those prices because it requires no commitment. You could spend 99c on an app, use it just once, and not really regret it because it was "just" 99c. However if it is more than $10 then you have to actually consider the app's relative value and people aren't used to that kind of value proposition on the app store.
  - slantyyz 12y ago
    >> I suspect people are used to buying app-store apps at those prices because it requires no commitment. "No commitment" on the buyer's side, that is. There's still a high expectation of long term support on the seller's side regardless of whether the app has a very low price. Remember how many people freaked out over the sale of Sparrow? IIRC, that app only cost a few bucks.
- reeses 12y ago
  It's that race to the bottom they mention. As they mention, they're in a relatively expensive labor market (although, as I sit here in the Bay Area, they have me thinking about a recruiting run to the UK). They're paying for the market validation that can be eaten up by a company in a less expensive market to produce a knock-off version (or, more likely, ten knockoff versions) for that USD9.99 and enjoy boatloads of sales. This pattern sets an expectation that, because it can run on your phone, it should cost significantly less than desktop software, even if it is more useful than a desktop version. I'm a big fan of leverage and my father taught me the ROI model of tool selection from an early age, for everything from shoes to calculators. Unless it's completely unaffordable, the cost of a tool is irrelevant outside the context of its ability to amplify your thought and your output.
Bill_Dimm 12y ago
The charts are interesting, but I wonder how meaningful they are. For example, does the sales volume at $9.99 reflect what long-term sales would be, or is the number artificially high because people saw the price drop and thought they should buy immediately in case the price went back up. Since the $19.99 price followed the $9.99 price, is that number artificially low because the $9.99 price already drained potential customers from the market? Of course, none of that argues against the conclusion that $99 gives them more revenue than $9.99.
joeblau 12y ago
Great post, especially the graphs comparing sales and revenue. In regards to this comment > 5. There’s no Upgrade or Maintenance Pricing on the App Store You can use in app purchases to add features feature upgrades to the app. Games do exactly that. The only challenge is that you have more maintenance in code and in iTunes connect.
moron4hire 12y ago
What is very interesting is the number of people who get angry over apps charging essentially anything. I can see disappointment, sure, if you really think you can't afford a particular app, but anger? Where does the anger come from? What must this user expect out of the app store that asking for remuneration leads to flaming comments in the reviews? The only things I can figure is that there must be some sort of default assumption of freeness. Does the user believe the apps to be coming from Apple/Google/ATT/Verizon/etc, and feels jilted that they are paying for their service and an "incomplete" device [1]? Or does the user believe the apps to be coming from other users, that apps are no more complex to develop than images are to share on Pinterest? Even that feels like a stretch. I don't know. Have there been any studies on this? Any insights from experienced app publishers here? I think this is a really important question to answer, because otherwise I don't think we're ever going to properly monetize apps, if there is such a fundamental disconnect between developers and users on how the app ecosystem is viewed. [1] default builds are pretty underwhelming.
- dotnetkow 12y ago
  Very well said. Completely agree on the "angry" part - I've experienced that with my own app ($2.99). The hateful things that people write are mind boggling! It costs less than a Starbucks coffee yet they feel like I've robbed them blind. My theory is that the "race to the bottom" that occurred years ago when the app stores began are to blame - as developers/companies we had a chance to establish appropriate expectations but blew it. From here, it's an uphill battle but I think sticking to our guns (charging for apps) and educating friends/family about the true costs/work effort behind apps is a great first step.
  - moron4hire 12y ago
    Is that enough to account for anger, though? What is going through these folk's heads to skip right past dismissal and go straight to hate? Hate and anger are usually reactions out of insecurity. And unfortunately, I think "sticking to your guns" on this subject just puts you in a sort of prisoner's dilemma with the other app developers.
callesgg 12y ago
9.99$ would make me happier as a customer, if it was good and worked like is wanted i would recommend it, if it was buggy and bad i would just ignore it. 99$ it it was good i would recommend it. If it was buggy and bad i would do screaming rants and blog posts about it. My initial thought on the subject when trying not to only think about final revenue.
rdez6173 12y ago
When the app is forced to coexist with cheap/freemium applications in the App Store, it can be easy for consumers to make an apples-to-oranges comparison. That is, Angry Birds offers a lot of value at $0.99; does this app offer 100x the value? Is the value comparable? The user comments presented in the article seem to indicate unreasonable expectations set by the App Store market as to the value of software. Perhaps they need to focus more on operating within the constraints of the market rather than fighting against them. There are several business models that work, and it doesn't need to be advertising based. They could offer tiers of functionality that that are priced accordingly. They could make it a subscription service. They could make make the functionality modular and offer a la carte in-app upgrades. In addition to all of these, they could offer a lifetime "platinum" version at $99.
- gtirloni 12y ago
  I don't see why they should bend themselves backwards to fit a consumer-focused store. The fact that users expect apps to cost less than $5 despite whatever functionality is offered is outrageous to any company trying to provide a decent tool. IMHO, Apple/Microsoft/Google should provide a "Enterprise" marketplace to things like this (if that doesn't already exists). Then people won't be comparing great tools against Angry Birds.
- uxp 12y ago
  > Perhaps they need to focus more on operating within the constraints of the market rather than fighting against them. It's also amusing to look at the number of Chrome Extensions that do the same exact thing as this app that exist on the Extension Webstore. Granted, making a native iOS app can be arguably more expensive than a Chrome plugin, but it also shows where the market is pointing for this particular niche. Not many people I know of would willingly purchase this app to solve a mobile http connection issue they normally would solve with a free plugin for their desktop browser, especially when it's going to be a rarely used utility. I think a tiered approach would be a fantastic way to ease consumers into the product. Not only would these developers get a much larger install base, but it would also help the entire app store economy grow more accustomed to more expensive apps, countering the "race to the bottom" effect the author cites as a reason they charge the amount they do.
dotnetkow 12y ago
Refreshingly honest, happy to see more developers sticking to their guns. If you are creating software that truly provides long lasting value, you should get paid for it. I wrote a post with some similar reasons why I charge for my mobile app ($2.99 though as opposed to $99): http://netkow.com/post/89053877550/why-i-charge-for-my-mobile-app-fitwatchr http://netkow.com/post/89053877550/why-i-charge-for-my-mobil...
taytus 12y ago
#6 shouldn't be #1 or #2 instead?
personZ 12y ago
Has anyone on HN actually bought this application? It seems to have no reviews or ratings for any version, which is somewhat strange for something costing so much (that price motivating feedback). Even the basic version has no ratings or reviews (sorry the US basic version has 9 ratings, but no reviews). It even includes a rating shortcut in the app itself. I actually flagged this story when it first appeared because it seemed to be spam, and what I suspected was a fictional narrative to pitch it. e.g. a nice chart isn't necessarily backed by non-fictional numbers, but can as easily be manufactured numbers to fit the narrative. I appreciate that I am being horribly cynical, but such is the nature of promotion today -- the story that gets you some attention often needs to be propped by a fiction about attention. I have no idea if that is the case here, but some of the signs are there.
- httpwatch 12y ago
  The app store is optimized for mass appeal apps. It only shows reviews for the latest version in your country's app store. The HttpWatch app has had a reasonable number of reviews but it is a relatively niche app. Getting app reviews is very hard unless you have hundreds of thousands of downloads. This post suggests that only 10% of all apps have one or more reviews: http://blog.appfigures.com/a-deep-dive-into-app-store-reviews-distribution/ http://blog.appfigures.com/a-deep-dive-into-app-store-review...
EGreg 12y ago
Through experimentation I think we've come to believe that a free app with upgrade features available for a recurring monthly subscription, and an in-app trial of those features, will generate the most revenue. That's because people have more chances to make a decision, and you can influence that decision with the free trial (try before you buy). Otherwise they are deciding based purely on a picture and description, and maybe some social proof (a blog article that brought them there, the reviews, etc.) With the above scheme, you get all that + the actual visceral experience of the trial, and a low monthly payment. What do you y'all think? Have you tried this scheme?
prottmann 12y ago
I agree absolutely! Such software are working tools that save hundreds or thousands of dollars. It is like the old discussion about the price of Microsoft Windows, or an Apple Mac, or Adobes Photoshop - oh my good, i call them all in one sentence ;-) Yes they are expensive, but from the viewpoint of productivity, you make money with them and much more than they cost you. I hope more developer have the courage and sell their work at reasonable prices.
gtirloni 12y ago
One idea is to develop the full-featured app for the desktop (you know, that productivity machine we've been using for a while and that we know works) and make a skinny/thin app for tablets/smartphones that you can charge $5 and users will be happy to "have that added functionality for just $5, awesome!" while paying the full price for the desktop version (like they always do with business apps, which much complaining).
channikhabra 12y ago
Why don't they sell a locked demo version which hides most of its functionality and ask for a key to be obtained by opening a paid account on their website. They can make a subscription model then. Do Apple make that illegal too?
- FireBeyond 12y ago
  Absolutely they do. As is bypassing IAP, if you're going that route.
rpdillon 12y ago
I find it difficult to believe that dropping the price by 80%, from $100 to $20, resulted in no increase in demand. Another post mentioned some possible confounding factors related to the sequence of price changes ($100 -> $10 -> $20) that might explain it. Although a very different market, I'm still amused that online gaming portals like GOG and Steam consistently get me to buy games I would not otherwise buy by running sales more-or-less continuously. I wonder if HttpWatch could capture the lower end of the market in a similar fashion.

114 points by ryanmcdonough 12y ago

Really good article just for the sales vs income graph alone.

I'd argue that the charts in Section 4 are the reason to price high. Your overall revenues are higher. Joel Spolsky has his article on market segmentation http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... that provides a more thorough treatment of why increasing the price to "near absurd" levels is actually beneficial from a revenue standpoint. Unfortunately, Apple's app store as a channel makes it difficult (impossible?) to provide differentiated pricing (unless you do the classic free / paid with two apps).

samirmenon 12y ago

The price limit in the App Store is $999. I wonder why they chose $99, and not something higher.

aluhut 12y ago
Because crossing over to 3-digits would make even more people look for alternatives.
- unction 12y ago
  On the Australian app store it is $129.99. The Australian market is small enough that it's unlikely to be worth optimising for but I though I'd mention it all the same. (For the curious AU $129.99 is about US $121 at the moment.)
  - httpwatch 12y ago
    Australia has been one of our best markets for the app. Perhaps a 3 digit price is better :) Does the Australia app store include VAT (or equivalent) that can be claimed back by businesses?
    - lubos 12y ago
      Yes, the price to Australians will always include 10% GST (VAT equivalent)
    - unction 12y ago
      Yes it includes GST (10%) and that can be claimed back. Also it's not uncommon to soft-launch apps in Australia before the US and the rest of the world as a large scale public test. (The market is considered by some to be very similar to the US.) So it might makes sense to roll a different line just for Australia. Maybe. Just throwing the idea out there :)

sbarre 12y ago

$100 for a professional app that helps you in your day-to-day work is a completely reasonable price. Assuming their (rather low compared to North America) rate of $40/hour for a developer, if this app saves you in aggregate more than 2.5 hours of work, you've already made your money back.

joshcrowder 12y ago
The average iOS dev in the UK is not $40/hour that works out to be £187 a day! From what we see the going rate is around £300-500
- lmm 12y ago
  For a freelancer or a consultant via a full-service agency, sure, but you're paying for other things there. For a conventionally employed professional I rather doubt you'd pay 300/day (and if you are, tell me more!)
- monkeyprojects 12y ago
  That is your average contractor contract rate. The actual cost will be 10-20% more than that to cover agency costs (so £350-£600) a day. Permanent employees will probably cost less than that. Say £50k a year or approx. £250 a day...
davidjgraph 12y ago
Regarding this, I've found you need the case to be far more clear cut before people buy an app to save money. My ballpark is more like x10, i.e. they need to feel appropriately 25+ hours worth of work will be saved before purchasing. Remember, also, the fully loaded cost of an employee is at least x2 their salary.
smackfu 12y ago
True as long as you are an indie developer.

subudeepak 12y ago

Thanks for the insights. I wonder if a feature by feature in-app purchase on the app would have fared better.

leorocky 12y ago

These may be reasons why you cannot sell lower than $99 but they are not reasons why someone should pay so much. The stated plan to keep updating the app reveals a fear that they are not creating enough value despite the cost to develop. The plan to update is also a shitty thing to say as this is no guarantee and light on specifics about what the updates will feature. $100 for an opaque primise that more is to come is a shit sandwhich usually served with a nice heap of disappointment. xscope 4's price of $50 is another one of these niche narrow doodads that while clearly provide value do so at questionable prices and the user has no idea when they will have to pay for a new version. Apple's lack of an upgrade price sucks but that's not the users fault but they are the ones that get the shit end of the deal with limited time price reductions that you have to know about.

danbruc 12y ago
If using this app saves you an hour or two it was already worth its money even if you never receive an update.
wmt 12y ago
They most definitely have the right reasons for why someone should pay what they're asking. The reason #1, "we need to make a profit", is the biggest reason for the price. In reason #4 they clarify that reason by having tested that out of $10, $20 and $100 prices they made the biggest profit with the highest price. The flimflam about updating the app just means that they don't wish to fire everyone now that they have a selling app, but instead will keep developing it with the hopes that it would sell even better.
- hawleyal 12y ago
  > right reasons Maybe the right reasons for stakeholders. Not the right reasons for customers.
  - danielweber 12y ago
    The right customers -- professional developers -- would want the tool to stick around for a while, but of course there is a free-loader problem. Paying $100 a year, let alone $100 once off, for something that improves productivity ought to be below the level of even caring to do the cost-benefit analysis. If your employer won't let you spend $100 on a productivity tool, he's very foolish. (NB: Most employers are foolish. I've always got hemming and hawing about spending that money; can't we just do without?)

Shivetya 12y ago

The constraints of the app store lead me to believe there has to be a better solution for developers of professional apps. However that cut Apple takes really needs to have limits, its almost begging for someone to step in but I doubt its even possible with Apple's ability to lock it down

jblok 12y ago

It's a shame that a company even need to write an article like this. The venture backed economy in most technology companies really warps pricing models and allows companies with huge funding to disregard the actual 'making money' part

danielweber 12y ago
I remember my first start-up, where the software we were selling was what was paying for my ability to eat food and have a place to live. And a guy on the phone wondering why the software cost a thousand bucks and not $39.95 like the stuff he saw at Babbage's.[1] I said I probably wasn't the right person to ask about that. [1] TIL Babbage's had already had a name change before the time period in question.
soundlab 12y ago
Agreed- all the more reason to not apply mass market, VC-backed product economics to your niche technical application. We are working on a niche desktop OSX app that we will price +200 USD. It's for business users with a budget and has a demonstrable ROI for exactly that kind of buyer, why cater to the $.99 or free crowd?
- slantyyz 12y ago
  Part of the problem is the App store itself. It's primarily a consumer store, and price expectations are set accordingly. Sadly, Apple hasn't really done much to prevent the race-to-the-bottom pricing. If the app was a sideloaded app only, the OP would be able avoid the questioning from the more frugal app store audience completely (and could conceivably cut his price by 30%). The "even my company won't pay" comment was a bit shocking but also reminds me of Kalzumeus' experience with teachers and the already low price of bingo card creator.
rstupek 12y ago
Yeah companies able to continue to lose millions offering their below cost product makes it hard to compete in many markets.

edwintorok 12y ago

What is missing from the article: why you should pay for the app at all. What features does it offer in addition to what you get for free when using Firefox/Chromium and built-in tools or plugins? As it stands the article didn't even convince me that the app would be worth $0.99, not $99.99. Or maybe I'm just not the target audience.

danielweber 12y ago
What are the dev tools for Firefox and Chromium like on the iPhone?
- Fuxy 12y ago
  Valid response however he's right. They should have shown what makes this app worth its price.
- AlyssaRowan 12y ago
  IE, Firefox and Chromium all have great debug/developer menus, Chrome even has specific developer menus for mobile device tethering/debug. Why would I need extra performance optimisation data on iOS that those wouldn't already show me, for zero cost?
smanuel 12y ago
<cough>Fiddler</cough>

joshvm 12y ago

I think one of the best advantages of pricing high is that you have fewer customers and they're all 'useful' to you. Their feedback is far more valuable and you can spend the time to interact with them individually and tailor service towards them. 'Cheap' users spend more a lot of time complaining and demanding support that you can't afford to give them. If the product is good, people will pay.

captainmuon 12y ago

When an app is so expensive, and is targeted to niche/technical users anyway, I wonder why they (or other companies) don't also sell it outside of the app store (and avoid Apple's cut)? Users would get a $99 developer license, download the binaries and a little installer script, and the script would install the app via XCode on the device. For one app alone it would not make sense for the user financially, but I could imagine that some power users or people wanting to use censored stuff already have the license. Any reason why this wouldn't work (I'm only superficially familiar with IOS development)?

UK-AL 12y ago
Because people want things to be easy as possible.
deleted 12y ago
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xenophonf 12y ago
I believe that's a violation of Apple's developer license. There was a company using a similar trick to bypass the app store, and they got in hot water for it a while back. (I remember it being reported here but can't find the posting.)
- eddieroger 12y ago
  Yup, it is. If you're remembering what I was remembering, there was a developer who created a adhoc profiles and would distribute their app 100 at a time, then remove the device and start over. This was before Apple's rolling hundred devices was implemented.
  - captainmuon 12y ago
    But if I understand it right, in that case the developer was distributing the app, signed with his own developer's account, abusing the 100 devices you have for testing. What I meant was to let the users be the developers, and sign and deploy it themselves. If you didn't care about selling it, you could just dump the source somewhere with a little installation script. I can imagine many IOS users who would like to use emulators or other banned apps would happily pay $99 and compile their own stuff.

spartas 12y ago

“Because if we could reasonably charge more, we would”

fmavituna 12y ago

This is a quite bad blog post from marketing point of view. "Tell me the ROI not that you need to make money, I don't care about you. Tell me why your application will make my life easier and why it's better than other cheaper alternative solutions" Classical case of someone is taking user feedback personally.

danielweber 12y ago
It's a really useful post for software developers, but I agree his customers don't give a hoot.
Fuxy 12y ago
Well I guess that's for the typical selfish user however if you respect your customers and you expect them to respect you back and understand that you need to survive in order to keep pushing updates to the app this seems like a valid response. I certainly value it more. Their target market is developers don't forget.
deleted 12y ago
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prawn 12y ago
If their target market is made up of software developers and this sort of list appeals to under-appreciated software developers, then it's likely to help more than hinder their efforts. It made it on to HN after all and I don't know that the other approach would have.
- fmavituna 12y ago
  Fair point, I don't know whether they guessed the HN or not but certainly results are quite good :)

danielweber 12y ago

It would be purely performance art on their part, but they should release a "free" version crammed so full of ads they start leaking out the sides of the screen. This fear of paying for software is exactly why the Google/Facebook model of selling all your private data to advertisers is so popular.

TamDenholm 12y ago

The problem with mobile apps priced at $99 is price anchoring. If every other app on the app store is $1 - $10, then putting yours at $99 is going to make you seem really expensive. Its like here in the UK, Marks and Spencer Food (a premium food supermarket) doesn't compete on price with ASDA, Tesco, Sainsbury's etc, because they'd lose, instead their ads are Dine in, for two, £10 [1], which is meant to make you compare it to a restaurant, because then it feels like a very good deal. Its all about context. Search for Rory Sutherland on YouTube [2], absolute genius, he talks about this kind of thing as well as other absolutely brilliant ways to apply behavioral economics to advertising and business. [1] http://www.voucherexpress.co.uk/volatile/ProductBannerImage/M&S_6_months.jpg http://www.voucherexpress.co.uk/volatile/ProductBannerImage/... [2] https://www.youtube.com/results?search_query=rory+sutherland https://www.youtube.com/results?search_query=rory+sutherland

alextgordon 12y ago
> Its like here in the UK, Marks and Spencer Food (a premium food supermarket) doesn't compete on price with ASDA, Tesco, Sainsbury's etc, because they'd lose, instead their ads are Dine in, for two, £10 [1], which is meant to make you compare it to a restaurant, because then it feels like a very good deal. Its all about context. It "works", but I've never found those adverts convincing. People don't eat at a restaurant every day, and the food from a restaurant will be better than whatever M&S is offering. It's best not to try and trick your customers into spending more money for an inferior product. It tends to backfire over the long term.

hawkharris 12y ago

I appreciate the developers' honesty, but if the goal is to justify the price to customers, they shouldn't blame external costs and delivery challenges (e.g. Apple's take from App Store sales). Think of it this way: while asking your boss for a raise, you wouldn't mention the cost of rent or your other bills — even if those are prime motivators. You would instead focus on how you bring value to the company. Several of the article's points focus on the value that this app brings to customers. The post would be stronger if all of the points had that tone.

danielweber 12y ago
I've known a number of people who have successfully gotten raises by talking about their personal expenses. It's not a rational appeal, it's an emotional appeal, but emotional appeals can and do work. Rationally your labor has a market value. How you negotiate your way into getting paid that (or a little over that) is up to you.
- ekianjo 12y ago
  > I've known a number of people who have successfully gotten raises by talking about their personal expenses. Like that photographer dude on HN a while ago who defined the cost of one photograph by the equipment cost, and the plane ticket required to go there? With this kind of logic, you should bill your customers your years of education, from the time you started to read, and effectively charge them millions of dollars per product. This is so ridiculous I don't even know if there's a name for this kind of fallacy.
  - hyperpape 12y ago
    Fallacy, or just an application of supply and demand? In general, requiring many years of education reduces the supply of a given profession, which raises salaries (though demand still helps explain why doctors make more than philosophy professors).
    - ekianjo 12y ago

ekianjo 12y ago

"7 reasons our app is overpriced" should be the right title for this post. I love the last point : > A good programmer in the UK costs about $ 40 an hour. If an app sells for $ 10 that only pays for about ten minutes of a programmer’s time. Therefore, spending more than ten minutes interacting with a customer who bought a $ 10 app effectively results in a loss on that app sale. So you define the price based on how much time you interact with a single customer? It just doesn't make any sense at all. And that kind of logic does not scale if you have thousands of paying customers, since your time with each of them drops to zero.

jbardnz 12y ago
While I somewhat agree with your post I guess they answer this with number 3. Windows is a mass market app, this is not, you can't really compare the pricing of the two.
- ekianjo 12y ago
  In the online world you never know if you product is a niche unless you sell very few numbers of it. It's not clear in their post how many sales they are making, so the definition of "niche" is not very clear here. Is it 10 ? 100 ? 1000 ? More ? Every of these numbers would give a very different picture of the situation.

mootothemax 12y ago

Let's not forget reduced support costs as well; vastly fewer customers means vastly fewer tickets. I'd also bet that a $0.99 price attracts a lot of unreasonable customers, and those paying $99.99 would be an awful lot more reasonable. This has been my experience with SaaS and consulting: higher prices mean noticeably more pleasant customers.

leephillips 12y ago

When I was in grad school in the '80s living on my $430/month stipend I bought TeXtures, an implementation of TeX for the (new) Macintosh, for $400 so I could use it to write my thesis (in plain TeX) on my Mac Plus ($1400 with a steep educational discount). Reading the comment of a company that thinks $99 is too much to pay for a tool that they would like to use in their work is pretty funny. I can understand balking at software because the source is not available, but $99 for something to be used as as a professional tool is trivial.

Someone1234 12y ago
I suspect they wouldn't need to if that same "app" was sold on the PC, Mac, or similar. The problem is that app-store apps have a price pinned to around the $.99-9.99 mark, so anything more than that is seem as abnormal and needs to be "explained." I suspect people are used to buying app-store apps at those prices because it requires no commitment. You could spend 99c on an app, use it just once, and not really regret it because it was "just" 99c. However if it is more than $10 then you have to actually consider the app's relative value and people aren't used to that kind of value proposition on the app store.
- slantyyz 12y ago
  >> I suspect people are used to buying app-store apps at those prices because it requires no commitment. "No commitment" on the buyer's side, that is. There's still a high expectation of long term support on the seller's side regardless of whether the app has a very low price. Remember how many people freaked out over the sale of Sparrow? IIRC, that app only cost a few bucks.
reeses 12y ago
It's that race to the bottom they mention. As they mention, they're in a relatively expensive labor market (although, as I sit here in the Bay Area, they have me thinking about a recruiting run to the UK). They're paying for the market validation that can be eaten up by a company in a less expensive market to produce a knock-off version (or, more likely, ten knockoff versions) for that USD9.99 and enjoy boatloads of sales. This pattern sets an expectation that, because it can run on your phone, it should cost significantly less than desktop software, even if it is more useful than a desktop version. I'm a big fan of leverage and my father taught me the ROI model of tool selection from an early age, for everything from shoes to calculators. Unless it's completely unaffordable, the cost of a tool is irrelevant outside the context of its ability to amplify your thought and your output.

Bill_Dimm 12y ago

The charts are interesting, but I wonder how meaningful they are. For example, does the sales volume at $9.99 reflect what long-term sales would be, or is the number artificially high because people saw the price drop and thought they should buy immediately in case the price went back up. Since the $19.99 price followed the $9.99 price, is that number artificially low because the $9.99 price already drained potential customers from the market? Of course, none of that argues against the conclusion that $99 gives them more revenue than $9.99.

joeblau 12y ago

Great post, especially the graphs comparing sales and revenue. In regards to this comment > 5. There’s no Upgrade or Maintenance Pricing on the App Store You can use in app purchases to add features feature upgrades to the app. Games do exactly that. The only challenge is that you have more maintenance in code and in iTunes connect.

moron4hire 12y ago

What is very interesting is the number of people who get angry over apps charging essentially anything. I can see disappointment, sure, if you really think you can't afford a particular app, but anger? Where does the anger come from? What must this user expect out of the app store that asking for remuneration leads to flaming comments in the reviews? The only things I can figure is that there must be some sort of default assumption of freeness. Does the user believe the apps to be coming from Apple/Google/ATT/Verizon/etc, and feels jilted that they are paying for their service and an "incomplete" device [1]? Or does the user believe the apps to be coming from other users, that apps are no more complex to develop than images are to share on Pinterest? Even that feels like a stretch. I don't know. Have there been any studies on this? Any insights from experienced app publishers here? I think this is a really important question to answer, because otherwise I don't think we're ever going to properly monetize apps, if there is such a fundamental disconnect between developers and users on how the app ecosystem is viewed. [1] default builds are pretty underwhelming.

dotnetkow 12y ago
Very well said. Completely agree on the "angry" part - I've experienced that with my own app ($2.99). The hateful things that people write are mind boggling! It costs less than a Starbucks coffee yet they feel like I've robbed them blind. My theory is that the "race to the bottom" that occurred years ago when the app stores began are to blame - as developers/companies we had a chance to establish appropriate expectations but blew it. From here, it's an uphill battle but I think sticking to our guns (charging for apps) and educating friends/family about the true costs/work effort behind apps is a great first step.
- moron4hire 12y ago
  Is that enough to account for anger, though? What is going through these folk's heads to skip right past dismissal and go straight to hate? Hate and anger are usually reactions out of insecurity. And unfortunately, I think "sticking to your guns" on this subject just puts you in a sort of prisoner's dilemma with the other app developers.

callesgg 12y ago

9.99$ would make me happier as a customer, if it was good and worked like is wanted i would recommend it, if it was buggy and bad i would just ignore it. 99$ it it was good i would recommend it. If it was buggy and bad i would do screaming rants and blog posts about it. My initial thought on the subject when trying not to only think about final revenue.

rdez6173 12y ago

When the app is forced to coexist with cheap/freemium applications in the App Store, it can be easy for consumers to make an apples-to-oranges comparison. That is, Angry Birds offers a lot of value at $0.99; does this app offer 100x the value? Is the value comparable? The user comments presented in the article seem to indicate unreasonable expectations set by the App Store market as to the value of software. Perhaps they need to focus more on operating within the constraints of the market rather than fighting against them. There are several business models that work, and it doesn't need to be advertising based. They could offer tiers of functionality that that are priced accordingly. They could make it a subscription service. They could make make the functionality modular and offer a la carte in-app upgrades. In addition to all of these, they could offer a lifetime "platinum" version at $99.

gtirloni 12y ago
I don't see why they should bend themselves backwards to fit a consumer-focused store. The fact that users expect apps to cost less than $5 despite whatever functionality is offered is outrageous to any company trying to provide a decent tool. IMHO, Apple/Microsoft/Google should provide a "Enterprise" marketplace to things like this (if that doesn't already exists). Then people won't be comparing great tools against Angry Birds.
uxp 12y ago
> Perhaps they need to focus more on operating within the constraints of the market rather than fighting against them. It's also amusing to look at the number of Chrome Extensions that do the same exact thing as this app that exist on the Extension Webstore. Granted, making a native iOS app can be arguably more expensive than a Chrome plugin, but it also shows where the market is pointing for this particular niche. Not many people I know of would willingly purchase this app to solve a mobile http connection issue they normally would solve with a free plugin for their desktop browser, especially when it's going to be a rarely used utility. I think a tiered approach would be a fantastic way to ease consumers into the product. Not only would these developers get a much larger install base, but it would also help the entire app store economy grow more accustomed to more expensive apps, countering the "race to the bottom" effect the author cites as a reason they charge the amount they do.

dotnetkow 12y ago

Refreshingly honest, happy to see more developers sticking to their guns. If you are creating software that truly provides long lasting value, you should get paid for it. I wrote a post with some similar reasons why I charge for my mobile app ($2.99 though as opposed to $99): http://netkow.com/post/89053877550/why-i-charge-for-my-mobile-app-fitwatchr http://netkow.com/post/89053877550/why-i-charge-for-my-mobil...

taytus 12y ago

#6 shouldn't be #1 or #2 instead?

personZ 12y ago

Has anyone on HN actually bought this application? It seems to have no reviews or ratings for any version, which is somewhat strange for something costing so much (that price motivating feedback). Even the basic version has no ratings or reviews (sorry the US basic version has 9 ratings, but no reviews). It even includes a rating shortcut in the app itself. I actually flagged this story when it first appeared because it seemed to be spam, and what I suspected was a fictional narrative to pitch it. e.g. a nice chart isn't necessarily backed by non-fictional numbers, but can as easily be manufactured numbers to fit the narrative. I appreciate that I am being horribly cynical, but such is the nature of promotion today -- the story that gets you some attention often needs to be propped by a fiction about attention. I have no idea if that is the case here, but some of the signs are there.

httpwatch 12y ago
The app store is optimized for mass appeal apps. It only shows reviews for the latest version in your country's app store. The HttpWatch app has had a reasonable number of reviews but it is a relatively niche app. Getting app reviews is very hard unless you have hundreds of thousands of downloads. This post suggests that only 10% of all apps have one or more reviews: http://blog.appfigures.com/a-deep-dive-into-app-store-reviews-distribution/ http://blog.appfigures.com/a-deep-dive-into-app-store-review...

EGreg 12y ago

Through experimentation I think we've come to believe that a free app with upgrade features available for a recurring monthly subscription, and an in-app trial of those features, will generate the most revenue. That's because people have more chances to make a decision, and you can influence that decision with the free trial (try before you buy). Otherwise they are deciding based purely on a picture and description, and maybe some social proof (a blog article that brought them there, the reviews, etc.) With the above scheme, you get all that + the actual visceral experience of the trial, and a low monthly payment. What do you y'all think? Have you tried this scheme?

prottmann 12y ago

I agree absolutely! Such software are working tools that save hundreds or thousands of dollars. It is like the old discussion about the price of Microsoft Windows, or an Apple Mac, or Adobes Photoshop - oh my good, i call them all in one sentence ;-) Yes they are expensive, but from the viewpoint of productivity, you make money with them and much more than they cost you. I hope more developer have the courage and sell their work at reasonable prices.

gtirloni 12y ago

One idea is to develop the full-featured app for the desktop (you know, that productivity machine we've been using for a while and that we know works) and make a skinny/thin app for tablets/smartphones that you can charge $5 and users will be happy to "have that added functionality for just $5, awesome!" while paying the full price for the desktop version (like they always do with business apps, which much complaining).

channikhabra 12y ago

Why don't they sell a locked demo version which hides most of its functionality and ask for a key to be obtained by opening a paid account on their website. They can make a subscription model then. Do Apple make that illegal too?

FireBeyond 12y ago
Absolutely they do. As is bypassing IAP, if you're going that route.

rpdillon 12y ago

I find it difficult to believe that dropping the price by 80%, from $100 to $20, resulted in no increase in demand. Another post mentioned some possible confounding factors related to the sequence of price changes ($100 -> $10 -> $20) that might explain it. Although a very different market, I'm still amused that online gaming portals like GOG and Steam consistently get me to buy games I would not otherwise buy by running sales more-or-less continuously. I wonder if HttpWatch could capture the lower end of the market in a similar fashion.