4 ms·

The $0.99 Problem

35 points by EvilTrout 17y ago

pronoiac 17y ago
Oh cool: this article's from the Canabalt makers.
- tptacek 17y ago
  And before that Wurdle, which is a ridiculously popular puzzle title.
robryan 17y ago
Don't really know anything about the app store but maybe there should be some sort of listing by rating of people that have paid for it? It seems a bit stupid that to see more copies you need to have a high volume to crack into a best selling list.
- credo 17y ago
  >>It seems a bit stupid that to see more copies you need to have a high volume to crack into a best selling list. Why do you say it is stupid ? Shouldn't a "best selling list" be created based on the definition of a "best selling list" ? Btw rankings based on the standard "best seller" definition cannot be maniuplated the way that rankings based on "ratings" can be manipulated. imo Apple's current ranking policy - ranking by best-seller-list and also ranking by most-revenue-earned (i.e. the top grossing list) - is good.
  - stonemetal 17y ago
    >>rankings based on the standard "best seller" definition cannot be maniuplated Why not?(I don't have an iPhone, so I really don't know anything about it.) It would be fairly easy to buy your own app. A $0.99 app and 30% fee to apple, you could buy your app 300 times a week for $90. If it is really that much of a hit driven market it might be worth it. Apple would love it(cash and being able to claim the next billion sold that much faster.)
- JacobAldridge 17y ago
  Like what movie studios do. The general 'most popular' list is the highest grossing films of all time, which is based on box office receipts not the number of tickets sold. Apple could do something similar - highest grossing games, not just number sold. Would balance out factors like those the OP discuss.
icefox 17y ago
At the end of the article he makes the assumption that he would sell 50K no matter what the price is, but earlier in the article states that decreasing the price can raise you in rank which can be 10X the units sold...
- tptacek 17y ago
  Can raise you in the rank.
  - gcheong 17y ago
    I think this is the central question though - are app store customers price sensitive at those levels? His calculations assume they are not, common "wisdom" assumes they are. Now I need to ask where is the data? The one app I have (not a game) that does any sales to speak of, but so low it probably is not statistically significant, suggest they may not be - at least going from .99 to 1.99.
    - tptacek 17y ago
      Huh? He comes right out and says that you need to be .99 to break the top 50. The problem is, being .99 isn't enough to get you in the top 50, and at that price point, you're betting the farm to get there.
bd 17y ago
You don't have to earn all your revenue just on purchases of the application. It is also possible to sell virtual goods from within your (cheap or even free) application: http://www.insidesocialgames.com/2009/11/30/ngmocos-free-to-play-iphone-games-hit-the-top-grossing-apps-list/ http://www.insidesocialgames.com/2009/11/30/ngmocos-free-to-...
gojomo 17y ago
Why does the project have to pay back its 2 months' development costs in just an initial surge of 2 months' sales? Sure, games are hit-driven and their sales peak early... but the iPhone/Touch platform is very young and still growing. These games will still be playable and sell in small quantities years from now, when the platform's installed base is much larger. Maybe the only "problem" here is impatience?
- ruslan 17y ago
  Read carefully, the author explains it very well. Basically, 90% of app sales are made during first 6 weeks, which happens only and only if your app hits to top 100 (which is 99.95% less probable for an average developer). After that sales slow down to virtually zero (1-2 sales a week). PS. Developers want to eat, support their families, pay their mortgages, etc. so patience is not an option here.
  - cakesy 17y ago
    That has not been my experience, but it may be different for games. But still, he seems to ignore that more people will buy it at $0.99 rather than $2.99. And this will raise its ranking.
  - gojomo 17y ago
    The App Store is only 17 months old; it's premature to say what the long term patterns will be with so little data, and while marketing strategies and Apple's own presentation of "top seller" lists keeps changing. Old PS2 games still sell, 10 years after the platform was introduced. A good, simple game for the iPhone platform may still be sellable, in some format, in 2019. And the installed base of compatible devices could be 20x larger. PS. There was an invention hundreds of years ago that addresses exactly the need for paying current costs while waiting for long-term profitable projects to pan out. It's called 'finance'. Considering only 2-month windows of costs and revenues as if we were talking about subsistence farmers is a rookie myopia.
  - patio11 17y ago
    90% of app sales are made during first 6 weeks That is probably a conservative estimate on the AppStore (and people ask me why I won't develop for it). By way of comparison, roughly .3% of my sales to date were within 6 weeks of release. If you consider the release of my web version to also count, then about that bumps up to about 5%.
Wilduck 17y ago
This is an interesting and definitely non-trivial economic issue. What we're presented with it the classic supply and demand pricing problem, with some fun complications. I'm assuming a horizontal supply curve (and marginal cost approaching zero), which implies that pricing comes down to substitutability and demand. The pricing strategy in the article implies that to break into the top 10, your app has to be priced at $.99. To me this suggests that quality apps are perfect substitutes, and are selling at as close to marginal cost as possible. Once you fall out of the top 10, however, the competition is more monopolistic, and you can raise your price such that you sell the quantity where marginal cost equals marginal revenue. This seems backwards to a traditional market, where the competition is more monopolistic in the higher quality products, and more perfectly comptative in the lower quality products. Interesting.

The $0.99 Problem

35 points by EvilTrout 17y ago

pronoiac 17y ago

Oh cool: this article's from the Canabalt makers.

tptacek 17y ago
And before that Wurdle, which is a ridiculously popular puzzle title.

robryan 17y ago

Don't really know anything about the app store but maybe there should be some sort of listing by rating of people that have paid for it? It seems a bit stupid that to see more copies you need to have a high volume to crack into a best selling list.

credo 17y ago
>>It seems a bit stupid that to see more copies you need to have a high volume to crack into a best selling list. Why do you say it is stupid ? Shouldn't a "best selling list" be created based on the definition of a "best selling list" ? Btw rankings based on the standard "best seller" definition cannot be maniuplated the way that rankings based on "ratings" can be manipulated. imo Apple's current ranking policy - ranking by best-seller-list and also ranking by most-revenue-earned (i.e. the top grossing list) - is good.
- stonemetal 17y ago
  >>rankings based on the standard "best seller" definition cannot be maniuplated Why not?(I don't have an iPhone, so I really don't know anything about it.) It would be fairly easy to buy your own app. A $0.99 app and 30% fee to apple, you could buy your app 300 times a week for $90. If it is really that much of a hit driven market it might be worth it. Apple would love it(cash and being able to claim the next billion sold that much faster.)
JacobAldridge 17y ago
Like what movie studios do. The general 'most popular' list is the highest grossing films of all time, which is based on box office receipts not the number of tickets sold. Apple could do something similar - highest grossing games, not just number sold. Would balance out factors like those the OP discuss.

icefox 17y ago

At the end of the article he makes the assumption that he would sell 50K no matter what the price is, but earlier in the article states that decreasing the price can raise you in rank which can be 10X the units sold...

tptacek 17y ago
Can raise you in the rank.
- gcheong 17y ago
  I think this is the central question though - are app store customers price sensitive at those levels? His calculations assume they are not, common "wisdom" assumes they are. Now I need to ask where is the data? The one app I have (not a game) that does any sales to speak of, but so low it probably is not statistically significant, suggest they may not be - at least going from .99 to 1.99.
  - tptacek 17y ago
    Huh? He comes right out and says that you need to be .99 to break the top 50. The problem is, being .99 isn't enough to get you in the top 50, and at that price point, you're betting the farm to get there.

bd 17y ago

You don't have to earn all your revenue just on purchases of the application. It is also possible to sell virtual goods from within your (cheap or even free) application: http://www.insidesocialgames.com/2009/11/30/ngmocos-free-to-play-iphone-games-hit-the-top-grossing-apps-list/ http://www.insidesocialgames.com/2009/11/30/ngmocos-free-to-...

gojomo 17y ago

Why does the project have to pay back its 2 months' development costs in just an initial surge of 2 months' sales? Sure, games are hit-driven and their sales peak early... but the iPhone/Touch platform is very young and still growing. These games will still be playable and sell in small quantities years from now, when the platform's installed base is much larger. Maybe the only "problem" here is impatience?

ruslan 17y ago
Read carefully, the author explains it very well. Basically, 90% of app sales are made during first 6 weeks, which happens only and only if your app hits to top 100 (which is 99.95% less probable for an average developer). After that sales slow down to virtually zero (1-2 sales a week). PS. Developers want to eat, support their families, pay their mortgages, etc. so patience is not an option here.
- cakesy 17y ago
  That has not been my experience, but it may be different for games. But still, he seems to ignore that more people will buy it at $0.99 rather than $2.99. And this will raise its ranking.
- gojomo 17y ago
  The App Store is only 17 months old; it's premature to say what the long term patterns will be with so little data, and while marketing strategies and Apple's own presentation of "top seller" lists keeps changing. Old PS2 games still sell, 10 years after the platform was introduced. A good, simple game for the iPhone platform may still be sellable, in some format, in 2019. And the installed base of compatible devices could be 20x larger. PS. There was an invention hundreds of years ago that addresses exactly the need for paying current costs while waiting for long-term profitable projects to pan out. It's called 'finance'. Considering only 2-month windows of costs and revenues as if we were talking about subsistence farmers is a rookie myopia.
- patio11 17y ago
  90% of app sales are made during first 6 weeks That is probably a conservative estimate on the AppStore (and people ask me why I won't develop for it). By way of comparison, roughly .3% of my sales to date were within 6 weeks of release. If you consider the release of my web version to also count, then about that bumps up to about 5%.

Wilduck 17y ago

This is an interesting and definitely non-trivial economic issue. What we're presented with it the classic supply and demand pricing problem, with some fun complications. I'm assuming a horizontal supply curve (and marginal cost approaching zero), which implies that pricing comes down to substitutability and demand. The pricing strategy in the article implies that to break into the top 10, your app has to be priced at $.99. To me this suggests that quality apps are perfect substitutes, and are selling at as close to marginal cost as possible. Once you fall out of the top 10, however, the competition is more monopolistic, and you can raise your price such that you sell the quantity where marginal cost equals marginal revenue. This seems backwards to a traditional market, where the competition is more monopolistic in the higher quality products, and more perfectly comptative in the lower quality products. Interesting.