

IOS app store has created unrealistic pricing expectations - kgutteridge
http://appcubby.com/blog/5-is-the-new-10/

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jeremymcanally
I think I prefer an open market with prices that have naturally fallen to this
point than something with artificially inflated prices. There are two things
at play here.

One, the competition in the app store right now is so voluminous and so fierce
that it's driving prices down. It's a natural phenomenon that will happen in
nearly any "free" market. To complain about it is to complain about the
essence of free market pricing.

Second, these lower prices allow for higher volume of sales. The prices have
settled here because this is what users see as the value of these apps. No
offense to these guys/gals, but I wouldn't pay $10 for something to track my
gas mileage. I'd find a free web app (if they exist) or just keep it in a
note. I get the value-add of IRS compliant reporting and such, but that's a
niche problem to solve. Charging $10 for that is fine, but don't expect mass
market appeal or uptake.

I think the biggest problem is that people who write niche apps like these
apps expect to see numbers like "Fart-O-Matic 9000" or "Angry Birds." You
won't. Accept that and then figure out what's going to make you the most
money. The trick is figuring out if pricing at $10 and making (x) sales is
more profitable than pricing at $1 and making (y) sales. For some developers,
pricing higher with lower volume is much, much better, and these developers
are typically niche applications (take a look at some of the "pro" audio apps
on iPad especially) that can handle the price difference because the people
seeking them REALLY need the value that they're offering.

An MPG tracking app that gives me nice Excel sheets might not be enough to
warrant $10 in the eyes of users, and I don't think that's necessarily Apple's
fault or the market's fault. Maybe it's just that the niche you're targeting
won't sustain the price you want, and unfortunately, that's the way the cookie
crumbles when selling software like this.

~~~
cageface
As an author of one semi-pro audio app, I can tell you that even the "pro"
apps are selling for as little as 1/10th of the price of a similar app on a
Mac. I really doubt the sales volumes compensate for that.

The big problem with the app store is that the people on the very high end of
the power distribution dictate a pricing structure for everyone that only
really works for those moving huge volumes. People now have a preconceived
idea of what an app should cost that often has nothing to do with how much it
must actually sell for in order to turn a profit.

~~~
technoslut
I'm assuming that you mean prosumer apps. I haven't seen these on iOS. The
only app that I've seen that is better on iOS is the official Twitter app.

Then again, I haven't seen traditionally big devs on the Mac release Acorn,
Flare, and Pixelmator on iOS.

~~~
cageface
For example, an excellent synth app like this would probably sell for at
_least_ $99 as a plugin for Mac/PC: <http://beepstreet.com/horizon>

I don't know for sure but I'd be very surprised if it's moving 20x the units
it would as a plugin. But if you price something like this above $10 you'll
get all kinds of user outrage because that's not what an "app" should cost.

~~~
technoslut
I'm listening to the link of the app and it is good but people have to be
aware of it. This is the third synth app I've seen. I've also seen Animoog
that was posted on The Verge.

The fault is that these apps need more advertisements. I'm willing to bet that
most don't know that they can create music with a low-priced app. Consumers
need to be made aware of this. There are YouTube videos destined to be made
with these kind of apps.

For example, I saw an Sprint iPhone ad yesterday (maybe you've seen it?) where
a guy is talking to his girlfriend while watching a game. All I gathered from
the commercial was that the iPhone was on Sprint. They didn't give me the app
or whether the game was live. The commercial became immediately insignificant.

~~~
cageface
I don't think marketing is the answer here. Every musician I know with an iOS
device knows about this app. The problem is that the potential audience for
something like this is never going to be big enough to make the Angry Birds
pricing model work.

~~~
technoslut
I've seen some that hate movies or TV but I've never seen anyone who doesn't
like music or wants ti create it, even on a superficial level.

Angry Birds is an outlier. Their success had as much to do with quiet
advertising than any blog could do.

At the end of the day, everyone wants to create – even it is something
different with an usual set of apps.

Some believe that iOS is only meant to consume. I don't believe that. Apple
has essentially released iWork and GarageBand in subsequent iPad releases.

------
MBCook
The kick the tires problem is a big one for me. I've downloaded enough free
apps that are junk. Downloading a paid app that has all sorts of problems is
very annoying, so I usually wait quite a while before buying something for
review to come in.

This makes me a little hesitant to try $ and $2 apps, even though
realistically that's a trivial amount of money. But if an app is $5 or $10,
then I really want a chance to try it first. Many apps don't have 'lite'
versions (since, IIRC, demos are forbidden).

Just having some kind of 2 hour return/refund policy would really help.

------
crazygringo
I think a lot of people may have a "mental budget" for apps -- e.g. spending
$5/mo. on apps seems reasonable to me, while spending $50/mo. is not.

So if apps were $10, I would buy 1 every couple months, instead of 2-3/mo like
I do now.

For example, I'll buy a $0.99 remote desktop connection app to connect to my
server from anywhere, that I will use maybe 3 times ever. But I will not buy
it for $10.

So I'm not convinced that higher app prices would necessarily translate into
higher revenue.

Also, remember that we can't compare piracy-free iPhone app pricing (ignoring
jailbreakers) with normal software pricing. Every purchased copy of Photoshop
"subsidizes" n other people who use it for free. So on any piracy-free
platform, you might expect prices to be lower.

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jiaaro
This will fix itself -- _if_ he is correct that people _want_ iOS apps (read:
games) that reach parity with other handheld devices.

1\. Developers will start making simpler games to maintain profitability at
the $5 price point.

2\. Once the vast majority of iOS games are $5 and relatively shallow in
comparison with other devices, deeper more complex games will once again
contrast in value to the $5 games, allowing them to charge more money.

3\. Because of the "monthly budget" effect, I'm guessing the way this will
work is in-app purchases. X-Box has been very successful with this model. Sell
a full (but somewhat short) game for $5. Then allow the users to buy more
"content" for $2 per unit.

a $5 game That allows you to buy multiplayer content, additional story, or
other mods for a dollar or 2 at at time could easily get their average
lifetime sales per game up to 7 or 8 dollars. (and the big name games could
start at $10 and total 12 to 15)

 __One more thing __

\--------------

I think it's worth pointing out that price decreases in the longer term don't
prove anything. This happens everywhere. Even on game consoles (Xbox, PS3,
wii, etc) where the games start out costing upwards to $40.

You can always to to a game store and find older games on sale for $15.

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

------
technoslut
From the post:

>Because of this, most developers I spoke with at WWDC (even the VERY
successful ones) were looking to spread risk among several small apps rather
than creating one amazing app.

This is their loss. This garbage of having 15 different apps to accomplish a
job that can be done with one will eventually be finished whether it is on the
iPhone or iPad.

Much of the App Store is about word of mouth and less about price. If you give
a comprehensive app that is worth the price and has proper dev support, the
payers will be there.

Today, I need an incredible amount of apps just to do what would take 5
minutes on Photoshop. An opening is left on iOS by Adobe to fill the solution.
Virtually no one is doing this.

Jobs' intention was not to hurt devs, but to kill piracy, reduce software
pricing and make it safe for people to get apps without worrying about
malware. Some devs may no longer exist because they can't adapt but that is
not his fault.

The main mistake Apple has made so far is not allowing a trial period for apps
or offering refunds within a certain window.

~~~
rogerchucker
I thought those "lite" versions are essentially the "trial period" apps.
Refund window is problematic as Google witnessed (and thus stopped it); but
then again, if your app cannot provide me long term value then may be you
deserve a refund.

~~~
jiaaro
What they really need is a way to link the demo and full version together in
the app store.

Apps with a "demo" version should have a seamless upgrade-to-paid-version
experience.

Some apps have done this with via in-app purchases (check out living language
for example [http://itunes.apple.com/us/app/living-language-spanish-
for/i...](http://itunes.apple.com/us/app/living-language-spanish-
for/id453341418?mt=8)) which does a great job of this and manages to get $15
out of you by demonstrating the value the app provides very effectively before
asking for money.

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jyap
Firstly, as someone else pointed out, this was written over 2 years ago.

Pricing must also take into account the distribution power of the app store
and the actual usage medium.

iPad app prices are higher is a good example but then again this was written
pre-iPad.

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PhuFighter
Bah. There are so many apps that I purchased that are complete junk, that,
IMO, paying a $0.99 for an app that I do use seems to even itself out. And
what about completely fraudulent apps (e.g. search for "blacklist" in the App
Store). How are they even getting in?

Given the huge amount of crap in the App store, the only real way of finding
things that are decent is to go to specialized aggregators. I go to
BoardGameGeek in order to find reviews of games. The detailed reviews there
mean more to me than the huge stinking pile of games in the App Store. There
needs to be a better way of sifting through the stuff in the App Store than
using the App Store Application itself.

~~~
drbarnard
Don't you see the problem there. The developers who build crap apps end up
being rewarded the same as those who build great apps. Essentially, you're
saying that you do pay $5 for a great app because you buy 5 and keep 1, but
the developer who built the app you like gets just $1. That sucks.

~~~
erichocean
That's the situation with "entertainment" content generally., e.g. all movies
at the theater cost the same.

And just like with movies, review sites, massive advertising to move units and
create awareness, and a general distrust of new things is where I'd expect the
App Store model to continue to go.

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crazygringo
Also, I'd love to have a way to pay for apps _after_ I've been using them for
a while. For example, I would never have bought Instapaper in the first place
for $10, but now that I use it every day, I would be very happy to contribute
even $20.

It would be fascinating from a psychology standpoint to see what kinds of
results this might have.

~~~
gharbad
At a large scale, it approaches $0/user.

~~~
crazygringo
Citation?

For example, the business model of Evernote would seem to suggest otherwise.

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

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

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

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

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

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

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drbarnard
I just finished a followup post, since the one originally linked is over 2
years old.

<http://appcubby.com/blog/free-and-low-cost-apps/>

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gcanyon
Everyone realizes this article is from 2009, right?

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

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

