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.
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.
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.
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.
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.
>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.
Gas Cubby is a terrific app and I don't believe it's a niche. I think it's rather important in the US where many drive cars just because it reminds you where servicing is due. It suffers on gas station and prices because it's not easy to get these stats and prices change on a daily basis. I think the app suffers from a lack of advertisement.
There is still room for improvement within the app and to make it a necessity for all drivers.
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.
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.
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
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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.
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.
>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.
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.
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...) 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.
Maybe the answer s Amazon's solution in which they demo it on the web. All I can say is that what iOS is doing is not the correct solution. Even though Omnifocus is the best to-do app, no one is going to spend $20 just to understand that.
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.
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.
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.
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.
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...
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.
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.
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.