On the Mac, there's a fair range of prices for software, from simple free applications to high-end software costing hundreds or even thousands of dollars. Among many full-time independent software vendors (ISVs), there's a consensus that selling applications for much less than around $20 is unprofitable, requiring more effort to sell and fully support than is recovered by the sale. This certainly isn't a hard and fast rule, but you'll find a great deal of software on the Mac selling for around $15 to $30 dollars.
The iPhone, however, has no price yardstick currently. The best we can go by is the demos from the keynote at WWDC 2008. In this keynote, we saw several $9.99 games and a few applications with no prices yet, coupled with some free application that connect to other money-making services like eBay. It's certainly early, but it would seem that $9.99 will be a popular price point.
Gene Munster, an analyst with Piper Jaffray, conducted an informal survey while at WWDC. This was mentioned on TUAW and AppleInsider, but Munster's own summaries over-reached, as his sample size was just 20 developers. He states that he "found the average cost of iPhone apps on the App Store to be $2.29, with 71% being free." Does that $2.71 average factor in 71% free + 29% paid, which would mean the average price of non-free apps would be around $9? It's simply not clear, and I think the $9.99 prices seen during the keynote is a more useful estimate.
For developers looking to determine prices, it's worth remembering that Apple is taking 30% off the top. When selling software for the Mac, you're likely to pay between 5% and 15% for credit card processing and more, depending on what service you use, so at best, you're paying double that here. Customers won't care about this, but it's certainly important to bear in mind when pricing your application.
If you're not going to be in the store at launch, you can certainly wait and see how the market adjusts itself. Will people pay $10 for applications? Almost certainly. How about $20 or more? We don't yet know. Software for mobile platforms like cell phones and Palm has traditionally been priced lower than software for "full" computers running Mac OS X or Windows. While development costs may not be much lower for iPhone software than Mac software, and customers will always want lower prices, it would be foolish to completely ignore the market's feelings on what applications should cost.
If the iPhone hews to the example of other mobile platforms, lower prices and higher volume seem like the answer. In that case, support costs become a concern, but ideally an iPhone application is simpler overall when compared to an average Mac application. Further, there's less diversity of hardware and little or no chance for conflict with other applications. As such, a developer's support burden per user will likely be much lower when compared to an average Mac app.
Taking all that into consideration, I think we wind up with a range of acceptable prices. My own estimate is that most prices for consumer-level software, both games and applications, are likely to run between $5 and $20. I think $9.99 and $14.99 will both be popular price points, and I'm hopeful that users will be willing to spend enough on quality products for iPhone development to be viable for both us and other developers. In the coming weeks, I'll be watching to see just where the market goes, but I'd be interested to hear thoughts from potential customers on the price range for which you're hoping.
I have bought a few pieces of software for my mac over the years, and I usually don't go above $25. I think that there is a chance for developers to have prices higher than the $10 range if there is some integration/bundle with the desktop equivalent software. The problem I see is that people buying these things may subconsciously compare the purchase price to music or videos on iTunes.
Being able to test desktop applications and even to use them for productive work certainly makes it easier for users to pay a somewhat high price. Conversely, paying even a very small fee for an app you haven't tested and whose developer you don't trust could be an issue. I'm in the market for a good subway/bus maps and routes app. I guess there will be a few of them, and some will be cheap, around $4.99 maybe -- but will I have to pay and try them all before I find best one?
The AppStore is supposed to take care of trust issues, I know, and the general buzz will indicate the good apps. But you see, if I have to get involved with a high priced app, I'd rather be able to spend some time with it before. $30 is not too much at all - even for a mobile app - if it durably fits into my habits or my workflow.
One guess: bundles will be big, such as, buy my GTD / feedreading / note-taking / documents-tagging app on the desktop, and you'll get the mobile version free.
I would have to say that for games like the ones we have for the older iPods, $4.99 is a great price.
For some of the games shown at WWDC, I would probably pay the $9.99 for a game that has more than a few levels.
For a program that will make my life way easier when grocery shopping (I'm using a Dell Axim now), I would be willing to pay a bit more.
However, I guarantee, I am not going to be paying more than $25 unless its a piece of software that will change my life. So far, I can't think of a single title that would make me part with $25 or more.
As someone who hasn't bought an iPhone but is considering it, I would expect to pay quite a bit less than a desktop application because the software isn't as portable. I haven't read the details about re-downloading, multiple machines, etc., but the impression I have is that my relationship to the software isn't going to be like BBEdit, where I've been using the same thing since System 7, albeit with paying for the occasional major update.
Maybe I'm just old-school and need to adjust my expectations about software and platforms?
Offtopic, but your Atom feed looks like ass in IE. No paragraph separators - plz fix.
Stang, get Firefox or Safari and stop expecting IE not to suck.
Paul, I think you hit a nail on the head regarding price points. It's worth noting that people are already used to paying the $9.99 and $14.99 price points on iTunes, since those are the respective costs for movies. I also anticipate a degree of separation between "casual apps" ( x
While Apple may be taking a hefty 30% cut of your bottom line, it's still in line with their general philosophy of iTunes inventory: Small margins with ridiculously high sales figures. The ability to leverage the mobile market to your will and convenience is priceless, particularly with the estimated 18m total units able to run your software by year's end.
Considering that applications for other existing (but arguably lesser) platforms like Windows Mobile have reached prices of $20 and even $30-40, I think there's a lot of room here. I'm a journalist who needs to stay in touch with people via email and IM throughout the day, but would I pay $40 for an iPhone chat app? No, because I could just leave AIM's SMS-forwarding feature on to stay in touch that way. Paying for a chat app is already a strange precedent (but one that I'm not above, speaking as an owner of a Proteus license from back in the day), and I bet that paying for a chat app that lives only on an iPhone will probably be even stranger to most prospective users. Would I pay $10-20 for a chat app? Sure, but I'd want it to hook into that background/notification service Jobs mentioned at WWDC and offer some other snazzy integration goodness.
Will *most people* pay $20 or more for iPhone apps? I doubt it. I think you're right that most apps will do well in the $5-20 range, with specialty and power-user apps being the majority of ones that go higher.
I agree. Most of the applications will price in the range of $9-19. The iPhone market is all about scale and if people get quality applications for a price of $9, I see a huge potential as a buyer as well as a seller.
I think there will be downward pressure on prices, merely because of the developer competition. It appears its going to be a very popular platform. When one developer offers and application for $14.99, another can offer it for $7.99. The prices make less difference as you get lower, but I suspect many offerings from new or unknown parties will be below $10.
To me they should be free. I think they should be an extension of an existing web-based application in order to facilitate easier mobile access, such as what we've done with processing orders on the iPhone with Interspire Shopping Cart:
http://www.youtube.com/watch?v=oJsmk1L_RGI
I think the above comments cover things quite well. I just want to add that if the software is locked to my particular current piece of hardware I won't pay anything for it. I won't buy a piece of software which cannot be simply and easily migrated to my new device if the software is compatible.
I have a few applications that I have been involved with. I have a couple of simple games that will be priced to encourage impulse downloads while waiting for table at a restaurant. I'm thinking between .99 and 1.99. I may even release for free to build brand awareness for the company. I think useful applications can probably get 9.99. I think a game would have to be pretty sweet in order to get more than 10.00.
re: Edward Spodick
Unfortunately, I don't know that developers will have such a choice in the matter. It will boil down to how Apple decides to operate the AppStore.
Logan: Integration with a desktop app is an interesting idea, but I expect you'll see a lot of free applications on the iPhone that are much more useful when coupled with a paid desktop app.
The idea of comparing the price to music or movies is an interesting one, and one we've debated internally. I think things will start there, but I wonder if applications will take on a mental price point of their own.
Louije: Not being able to test will be an issue, and I'm hopeful Apple will find a way to allow us to provide demos. I think you're certainly correct about coupling desktop and iPhone apps.
Dave M.: That all sounds reasonable, but makes me wonder - what's your ceiling on the desktop, and if it's different than on on the iPhone, why?
Adolph Trudeau: I don't think we know anything about portability yet, save that Apple intends to put Fairplay protection on the app. Will it be limited to one device? 3? Can developers adjust it? It's all unknown. That's a very interesting point though.
Tom: I'm not sure of that - look at the Mac market, where there's plenty of freeware, and then plenty of paid software, in the same market. People on the Mac are certainly willing to pay for higher quality, support, and so on, and that could well translate to the iPhone as well.
Mitchell Harper: Every app should be free, and linked to a web-app? There are plenty of "desktop" type applications, with no needed web component, and giving those away doesn't make much sense.
Edward Spodick: Well, I'd be sure to indicate this to Apple, as it looks as though they'll be in charge of this. I can see paying less for this, but not being willing to pay anything at all seems a bit extreme.
edst: Impulse buys are an interesting idea - they really need to be fool-proof, requiring no support, for that to work. If they are, however, they could be very profitable.
Because there are so many ppl developing apps, many of whom are not really in business but rather just techies honing their development skills, I think we'll find all sorts of very useful free apps available.
In addition, when a new $14.99 app becomes popular, I can imagine there will be (within days) numerous copycat apps available for free.
Which raises a whole host of additional questions: will developers be able to copyright their apps? If yes, how long might that take and at what cost per app? If, subsequently, they think their copyrighted app has been copied, how easy/expensive will it be to assert their rights?
Okay one thing that people might need to really consider...
The potential audience for your application.
Here is a perfect example...
Home Automation (a small market to begin with) it started its life as el-cheap-o X10 hardware that worked (sometimes) but also lacked many features people desired. Now we have 3 new players entering the mix each with their own hardware.. Insteon, Zigbee and UPB... these devices are FAR from cheap yet true home automation aficionados are migrating their homes from the unreliable X10 to one of those three hardware platforms. Now the admittedly small HA marker is now further segmented and then each of those hardware platforms have 3 or more 'software based' (or hardware based) controllers to wrap up all the stuff into a really cool home automation 'package'. Still FURTHER market segmentation.
If I were to write a really cool iPhone Controller that would wirelessly talk to the 'software or hardware based controller' and allow you to walk around your home doing all kinds of home automation 'stuff' without ever being near your computer what would that be worth to the user?
The audience is already commonly paying 29-79 (or more) for automated light switches (just for 1) and paying 199-499 for software or hardware based controllers to allow for program control over those expensive light switches and for those willing to pay it... upwards of 1000 for wall mounted (or table top) touch screen interfaces to their home-automation setup.
1 - Small market
2 - Users not shocked by high prices
Providing a truly elegant iPhone interface that could potentially remove the need to shell out $1000 for a touch screen interface... Hmmm would $149 - $199 be out of the question... I'm thinking perhaps not... If it has a 'cool factor to it' the iPhone app could very well sell people into buying the iPhone / Touch where they might never have before... heck it might even get them hook on home automation after seeing how easy it can be now.
Again.. price can be determined but quite a large number of factors.
Dave
Check out PocketBar iPhone App: This one is free! http://www.pocketbar.vishalseth.com Its an online database of cocktail recipes for the iphone! very cool!
I should say not above 15USD but why not try these tools and software??
http://www.unlockappleiphone.com/2008/iphone-top-15-software-games-apps/
I like the flashlight or psx4iphone but iCopter is indeed best. Keep up! I really like your way of writing. Thanks for sharing.
rwin
Does anyone know if Apple allows app providers to charge subscriptions, i.e. pay $5/month for apps that are service type.
I really think it comes down to the creator. THey need to decide the happy medium between good value and high cost. If they want to see their app, then they need to have a little marketing savvy. I would rather sell 10 apps at $1 then 1 app at $5. Think about it.
Hi,
does anyone have any idea how many games is downloaded a day? Ie. the most popular paid ones? We are creating an iPhone game so we're just wondering...