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iPhone Pricing Revisted


Yesterday, I read a terrific post by Andy Finnell regarding iPhone Pricing. You may now have seen this article linked by Daring Fireball or Ranchero, but if you haven't, it's absolutely worth a read. In it, Andy discusses the low prices found in the App Store, and makes a compelling argument that prices simply must be higher.

As a buyer, low prices may seem ideal. However, as Andy points out, when the prices are too low, they're not honest. The minimum price of an application must be that price at which the sales will sustain development. If the price is lower than that, it simply won't be possible to maintain the software in the long term. There are a few scenarios where low prices can work for the developer, but on the whole, everyone is better off when prices accurately reflect the cost of development.

I touched on pricing prior to the App Store opened, in a post asking What Should iPhone Applications Cost?. In that article, I concluded that $9.99 and $14.99 were likely to popular prices. Thus far, I've been proven quite wrong. Prices have rapidly been headed downwards, with 99¢ cents and $1.99 being the most popular. At those prices, only the most popular applications can sustain a full-time developer, and that's not a signature of a healthy platform.

Perhaps the most important section of Andy's article is the one entitled Judgement Day, wherein he lists three possible outcomes for the App Store. For all involved, from Apple to developers to the endusers, only the third option leads to a sustainable platform. Both as a developer and a user, I'm hopeful that prices will rise to a level where development is sustainable. I'm certainly willing to pay a few more dollars per application to facilitate a healthy platform.

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Comments (5)

5 Comments

MILE said:

Whie I do agree the sad part is that people seem to expect getting stuff for free nowadays and the many freebies and low-priced apps (obviously part of a plan to get people into the iTunes App Store at first) didn't really help either...

You just have to read some of the comments as soon as an app costs more than 99 Cents...! Well at least the comments before they changed the rating system...

Just an hour ago I was taking part in a discussiun in the Boxee forum where people were demanding a native iPhone app to control their XBMC/Boxee setup and when I pointed out that there already are two apps in the store, guess what the very first reply was...!?

"BLEH, both cost money."

This from someone who has payed good money for at least an AppleTV and probably a load of other gear...but when it comes to paying 2.99 $ for a useful app, that's the reaction...

steveh said:

I have purchased nearly $100 in apps from the store. I have been disappointed by most of them and many I just uninstalled or tossed as they had no real value. I think the cream rises to the top. Apps like Bloom, Field Runners, and many others have been able to make it into the Top 25 while still having 4.99 and higher price tags. Most of the $.99 or $2 apps are priced right. I think this is sour grapes.

Ron said:

As the previous poster noted, I have also spent a fair amount of money on the apps in the app store, and I am sorry to say the vast majority of them did not live up to their advertised functionality or were prone to crash and therefore I never use them on a regular basis.

Until the level of quality goes up, and Apple provides an easier way for users to trial the applications, I do not think people will be willing to risk spending more money on apps in the app store.

Another possible help would be a way for people to get refunds for apps which simply don't work.

In a regular brick and mortar environment, applications won't get shelf space if people keep returning product because it does not do what is advertised.

In the app store, many applications are getting away with poor quality, and still selling thousands of copies of their buggy software. This is putting a huge black mark on the app store, and making consumers leery to spend more money on apps.

I have even had to pay TWICE for apps which I have downloaded and then updated because the app store "forgot" that I already owned them. (How that happens I simply don't know because they are currently residing in my applications library).

Until these basic issues are addressed, I don't think anyone can call for the prices to go up!

I think the availability of trial versions would help a lot here.

It seems to me that all the commenter's here have a point: the prices are too low for professional development (I'm certainly a long way from giving up my day job!) and the quality of many apps is suspect.

If you didn't have to buy software until you'd played around with it, I think both developers and users would benefit.

(BTW, if you have a problem with my app, please let me know! If you just post a review to iTunes saying it's broken then there's nothing I can do. As far as I know, I have fixed every problem that has been reported to me.)

Paul said:

MILE: Indeed, comments on pricing were fairly ridiculous. I think Apple changing the rating system will have a positive effect on this however - no longer can a vocal minority drown out real comments on an app, just because they don't want to pay for it.

There are always people who loudly demand all software be free, but on the Mac it's quite possible to make a very good living selling software. The iPhone CAN be such a platform as well, with some changes.

steveh: I think your experience speaks well to the need for proper trials of software. I touched on this a few weeks back (http://blogs.oreilly.com/iphone/2008/10/refunds-and-trials-in-the-app.html) and John Gruber made a similar point, that higher prices will require a better trial system (http://daringfireball.net/linked/2008/11/16/finnell-app-store-pricing).

I'm not sure what aspect of this is "sour grapes", however? The basic statement is that the low prices seen right now aren't sustainable for high quality applications. You're saying you're getting what you paid for, and you're not happy with most apps - that's not exactly a ringing endorsement, nor indicative of a healthy ecosystem.

Ron: It's sort of a catch-22, isn't it? Quality won't rise until sustainable prices are possible, and sustainable prices won't be possible until apps are higher quality. I think, as you do, that the way to break that cycle is with proper trials. With proper trials, crummy apps won't get purchased, no matter how cheap, and more expensive apps will, if they're worth it.

"Until these basic issues are addressed, I don't think anyone can call for the prices to go up!"

To be sure, I don't believe anyone is saying "X, Y and Z apps shouldn't be 99 cents, they should be $9.99". The point is that the general pricing scheme needs to change, or the level of quality is just going to continue to drop. Increasing prices likely isn't the first step, but it's a key to having a sustainable ecosystem for development.

Stephen Darlington: Agreed (multiple times above 8). And it's definitely worth noting that customers would do well to contact developers directly. The App Store has a way of obscuring the fact that this software is made by real people, who generally really want you to enjoy it. Most developers aren't BigCos, they're 1, 2, 5 man shops, and if you have a problem, they're very likely to hear it and fix it, if you just contact them directly.

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