03-30-2011 03:42 PM
This is a thread for discussing how we should price our apps in order to maximize value without sacrificing consumer interest.
I see alot of junk in the App World that isn't even close to being worth a dollar. How do you plan to compete? Will you price match the garbage, or will you charge a premium for superior content?
03-30-2011 03:51 PM - edited 03-30-2011 03:55 PM
What meets your standard for what's worth a dollar? If someone spends a decent amount of time coding an app, what's one whole dollar really? Before phones and tablets came around with app stores like this, almost all software cost $10 at the least, with the large majority being $30-50 even. There weren't so many independant developers out there that could get their products to people. So what is a dollar really? Hell, I have enough change to buy a couple apps in my pocket right now.
But that's my mindset as someone who understand the developer side of the story. A lot of users may not agree, which means you have to find the sweet spot where they are willing to pay vs where they don't want to pay the price. It really all depends on what your app is and what the demand for it is, and maybe you have to feel it out.
I'm personally starting my first app off for free because it is a preview version with pretty limited functionality, but I have a lot of things to add to it in the future, and when I do, I may raise the price to a dollar or two. How much do you think you should get paid for the work you did? Let the users weed out what's junk and what's worth the price.
03-30-2011 04:22 PM - edited 03-30-2011 04:23 PM
Hi Golden Joe,
This will all depend on what the developer thinks their app is worth. This is not the Android market and the users are of a different mindset. Android users expect apps to be free. Typically, BlackBerry users do not mind paying for apps if they have some value. I agree that you do end up seeing apps that might not seem worth a dollar to you, but they may be to others. The race to the bottom may work in plenty of markets, but I hope developers don't lessen the value of the apps they create as it lessens the value of the app world. If you look at the gross sales of the Android Market with 250K+ apps versus the 20K apps, you will see that App world was the 2nd place market with $165 Million in sales vs $102 Million for android market. Put ads into the mix and I am sure you will see more $$$ for the developers, but in my opinion, it also lessens the value of the app and can annoy the customer.
My best selling app in the App World is a BB Phone utility that I have priced at $7.99. That might seem steep to you, but it has a purpose and it works well. It currently has a 4.5 star rating and sells 40-50 copies a month. I put a lot of work into it and provide support within 24 hours (but typically within minutes if possible). I have a similar app the has reduced functionality priced at $3.99. This app has 3.5 stars and sells about 20-30 copies a month. It has the level of same customer support. Customers will pay for quality and service.
03-30-2011 04:29 PM
I'm not looking for advice; this is just for sake of discussion.
My opinion is that you cannot simply price against the quality of your application. Perhaps licensed properties like Tetris or Pac-Man can get away with a $5 game, but it's simply not going to happen for the rest of us. Consumers assess risk/reward when shopping for apps, with very few being willing to take a risk for more than $2.
I also believe that the $1 pieces of garbage do more damage to the market than anyone could possibly measure. Let's face it - most apps are garbage, and consumers know it. They've lost confidence in the $1 app because for such a long time, developers have been shovelling them out as hastily as possible in hopes of achieving profit through volume. As a result, consumers are less willing to pay for apps. Look at Android. They actually had less app revenue than RIM last year, despite the fact that RIM's App World only had a fraction of the number of apps that the Android Market had. Now if you want to make an app for Android, you have little choice but to rely on ad-supported revenue, which further cheapens the presentation of your app, and lowers consumers' expectations even further.
The solution is of course QUALITY CONTROL, but we all know that isn't going to happen. Instead, we have to deal with the poisoned market, which is the purpose of this discussion.
As of this writing, I plan to price my game at $2. I like to imagine that it is worth more, but anything higher will likely exceed consumers' risk tolerance. I don't want to price it at $1, because it would then stand with too much trash. Just as consumers assess risk/reward, they also associate quality with price. Additionally, to encourage adoption, I will release a free trial containing one level.
03-30-2011 04:34 PM
If someone spends a decent amount of time coding an app, what's one whole dollar really?
Please keep in mind when pricing your apps. The price has nothing to do with the cost to produce it. The price is based on what the market will allow. If you spent $10,000 to produce a product, you're not going to charge $10,000. You're going to amortize it over the life of the product. If you think your product life is 3 years, and you think you will sell 5000 per year, then the cost per item is $0.67. If you sell if for $0.99, then you are making a profit of $0.32 per item or $4800 gross profit.
If the market is willing to pay more than $0.99, then you will get more profit. If the market will not pay $0.99 or even $0.67, then at best your will break even or lose money on the venture.
In looking at your costs, just dont look at material costs (IDE, computers, Internet, etc.). You have to value your time as well. If you think your time is worth $50/hour and you spent 200 hours to develop an app, then your labor cost is $10,000. If you were not developing an app, you could be using that time on other efforts that produce revenue (e.g. pizza delivery).
Mobile apps will always be cheaper than desktop apps because they typically do less. Additionally, no one is going to buy a $500 device and pay another $100 for a piece of software. It is not proportional.
03-30-2011 04:46 PM
Also, in terms of garbage apps, those will eventually get low ratings and less people will likely purchase them. So you have to compare your app's pricing to the competition with like features and ratings. I would pay an additional $2 for an app that I know is good (based on a lot of other customer's reviews).
As a developer community, we can self police ourselves as well. If we come across a "**bleep**" app, but it looks promising, there is no reason not to send an email to that developer and give them constructive suggestions in how to improve it. This would benefit them and the community as a whole in reducing "**bleep**" apps. If they dont do anything, the market will eventually weed them out.
More people will buy the device if the word gets out that there is a high percentage of quality apps.
03-30-2011 04:47 PM
I encourage everyone to read the article linked below:
(Yes he is discussing games specifically and iOS, but it still has a lot of great points). The comments are really good to in giving a consumer point of view. Because of the junk in all these app stores, the risk that your money will be wasted is a definite factor. You also need to consider whether or not you ever want to have "sales" on your app, and what your price will be for that.
Also, with this being a new market on a new device, I have a feeling we'll all have to play around a bit to find a sweet pricing spot with all our apps.
03-30-2011 05:09 PM
Pricing apps is a tricky thing. I am a first time developer, but a long time iPhone user with lots of app purchases. I can say that to a certain extent when you see two apps with similar functionality, and one costs more, there is sometimes this sense that the one that costs more is probably better somehow, even if you aren't sure how. Of course, if the price discrepancy is too great, you'll go with the cheaper one anyhow. Also, I think there is something to be said for how the market values apps. In the appstore, it is pretty much expected that an app will be $1-$2 despite how complicated they are or how much time and effort the developer put in. Certain sectors, like the remote desktop apps, seem to be able to get away with very high prices - typically on the order of $20-30. Similary for mapping apps.
At the end of the day it is not about how much you charge, but about the supply-demand economics and maximizing return. Its all a tricky game that is many times unpredictable. Only the most business savvy developers will be able to use their pricing to maximize their returns and influence the market effectively.