Hourly Wages and App Pricing

I whipped up a handy chart for reference. Before you complain about an app’s price consult this:


(Click to enlarge.)

Here’s how to use this chart: pick the salary that most closely matches yours and the app price the see where the two intersect. This number you get is the amount of hours you need to work to obtain the dollars needed to purchase the app in question. Then ask these questions:

  1. Do you gain more than X hours of value/time by owning this app over the course of the next year?
  2. What about over the course of the next two years?

Let’s pick on OmniFocus for the iPhone. It is priced at $19.99, so with on the lowest salary on this chart you will need to work for about 2 hours to make that money. The question then becomes: will OmniFocus give you back two hours of time, or make you two hours more productive if you buy the iPhone app?

I don’t know the answer to that question and I urge you just to look at what you get back over the next year of time — even though most apps will last you at least two years. 1 I do know that most people scoff at the actual price of apps and not at the actual value of apps to them, given their financial situation. 2

I have also highlighted (in light yellow) the price point for each salary level that most closely represents one hour worth of work (or less in some cases). This is the price point where anything below this threshold becomes a no-brainer in my book and I think best explains the pricing model in the App Store.

Most people are likely not to be inclined to pay for an app that will take them more than a one hour wage to earn, unless they are supremely confident that it will get them back that time. This is likely why most developers know that pricing over $9 is likely to result in low sales.

It’s the is–buying-this-app-worth-slaving-for-extra-hour-at-this-job-I-hate-worth-it factor.

Take a look on the store, most apps live under the $9.99 threshold which is also roughly an hour wage for a lower salary individual (lower salary on the above scale only).

In green I have highlighted (light green) the dollar amounts for each salary level that represents one-tenth of an hour. This is the level that I think makes the price point of an app an impulse buy for most people.

If you make ten times that amount in an hour, well then that amount of money starts to become very disposable.

Conclusion

I have no real conclusion here and no big lesson that you are to gain. But it is something to keep in mind before you complain about how much that app is — considering that developers spend far more time making the app than you do making the money you are fretting about spending on the app. 3

  1. At which time maybe you switch phones or there is a paid update you must, or want to, buy.
  2. This is not to say that you buy apps when you don’t have the money to buy them. That would be silly.
  3. Well in most cases.
Originally posted for members on: August 3, 2011
Follow along on RSS, App.net, or Twitter.
~I would appreciate it if you considered becoming a member.~