Raise Your Prices

I have no first hand experience with this, but I think we can make some reasonable assumptions about the underlying problems.

I think it best to start with this post from David Barnard on the App Cubby blog, the post was all over the web when he posted it and it makes all sorts of assumptions. I have been told by a couple of people now that Barnard’s guesses at Sparrow’s revenue were not accurate at all, Barnard seems to be hearing the same thing:

It does seem like I got the Mac App Store profit wrong and that the app was more profitable than I assumed

That doesn’t actually matter much for the debate at hand, Sparrow is not representative of the app market. I think the main point that Barnard was trying to get across is best expressed in this line from his post:

The age of selling software to users at a fixed, one-time price is coming to an end. It’s just not sustainable at the absurdly low prices users have come to expect.

That’s a sentence that really hits home for me and at the same time bugs the crap out of me.

I go out of my way to spend money on apps, so I hate hearing that what I spent wasn’t enough to help fund the app’s development. But, I also think that isn’t a problem that I created, it’s a problem of the market place and the developers. As Barnard says, expectations of cheap software have been firmly planted in the consumer mind, but who set them?

In Apple-land the expectation for inexpensive software has been set, by Apple itself first. The lowest price you can charge: $0.99. If Apple wanted to, they could have made that base higher.

Then came a flood of developers who looked at that price and couldn’t imagine, themselves, paying more than a buck for an iPhone app. By the time it was clear that people are willing to pay for iPhone apps, and are willing to pay more than a buck, the expectation of $0.99 apps had already been set.

I get that, we all do. It’s odd when an app is over $2.99.

But while Apple may be responsible for the minimum price a developer can charge, the developer is the one responsible for choosing the price. This problem may look like it’s Apple’s fault, but developers chose $0.99, maybe not you but those before you did.

I have seen a few people chime in arguing for recurring payments to solve this — like the monthly membership here — where it keeps revenue coming in. This, though, only makes sense for apps that are really portals to a service, such as:

  • Twitter
  • Facebook
  • Path
  • Instapaper
  • MLB At Bat
  • Day One

What it doesn’t make sense for are apps that one could call a service, but more likely just assume are only an app, such as:

  • OmniFocus
  • Soulver
  • Mail
  • Agenda
  • Scratch

These are all great apps, apps that deserve to make their creators a living, but they aren’t apps that even I would be willing to pay for every month. They are apps that I would be willing to shell out more than $9.99 for when I initially purchased them, but that’s about it. If that’s your app and you can’t make a living selling at that price point, then you have to think about whether the app is worth it or not.

Over the past week I have told at least half a dozen people that they aren’t charging enough for their time, service, app, or product. It’s not just a problem in iOS or the Mac, but it’s a problem across the web. People seem more willing to compete on price, than on quality.

So what bugs the crap out of me is that developers are whining about not making enough money, when they are the ones in charge of the pricing. If you need more money per customer to hack it, charge more. If people aren’t willing to pay that, well, unfortunately you have your answer.

People will pay for good software, the Omnigroup proves this point, but you have to offer compelling and unique software in order to demand such prices. I am not saying that App Cubby thinks it is the consumers fault, but it sure sounds like that to me — and that bugs me. I don’t like when people charge too little to make a living and then complain about charging too little.

Originally posted for members on: July 24, 2012
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