On App Store pricing

Over the weekend, two authors wrote great posts about the sad state of App Store pricing:

Andy Finnell attempts to persuade app developers to raise prices and make $9.99 the new starting point. It’s a great post, and developers should strongly consider his message.

Veiled Games’ response, which plausibly could represent the average developer response, made some incorrect generalizations:

  1. People aren’t willing to pay very much for iPhone apps.
  2. If you charge more than $0.99, a lot of people will complain.
  3. Very few apps are priced at $9.99 or higher. Of those, nobody’s selling in any volume.

Well, guys, I’m a developer and my app sells for $9.99. It’s not a blockbuster hit, and it hasn’t made me a millionaire, but it sells at a healthy rate considering that I only spend a few hours per week on it, I haven’t spent a penny on promotion, and I haven’t released a new version in months (although I’m about to). A few people have complained about the price, but their numbers pale in comparison to the people who email me to say how happy they are with my app.

Selling an app for $9.99 isn’t impossible, but you can’t expect just anything to sell for that price. Here’s a combination of my anecdotal evidence and some general hunches on how to do it:

Offer a free version. It’s tough to ask someone to pay more than $2 blindly without any way to try your app. Make a free version that doesn’t suck, but leave enough great features or content as paid exclusives, and make sure the free app tastefully tells its users that the paid version exists (and why they should buy it).

Deliver real value. Solve a problem that a lot of people have — not just geeks like us. Make people love your product so much that it will be worth more than the cost of two sandwiches. This will not be easy, and it will take time.

Respect yourself. Have pride in your work, and don’t deliver crap. But respect the value of your time. Make it worth your while. Don’t bother making software that won’t pay you a price that’s worthy of your efforts.

Never pander to cheapskates. You’ll get emails, blog posts, App Store reviews, Twitter statuses, and comments from cheapskates complaining about the price. (If you don’t, your price is too low.) Ignore them. If you pander to them, they’ll keep complaining until your price is $0, then they’ll complain about the color scheme. You will never satisfy everyone. You don’t need to. There are plenty of people out there willing to pay reasonable prices for apps of value, but like happy blog readers and intelligent YouTube watchers, they tend to be less vocal.

Have reasonable expectations. Do the math to figure out a fair price point or decide if an app is worth making. How many copies are you likely to sell? Well, break it down. How many iPhones exist? If you’re selling an app that only a certain group of people can use (e.g. users of a certain website), how many people are in that group, and how many of them have iPhones? Of your potential, what percentage are likely to hear about your app (maybe 5% if you’re really good)? Of those, what percentage will actually choose to buy it?

Achieving all of this and selling at a reasonable price will naturally be harder for some types of apps. I don’t think many people are going to pay $9.99 for a tip calculator or unit converter.

Games are a special case. You can sell a game for $9.99, but it’s much harder than selling a good app: games don’t solve most people’s problems, get them laid, save them time, make them money, or enrich their lives. Most have little lasting value: once you’ve beaten them or gotten sick of them, you rarely play them again. And the game market is absolutely flooded with cheap or free competition. But there’s nearly infinite demand for new games, and the potential market for a good game is much larger than the market for a good app. You can sell a great game for $9.99, but the bar is pretty high.

I suck at ending articles, so I’ll leave you with this: There are a lot more people than you think that will pay reasonable prices for good software, but most of them don’t leave reviews or send emails. They quietly buy the app and you never hear from them. These people are the market, not the complainers and whiners.

People have always been willing to pay money for valuable software, and users of the iPhone platform are no different. It’s not some crazy new voodoo platform where nobody will pay for anything. Treat it like any other software market, and you’ll see that it responds in the same way.