99 cent apps vs the rest.

[brianalucas]

A previous thread regarding finding the best 99 cent app is what triggered this thread...

There seems to be this prevailing practice of buying 99 cent iPhone apps with little hesitation but then exercising surprising frugality when the cost of the app is even one dollar above that. Why is that? If an app is free then i understand completely - there's no financial risk involved at all, so why not try it. I also understand that $0.99 is the lowest amount an app can sell for which naturally makes it an attractive price. But what I'm curious to get your thoughts on is why there is such the big drop off in interest from $0.99 apps to $1.99 apps (some apps are exceptions of course). But, more importantly, why do we seem to hold the $1.99+ apps at a disproportionately higher standard than the $0.99 apps. For instance, if you buy a $0.99 app and it's not good, then we accept it and we might say, "well, what did we expect for just a dollar". However, if we bought a $1.99 app and it was just so-so, we would rain fury on it as if we were the victims of the biggest scam in gaming history. While $0.99 is obviously a more attractive price than $1.99, $2.99, etc... I, personally, do not expect double or triple satisfaction from higher cost apps. iPhone apps are still extremely reasonably priced in my opinion. What should matter is the reviews they get. Take Drop 7 and GeoTap and Word Fu, etc.. as just a few examples. All more than a buck, but have great value even at their prices and have lasting playability. Anyway, just curious why we scoff and are hard on anything more than 99 cents but have no problem dropping $2 bucks on that Big Gulp from 7-11 every day.

 

[srl7741]

Because it's smart

It's certainly an interesting topic and I think it boils down to wanting the best price possible for the highest quality product.

In other words many are trying to be the best consumer they can be. It's smart and also ensures those who are in the business to make money give us their best product.

 

[Resist]

The current financial world economy should answer your question.

 

[marksman]

I think for most people the .99 is essentially disposable. If the app is worthless they really didn't lose anything, it wasn't even a dollar.

Once you get close to $2.00 then, you are talking about real money and having a real impact of adding up.

It is 99.99 % psychological for sure.

I don't even know if I own many if any 99 cent apps. Most 99 cent apps feel like apps that should be free but charge anyways. Obvious exceptions exist.

I say don't undercut yourself. The problem is a lot of developers have no business or marketing experience or savvy. So they over-react to things and under-price their product or overvalue certain actions or results.

Sometimes you got to think if you can hit the elasticity right, do you want 10,000 customers at .99 cents, most who don't care at all about you or your product, or 2000 mostly dedicated users who have an interest in the product being better and paying you $5 each.

Obviously you will have those kinds of people at .99 cents but you will have a lot of other people as well, and it is obviously way more complex than all that. However, I have seen enough developers complain about the only way to play the game is to lower their price or cave in to the supposed demand that all apps are free or 99 cents.

I see some developers charging more and doing actual marketing of their products. Too many developers thought the App Store would be an all in one where they just drop off their kids for pre-school and pick them up when they graduate college. The reality is while they can take them to pre-school and middle school and high school and college, they still need to spend time with them by marketing their product, finding out where their community is and reaching out to those people. The app store makes it very hard for people to just wander into niche products. So developers need to go out and find their niche communities and promote themselves. There are more ways to do this then taking out expensive ppc campaigns as well.

Too many developers roll out their product, get it on the app store, buck the system and charge 7.99 for it, then get depressed when they get no sales so they drop their price to 99 cents or something and then get some sales so they just accept that as they have to be. When in reality the only reason they got any sales at 99 cents is because some portion of the App Store customer base will buy essentially anything that is 99 cents whether they need it or not, or like it or not. These are unlikely to be good customers, as they will not provide good word of mouth, feedback and/or support and community. Instead that developer should have stuck with their price, went outside the app store and determined who their target is, and talked to them directly. Get a foothold there and they can spread the word.

It is a lot like work unfortunately, and not everyone is cut out for it. It especially sucks for the computer programmers out there who were essentially told they could just program, not sweat the details and let the money roll in. The reality is even with Apple's piece of the pie (so funny), there is a still a lot of other work to be successful. I even think some of the big gaming companies are making mistakes they have NEVER made before. Seeing some of these games go for only $10.00 is disasterous for them when they could sell them for a lot more.

The good news is at some point there will be a game changer or two. An application or game that is so popular and so in demand, that even at a significant price will still bring in more customers than anyone could have possibly imagined. Once that happens things will shake up a bit.

Until then, realize .99 is almost free.

 

[return7]

The current financial world economy should answer your question.

If someone can afford a 200-600 dollar iPhone and 80 bucks a month for phone service, then 10 bucks a month in apps isn't going to hurt them...if it does, they probably shouldn't have the iPhone in the first place. The folks that complain about 99c or 1.99 apps are probably also the same people that would drop 5 or 7 bucks on coffee at starbucks every other day without thinking twice. Just MHO.

 

[MacToddB]

The difference between a $.99 and $1.99 app is 100%.

If you were going to the movies (which might give you less entertainment value than an app), and two theatres charged $10 and $20 for tickets, you would be hard pressed to choose the one that was 100% more.

I've priced, and kept my app, 100sounds, at $0.99, consistently. As a consumer, I don't like the idea that I paid too much... i.e. that the guy next to me on the airplane might have paid 50% less for the same flight. So I don't want to be in the business of charging different prices for the same product. I'd rather have customers feel good about their purchase.

Also, Apple's rankings favor unit volumes over revenue. As long as 'Top 25/50/100' lists are based on unit volumes and not weighted by units times price, you are better off selling 500 at $0.99 than 300 at $1.99 because the 500 might bump you up into the top tier, where peer pressure and visibility drives future sales.

More details to come in my free e-book...

 

[Resist]

If someone can afford a 200-600 dollar iPhone and 80 bucks a month for phone service, then 10 bucks a month in apps isn't going to hurt them...if it does, they probably shouldn't have the iPhone in the first place.

True, but most people don't realize this until it is to late.

 

[NickFalk]

...I even think some of the big gaming companies are making mistakes they have NEVER made before. Seeing some of these games go for only $10.00 is disasterous for them when they could sell them for a lot more...

While I agree the "race to bottom" isn't a good thing from a developer's view I really can't recall a game on the App Store that would be worth a tenner. After all the returns (percentage) compared to selling physical copies are a lot higher and the expenses much lower (no packaging etc.). Also, very, very, very few of the apps seem to combine spit & polish, high quality gameplay and hours of content common on more mature gaming-platforms.

$.99 is an OK price-point for small craptastic and experimental apps. Part of the problem at the moment is some of the bigger guns slashing the prices of higher-quality apps and by doing so is destroying the very market they compete in. Good for the consumer right now, but could eventually lead to higher profile developers dropping the platform alltogether when they find no one is interested in paying more than a buck for anything...

 

[return7]

The difference between a $.99 and $1.99 app is 100%.

If you were going to the movies (which might give you less entertainment value than an app), and two theatres charged $10 and $20 for tickets, you would be hard pressed to choose the one that was 100% more.

I've priced, and kept my app, 100sounds, at $0.99, consistently. As a consumer, I don't like the idea that I paid too much... i.e. that the guy next to me on the airplane might have paid 50% less for the same flight. So I don't want to be in the business of charging different prices for the same product. I'd rather have customers feel good about their purchase.

Also, Apple's rankings favor unit volumes over revenue. As long as 'Top 25/50/100' lists are based on unit volumes and not weighted by units times price, you are better off selling 500 at $0.99 than 300 at $1.99 because the 500 might bump you up into the top tier, where peer pressure and visibility drives future sales.

More details to come in my free e-book...

Todd, I'm totally with you on pricing apps well but 99c is not a magic price point for all applications. Feel free to write a turn by turn directions app that's as good as a stand-alone Garmin. I'll be your first customer but good luck making your costs back, much less turning a profit.

 

[return7]

True, but most people don't realize this until it is to late.

I agree, but isn't that their fault for being irresponsible?

 

[Small White Car]

I love the $1.99 - $4.99 range. (Assuming 3 or more stars)

Pretty much everything I've bought in there has been 'worth it.' If it's priced there (and has been that price for awhile) it's a strong sign that both the developers and the users think it's worth that much.

I am rarely proven wrong.

 

[MacToddB]

Todd, I'm totally with you on pricing apps well but 99c is not a magic price point for all applications. Feel free to write a turn by turn directions app that's as good as a stand-alone Garmin. I'll be your first customer but good luck making your costs back, much less turning a profit.

You're right. I play in the 'Entertainment' category, and there, users typically have choices between similar apps, one at $1 and one at $2. Unless there's a compelling reason, it's hard to justify 100% more. Now the same could be true of Free versus $1 (or any price). But there is a big difference between free and paid. The free app may be trying to sell you something, and annoying nag screens turn me off, more than the $1 I saved. You're just paying in another way.

The free app also may not be supported... There are already too many paid apps that have no updates or support, so I'd be (pleasantly) surprised to see the same level of support that we provide, from an unpaid developer.

But for utilities, there's no doubt that the value derived can easily justify $2.99, $4.99, or more. GPS is a great example. But maybe with the in-app purchase capability, you could see a low-cost GPS app, where you could buy maps per state?

 

[marksman]

The difference between a $.99 and $1.99 app is 100%.

If you were going to the movies (which might give you less entertainment value than an app), and two theatres charged $10 and $20 for tickets, you would be hard pressed to choose the one that was 100% more.

I've priced, and kept my app, 100sounds, at $0.99, consistently. As a consumer, I don't like the idea that I paid too much... i.e. that the guy next to me on the airplane might have paid 50% less for the same flight. So I don't want to be in the business of charging different prices for the same product. I'd rather have customers feel good about their purchase.

Also, Apple's rankings favor unit volumes over revenue. As long as 'Top 25/50/100' lists are based on unit volumes and not weighted by units times price, you are better off selling 500 at $0.99 than 300 at $1.99 because the 500 might bump you up into the top tier, where peer pressure and visibility drives future sales.

More details to come in my free e-book...

This is the philosophy a lot of developers are following and it is wrong.

Playing just to be in the top rankings is a horrible strategy. As I pointed out earlier, it attracts the wrong customer, ones who are not likely to help your product grow, expand and develop. You are essentially attracting lookie-loos and hoping they stick.

Playing for the top app list is a mistake in most cases, unless your application has no real value. Then anything you get is gravy. However, if you have a real app with real value, under-pricing to get on those lists is a horrible business strategy. This is why I said most developers seemingly have little to no business and marketing experience. You sell at a higher price and you go out and find your market. Don't worry about the stupid app store lists.

You think it is worthwhile to you, but again you have to assess the value of your application. Does your application have any real use or is it just a gag application. IE is there some reason why people might have to use your application every day, week, month or year? If not, then you are right, the only way to sell it is to be as cheap as possible and hope to get on some sales list. I don't know your sound application, but I have used others, and I suspect that it does not have any intrinsic value and is more of a gag / goof application that presents no real need for people to use regularly. If it does actually have a real use out there (say you have lots of good sound effects that are useful in some kind of recording environment), you could potentially market it to that market.

Products with real value should find out who their market is and go after it. Going after the app store list and the 99 cent price point is a bad strategy unless you are making very simple applications with no real long term reusable value.

 

[marksman]

While I agree the "race to bottom" isn't a good thing from a developer's view I really can't recall a game on the App Store that would be worth a tenner. After all the returns (percentage) compared to selling physical copies are a lot higher and the expenses much lower (no packaging etc.). Also, very, very, very few of the apps seem to combine spit & polish, high quality gameplay and hours of content common on more mature gaming-platforms.

$.99 is an OK price-point for small craptastic and experimental apps. Part of the problem at the moment is some of the bigger guns slashing the prices of higher-quality apps and by doing so is destroying the very market they compete in. Good for the consumer right now, but could eventually lead to higher profile developers dropping the platform alltogether when they find no one is interested in paying more than a buck for anything...

And I am not going to judge the quality of the applications. I have always selfishly wanted less expense game apps. I take something like Tiger Woods though and think it could probably do fine at twice the price. I don't think iPhone applications need to be the same as pc counterrparts at $40-$50, but the current pricing schemes leave little room for variation or tiering based on quality.

I agree the 99 cent thing is troublesome, and the developer posting here about his sales strategy for his soundboard app is what a lot of developers are doing... And it is going to hurt the marketplace long term. As you are right developers of more ambitious products are not going to be able to justify the return. I am not chastizing him for his pricing either, looking at his apps web page and it is primiarily a gag/joke program, which means it is perfect for the 99 cent appeal to whomever can grab it crowd. Lots of apps do not fall into that same category though, and I am not sure why they are even competing with them.

 

[MacToddB]

This is the philosophy a lot of developers are following and it is wrong. Playing just to be in the top rankings is a horrible strategy.

Don't hate the player, hate the game. Apple should weight the rankings by revenue, i.e. (units * price) instead of units. Mind you, this would hurt my app's rankings... but it's the truth.

In the end, my specific app (along with the 100's of ringtones and great customer service) is well worth $1, probably could sell for $2, would get complaints at $3, and would be overpriced at $5. So, $1 it is.

As I say, I'd rather UNDER-commit ("100sounds") and OVER-deliver (HUNDREDS of sounds, plus RINGTONES TOO!)! I prefer the reviews that say "well worth it" versus "should be $1" or worse "should be free".

I think we might have common ground on your other points, but it's hard to argue with success. It's funny to see my strategy, of offering a good product at a fair price, and being told I'm "wrong" and my strategy is "horrible". Sounds like something GM would say to Honda!

Ironically if I had been greedy and charged more, it's likely that I'd have had far less success. As I write in my ebook, I was hesitant to tell my wife about the $99 developers fee because I wasn't sure if I'd get it back. Now, my daily Google AdWords budget is more than that!

I agree the 99 cent thing is troublesome, and the developer posting here about his sales strategy for his soundboard app is what a lot of developers are doing... And it is going to hurt the marketplace long term. As you are right developers of more ambitious products are not going to be able to justify the return. I am not chastizing him for his pricing either, looking at his apps web page and it is primiarily a gag/joke program, which means it is perfect for the 99 cent appeal to whomever can grab it crowd. Lots of apps do not fall into that same category though, and I am not sure why they are even competing with them.

Right. Again, if my app was iPhotoshop, or iTomTom, it'd be one thing. But for a soundboard, free isn't worth doing (considering we want to keep making it better, and provide great service... which is needed for installing ringtones), while $2 would generate complaints and fewer sales, so $1 it is. Nobody can reasonably say it's priced too high, and those that want something for nothing will get what they paid for.

 

[inbrissy]

Very interesting discussion for a new developer like myself.

The only reason I've made the policy to make all my apps $.99 is because all my apps are developed to support a charity. So all my proceeds go to charity.

Perhaps I'm seeing it wrong and should look at different pricing options.

I figured that being in the $.99 for my apps would make them at least worth buying to look at. And if they're not enjoyable to the user, then its not like they wasted a lot of money on them.

However, I can see the points made also. Its certainly food for thought.

 

[liptonlover]

Like others have said, it's psychological. $0.99 is only as much as a song in the same store as the app store, because they're both in iTunes. It's a price people are used to. Especially because so many developers have rushed out retarded games or entertainment apps and put them at a dollar when they shouldn't even exist, which lowers the standard overall and thus the perceived value of a given app.

It's also because the price doubles, or more than doubles technically. All you have to do is happen to think of it that way whether on purpose or on accident and it suddenly seems like a lot.

Finally, it's simply more money so people are more cautious in general.

Now when you hit the higher apps, which is $5 and up, people are less cautious because most of the stuff up there is very polished and is usually by a company they've known, such as EA or namco for games. I trust namco and konami, even if I think namco is overpricing their retro converts a bit. So when they make a game at $5 that is something I'm interested in, if I can I'll pick it up right away and most likely I'll be happy with it.

 

[johnnyjibbs]

My first app has just gone up on the store and I too have pondered about the $0.99 price point. It's not one I want to be at (considering I think my app can add real value) but I understand that from an impulse point of view that price point is something that people may just go for without thinking about.

This in turn will drive up sales, even if you get a lot of customers that have no loyalty or neccessarily much interest in your product. Although that will be bad in the long run, it will give you more chance of getting onto the Top 100, etc lists which is important, considering how poor the search options in the App Store are.

Consider my new app, [app=grocery+checkout]Grocery Checkout[/app]. Despite having Grocery in the name (one of the two words), my app only appears on the 3rd page of apps if you search for grocery in the App Store. It's ridiculous because most of the apps in the first couple of pages are nothing to do with groceries but are included because there's a crafty keyword in their description somewhere. Surely Apple would make names carry more weight than descriptions but they don't, and you can see the problem. The search function is simply not up to the job.

Which means you rely on getting on the top lists for visibility. And to do that you need the lowest possible price to drive volume.

But I think that price point will hurt in the long run, so I am going to resist that for now. Which means I have to try to find my loyal base of customers on various blog sites as I don't have the marketing budget to shell out on expensive ads.

I only hope that Apple shapes up the store in time for version 3. Until then, I fear the $0.99 app will be here to stay.