To $0.99 or not to $0.99, that is the App Store question
This has been a raging debate for several months now. Many have taken a philosophical and idealistic approach to the argument, but such a lofty opinion requires a minimum bank account balance.
The truth is, as much as you and I want to charge more for our apps, we are constrained. We didn’t take VC capital. We have bills. We have angry significant others who have supported us and sacrificed, letting us sit and stare at our computer screens for unimaginable amounts of time.
Most of us just don’t have the luxury of picking our price point on principle. Even still, I did price Compounds at double the going rate, $1.99, though not exactly a princely sum.
Since Compounds is a very, very niche app (how big is the market of iPhone users that perform mole calculations?). My pricing strategy must reflect that. “But, Mr. Jalapeno, your app is now $0.99. Are enough people are going to buy it?” Well, thats a tradeoff we made. When we had the luck of being featured on the front of the App Store, our pricing strategy HAD to change.
This wasn’t clear at first, and our sales are probably slightly less than if we had reduced the price quicker. If you look at the graph from my last post, you can see how are sales had definite downward trend.
If we hadn’t reduced our price for the weekend, we would have left even more money on the table. How much is hard to say.
Our current price is still $0.99. Do we raise the price, do we let it stay at this level indefinitely? Thats a hard question I am constantly thinking about. The answer of course is, it depends. I don’t remember where I read it, but someone said “Don’t mess with your price during a positive trend”, and I believe that.
If sales drop to a certain point, I will most likely raise the price to recoup revenue for the lost volume. For now, I am happy with the consistent sales of Compounds.
So with this data in mind what are my thoughts on pricing new apps?
Niche Apps:
- I will price them according to what I THINK I need to be profitable. Most likely this will be above $0.99. This is just good business sense.
- I will ensure my niche apps are of high quality. No one pays for crap.
- I will release a “lite” version to help drive sales.
Wide Appeal Apps
- It is highly likely I will release these at $0.99. My market is so large, if I have decent idea, I should make it up in volume.
- I still will make a great effort on these apps, but depending on the time investment, I need to weigh tthey amount of polish against the amount of risk.
- If I do price this app at $0.99 AND it is an app that promotes repeated use, a “lite” version is in the cards.
Every situation is different and you have to evaluate for them for your self . The first time will be hard because you have no data, so my experience may be of use to you. This is the methodology I will be using until the data steers me otherwise. If you have other thoughts, let me know.
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April 28th, 2009 at 12:15 pm
Word. Thanks for your thoughts. A lite version eh?
Another one of those random hypothetical questions: instead of a toned down version of Compounds as the lite version, what about doing a free app that was exactly the same as compounds, only you built something else instead… instead of hydrogens as building blocks you used DNA to make amino acids or something. Exact same look and feel, but you switched the building blocks (you only have 5 building blocks to work with).
So, you’d have released “Compounds” and then “Amino Acid Builder FREE”. How do you think something like this would work vs. a toned down Compounds version for LITE. Do you think the power of a LITE version comes from the fact that it is a toned down version of the paid version AND it uses the paid version’s name in the title?
April 28th, 2009 at 12:43 pm
IMO, the lite-premium relationship is key. I could build another Chemistry app that is free, but because it doesn’t address the same use-case, it is hard to know how many “conversions” it would drive. A toned down app of the same name, implies that the premium version is “better” in the customer’s mind. This may not be the case in a “oranges-to-apples” comparison.
Figuring out how to make a “lite” app isn’t always straight-forward, though. it took me a month after Compounds was released to conceive a “lite” version of Compounds that would not alienate customers, entice them to purchase the full version, and get approved by Apple.