$4.99 the New Premium App Price Point?
As David Barnard of AppCubby points out in a blog post that even the staunch advocates of the $10 price point for premium apps may be giving in and reducing their prices.
Before the app store launched, no one knew what price point would gain traction as the main price point for premium apps. Pretty quickly that price point settled at $9.99 with the announcement that Super Monkey Ball would launch at $9.99 and many other apps following suit. Since then we have seen the average price for apps continue to fall and recently we may have seem some of the most vocal advocates of that price point have recently lowered their prices and seem to be settling in at $3.99/$4.99 now.
As David points out, apps are not measured for their value, they are measured against other apps. With so many apps launching or quickly dropping in price now, a $10 app is a really hard sell. To quote from user reviews from Davids article:
“This is the best app I’ve purchased by far… the only down fall is the $10 purchase price. I highly recommend this app…”
“Real good app. Does everything I wanted and then some. The only reason I am giving it 4 stars is because of the price….$10 is a bit excessive, although I think this will help me save money in the long run, so it could pay for itself.”
These quotes, unfortunately, show the general mentality of the users when it comes to app pricing. Apps are not measured on value they give but their price comparison to other apps, perhaps apps not even in direct competition. Even though the apps for the iPhone are priced considerably lower than on any other mobile platform, as users compare prices to other apps, it’s hard for them to justify the higher price point.
I asked Rob Murray from Firemint his thoughts on app store pricing. Firemint are one of the few game developers with a non-franchise game still priced at $9.99 in the app store.
“My confidence about the $9.99 price point is about the same now as when Real Racing first came out. We knew it would be a tough price point for some shoppers to swallow, but we didn’t plan all our marketing around the top 100 app list. The issues surrounding price are complex and cannot be easily removed from issues of quality, brand recognition and hyper-competition. I can say that while I am a little disappointed that Real Racing hasn’t steadied out higher in the charts and pricing undoubtedly had some part to play in that, I am content with how its sales are proceeding and I don’t believe that dropping the price would increase the overall revenue or success of the product.”
Real Racing is an example of one of those apps that is well developed and deep, and described by many as console quality. It makes sense to have at a higher price point for an app like that, compared to something like the Moron Test. But that higher price point is still hard to justify to some people and has most likely lead to lower sales.
Yesterday in Apple’s quarterly earnings call, Tim Cook mentioned that Apple may be working on some modifications to the app store rankings:
“As you know, today we do it by type of app and also have show popular apps and top-selling apps, etc. We realize there’s opportunity there for further improvement and are working on that.”
What that really means and when (or if) we’ll see anything, we don’t know. For now let’s hope that Apple is really working on something to help increase revenues and address some of the app discovery issues of the app store.
I'm not seeing this in the Productivity category. 14 of the top 50 apps cost more than $5. The #10 app is doing quite nicely at $29.99, despite direct competition from #35, at $24.99. And if Apple ranked apps by revenue rather than by unit sales, I think you'd find that the cheap apps are actually underrepresented.
The problem isn't users buying cheap stuff or cheap reviewers publicly bragging about how cheap they are; it's bloggers who try to foist broad over-generalizations like this one on the rest of us.
Maybe a little more in-depth analysis would reveal that price points are dropping for useless apps like games and novelty entertainment iFarts whose intrinsic utility is nil, while the price points for actual useful tools in the Business, Productivity, and Utility categories are not. Maybe, but we'll never know from reading these blogs.
The main problem I see as a developer is that people got used to free apps, and many of them are now unwilling to even pay 0.99$ for a good app. Allowing free apps on the AppStore was certainly a good move by Apple to increase the iPhone value and keep users on the platform, but now I think this is not so great as this starts to hurt small developers who have to work much harder on the marketing front to make any money. Apple should definitely adapt the business model, for example by supporting submission of apps with a trial period, or why not, by significantly increasing fees for the developer program so less free apps get submitted. In absence of change in this business model, I would not be surprised to see a drop in number of developers or submitted apps in a near future.
While it's sort of true that the new price point is around $4.99 for iPhone apps, but I've been seeing a lot of these apps for around $2.99.
Will be interesting to see what the new price point will be in a few months.
If $10 is a bit excessive then you need to go elsewhere. You just spent hundreds on an iPhone and at least $85 per month on a contract that you must stick with for 24 months and you're complaining about a $10 app – that could possibly save you money? We're all becoming whining little babies that want everything free. Why dont you all complain as much to ATT for $85 a month to get the bare minimum NOTHING package? Software developers work their butts off and not all of us are located in India where we write garbage code for $12/hr and live like kids at that rate. You get what you pay for and if you dont want to pay $19.99 then move along.
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