$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’re measured against cheaper or demo-based alternatives. 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 modifications to rankings may follow trends like keyword and metadata restrictions:
“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 boost revenue and fix discovery—especially for developers facing costly user acquisition of the app store.
