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iOS Developer David Barnard: 'Trying to Make the Boxed Software Model Work at $0.99 is a Fool's Errand'

Friday August 31, 2012 1:19 pm PDT by Jordan Golson
iOS developer David Barnard has written an interesting piece on App Store pricing, and whether freemium is the inevitable pricing model for iOS apps, or if there is another model that hasn't been considered yet.

The full piece is worth a read for anyone involved in app development or marketing, but an excerpt is below.
I’ve argued that Apple caused the race to the bottom in App Store pricing, but now I’m starting to think that Apple just accelerated the inevitable. The App Store is by no means a free market, but it is an efficient one. Early on I was able to charge $9.99 for my app Trip Cubby, but now most people use free or cheaper alternatives, even though I dropped the price all the way to $2.99. The odd thing about paying a fixed, one-time price for software is that people who find the most value are essentially subsidized by people who pay, but don’t end up liking/needing/using the app.

There’s also the matter of value over time. As shown in this brilliant chart — created by the founder of Pocket, and inspired by the CEO of Evernote — paying a one-time, fixed price for something really only makes sense for commodities that diminish in value:
NewImage
Chart created by Nate Weiner

Barnard continues:
And that’s exactly what we’ve seen in the App Store. People have no problem paying 99¢ for a gimmick, and don’t mind risking 99¢ on an app whose value is unproven, but trying to make the boxed software model work at 99¢ a pop is a fool’s errand. Sure, gimmicks and mass market apps like Camera+ seem to prove the opposite, but they are the outliers. The vast majority of apps are financial flops even though they deliver tremendous value to their niche.

And all of this brings us back to Sparrow. Most Mac and iOS users are content with Apple’s free Mail apps, and of those who find Mail lacking, only a small percentage really care enough to spend money on an alternative. So, Sparrow was ultimately a very niche app. But as we saw in the days after Google acquired Sparrow, the niche it served found a lot of value in the app and were incredibly disappointed to see the app shelved. I’m still not sure how Sparrow could have empowered those who received more value to pay more for it, but developers who crack that nut are the ones who will still be making a living on apps in the years to come.
Barnard is the developer behind Launch Center Pro and other iOS apps.
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iPhoneApple
Posted: 9 months ago
People would be willing to pay if iOS let you test apps before buying them.
Rating: 29 Positives
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iPhoneApple
Posted: 9 months ago

Isn't that what 'Lite' apps are for?

Although there aren't as many 'Lite' apps as there used to be, due to in-app purchases.


The issue with lite apps are that developers block you from using major parts of the app. Apple should allow fifteen minute trials where you can use all parts of the app.
Rating: 11 Positives
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cargoplex
Posted: 9 months ago
A real insight coming from a developer who has a "mirror" and "timer" app.
Rating: 9 Positives
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freedevil
Posted: 9 months ago
So basically he's unhappy that he has not created a million dollar app yet.
Rating: 8 Positives
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mattraehl
Posted: 9 months ago

People would be willing to pay if iOS let you test apps before buying them.


While this isn't a magic bullet, I absolutely agree with the point. I've bought several apps from the Mac App Store in the $15-$50 range, but only because I was able to download time-limited trials from the developer's website first.

It's true that not all boxed software had demos, but it's also true that the software market used to be so much smaller because having to get a box an a retail shelf was a huge barrier to entry into the market. With an artifically small market, we could rely on professional reviews of the few choices, and spend larger amounts on software before buying.

But now the barriers to entry are as small as they ever been. You just need a $100 for a dev license and you can potentially sell your app to millions. So the market is flooded with choices. But we can't try before we buy, we can't get refunds, and there are so many apps that trying to find solid reviews of all the alternatives is hopeless.

I think a trial period would go a long way toward improving the situation.

I also think the App Store is sorely in need of improvements in app ratings and discovery. Amazon's review system is the gold standard. Reviewer scores, reviews ranked by helpfulness, and the ability to comment on reviews, it puts the App Store review system to shame. Adding a social aspect to app discovery would also be huge - if I could easily see that someone I know has bought or recommends and app, it makes it so much easier to talk to a real person about the app, or maybe even try it on their device. Absent trial periods or refunds, simply making these improvements would give consumers more confidence in spending more on an app.
Rating: 7 Positives
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troop231
Posted: 9 months ago

People would be willing to pay if iOS let you test apps before buying them.


Isn't that what 'Lite' apps are for?

Although there aren't as many 'Lite' apps as there used to be, due to in-app purchases.
Rating: 7 Positives
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nagromme
Posted: 9 months ago
It’s a real bind, when the free market/human nature leads obnoxious IAP-based and ad-based business models to massive success (sometimes) while a great app that goes the route of “buy it and you have it!” is all too often a financial failure.

And there’s limited hope of being able to charge more (one-time or by subscription) even if an app is well worth it: because there will always be 10 competitors willing to jump in and undercut your price... and then go out of business, to be replaced by 10 more!

I exaggerate a bit and there are exceptions, but... it’s discouraging. I have no app to sell, but I have a game I hope to release one day. I’ll just treat it as a hobby and not worry if it flops. I won’t quit my day job :) Which is exactly why it’s still not done...

People would be willing to pay if iOS let you test apps before buying them.


Many apps do exactly that—but they still struggle to get the sale.
Rating: 6 Positives
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APlotdevice
Posted: 9 months ago
One of the problems I personally see with lite apps is that they are completely separated from the full ones. The consumer is forced to look for it, assuming they are even aware that one exists for that particular app. The app store should take a page from the iBooks store (no pun intended) and provide a demo/try button right underneath the buy button.
Rating: 6 Positives
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mattraehl
Posted: 9 months ago
Thinking about this some more. When someone buys an app in the App Store, there are a number of risks they face:

1. The app won't have a specific function they wanted.
2. The app doesn't work as advertised.
3. The app isn't stable.
4. The app is confusing or hard to use.

In all of these cases, literally the only recourse the user has, is to give a bad review. If it's a $1 app, fine, no big deal. But it makes it a lot harder to risk $5 or $10 on an app when my only recourse is some review that will be buried in a few days.

And it's a vicious cycle, because it's hard for a developer to risk the time and effort of building a great app, if nobody is willing to pay more than $1 for it.

My percived risk goes down if I can:

1. Find reliable reviews of the app.
2. Try the app before buying.
3. Get a refund if the app doesn't work.

Improvements in any of these areas will help reduced the perceived risk of paying for an app. In the App Store, #1 is barely passable, and #2 and #3 don't exist. I think it would be a win for Apple, Developers, and Consumers, if Apple would work on improvements in those three areas.
Rating: 6 Positives
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Saladinos
Posted: 9 months ago
The AppStore business model needs revamping. The developer side was always good, and consumers liked the low prices and free apps, but it's not the best software distribution platform Apple could build.

- Trials. For many apps, free doesn't make sense. They want to make paid apps, but the glut of lower-cost alternatives and poor search makes a race to the top far too difficult. Letting consumers try apps and find the one they're willing to pay for (if they're willing to spend the time) will help reward innovative app developers.

Microsoft has a good framework for this where the developer essentially codes in when the trial should stop. It integrates with the system purchasing framework so users can purchase if they want to and experience no interruption.

Perhaps a refund framework should also be established to increase purchaser confidence.

- Paid upgrades. The need for this is obvious. Mac developers are traditionally really user-friendly about this, offering upgrade pricing to existing customers and free upgrades to those who purchase close to a major new release. Apple could formally codify those sorts of consumer breakthroughs in their AppStore policies and it'd still be counted as a major win for developers.

- Bundles. Another great mac-culture phenomenon. Many of those bundles donate portions of their sales to charity and offer huge discounts for customers, not to mention being great at spreading apps for developers. There's no reason for Apple not to allow developers to organise their own bundles.

If apple made these changes, they'd reestablish iOS as a platform where individual developers can make money for writing great software.
Rating: 3 Positives

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