Under the Radar

Under the Radar 107: Free with Benefits

 

  welcome to under the radar a show but

  independent iOS app development I'm

  Marco Arment and I'm David Smith under

  the radar is never longer than 30

  minutes so let's get started so today I

  wanted to talk about something that I'm

  sort of having to navigate with workouts

  plus plus that seemed like an

  interesting discussion to have here and

  a topic that is kind of a perennial one

  one that we've talked about many time

  around business and pricing and that

  sort of thing and so for a little bit of

  background so workouts plus plus is an

  app that I released right around this

  time last year whose primary purpose is

  to create a fully customizable workout

  experience on the Apple watch and then

  on the iPhone to provide a much more

  detailed analysis and display view of

  all of the workout data you've ever

  collected with an Apple watch where ever

  that came from whether it's in work

  aspis plus or somewhere else and it's an

  app that I made because of a few

  shortcomings or things that I didn't

  like about the system app which is

  typically where a lot of my ideas come

  from where like there's an existing

  thing that I doesn't quite work the way

  I like so I wanted to make it better I

  wanted to improve it I had some ideas

  for how I liked it and so that's why I

  started it and it is an app that I I use

  on a very regular basis you know five or

  six times a week at least I used this

  app and so it's very tailored to to what

  I you know true the way that I think in

  the way that I work and I'm in the

  process now I'm finishing a pretty

  substantial update to it which will be

  launching hopefully in about three weeks

  as you're listening to this which is

  kind of bearing down on me and like now

  that I have like but two weeks left of

  coding too you can get all the last bugs

  out but in about two weeks I'm going to

  launch a big update for it and so

  naturally you start to think about you

  know what do you need to do with this

  new update are you gonna make any

  changes it's a good opportunity to kind

  of reflect on how the app has done and

  where might you know Murr might go in

  the future

  so in the initial version the version

  that I last I launched last December

  the app was paid it was a five dollar

  app and my reasoning for that initially

  was coming from a place that it is a

  very focused sort of power user niche

  kind of a thing like the bill a you have

  to have an Apple watch for it to be

  useful period

  so that's reducing my potential audience

  to you know down quite dramatically

  I think am i for my analytics for

  health-conscious people right around

  maybe ten percent of them have an Apple

  watch so of iPhone users I mean so

  that's pretty small and then you need to

  want more than you get out of the

  built-in app so it seems like well

  there's not that many people who might

  use this so like maybe I'll make it paid

  like maybe I'll take that approach and

  also it seemed like it was a fairly it's

  fairly premium in the sense of it was a

  it's it's trying to do more it's

  allowing you if you really care about

  this kind of stuff you can tweak and

  adjust and to do a lot of things and so

  I was like let's try that and the short

  version is that it didn't do very well

  at all I was I'm about to get into

  exactly how poorly it did before I do

  that I always want to just sort of

  disclaimer things that anytime you hear

  people talk about like sales numbers or

  things like that

  it's always good to take with a grain of

  salt that the the two types of numbers

  you tend to hear are when things go very

  poorly or when things go unusually an

  exceptionally good so just something to

  keep em behind that results not typical

  like it's just instructive insofar as

  helping sort of couch where I'm gonna go

  with this next but in the first year of

  the app's life the app made $16,000

  which is not you know nothing to sneeze

  that is a good is a good run for an iOS

  app in many ways but as you know you

  would if you would as you would expect

  if I had made fifty percent of that in

  the first month and has settled down

  dramatically since since then - at this

  point it's not uncommon to have a day

  where it's like zero or one sales is

  starting to become pretty common and I

  think that's a pattern that is very

  common with a paid app and just with

  apps in general in the App Store that

  there's this pattern where

  you might get a little bit of interest

  upfront and then it just falls off and

  this happen particular like it's

  competing against such a wide variety of

  things that in retrospect is probably

  not uncommon not unexpected that it's

  very hard to justify that someone would

  you know pay a substantial are they so

  substantial in the AppStore sense amount

  of money for it and so from that

  perspective I kind of view it

  financially as a bit of a flop now it's

  not something that I think is

  financially very very viable at that

  point and if anything it's kind of silly

  that I continue to work on it except for

  the fact that I use it every single day

  and I really like it and I have the

  benefit I suppose of you know my virtue

  of being self-employed and be able to

  make these kind of choices that don't

  necessarily make sense financially I can

  just keep working on it because I like

  it because I enjoy it and I can you know

  support myself with my other apps but

  that brings me to version 2 where I

  think is and I'm been I've been toying

  with a variety of things it seemed

  obvious that I should definitely make

  the app free inside in some ways because

  I think that's just the app store where

  we find ourselves now that like the paid

  apps are become theirs you have to be

  doing something else I think for that to

  be a viable situation like very almost

  all of the you know the app store is

  free with something else but when I when

  I decide maybe that decision then it's

  like you start to get into okay should I

  have ads it should have some kind of you

  know purchase or subscription situation

  and the more I thought about it for this

  app the more I kind of decided that

  maybe this would be an interesting

  opportunity to rather then go down the

  road of trying to work out some method

  to extract you know money from these

  customers who are put these potential

  customers even like the user base is

  incredibly small now and any amount I

  get from them is I still couldn't be

  somewhat in material unless I was able

  to grow the audience so and anytime any

  of those scenarios that I came up with

  by putting ads into it it don't really

  work because ads tend to work well in

  apps that she will go to on a regular

  basis like several times a day that

  become a more habitual app whereas an

  app like this is the thing that you

  might open maybe once a day at best

  probably more likely once a week on the

  iPhone side just because that's the

  nature of how often do you really need

  to do like deep dives into your past

  workout history and I also just kind of

  thought like you know that's it's if I

  don't really like the feeling of ads in

  general like I know they're an

  absolutely necessary situation but the

  one that fit my favorite and then so

  it's like okay so I do some some kind of

  subscription some kind of a net purchase

  some kind of situation where like well

  you get the first X you know you some

  you can see the last week's worth of

  data but you can't see more unless you

  pay and you're putting up a lot of

  barriers and pain points in my app and I

  just I decided that I think what I'm

  gonna try instead it's kind of you the

  situation I have that by virtue of

  having diversified extensively in the

  past that I am now in a position where I

  can view my my existing business that

  all my other apps as a venture

  capitalist who is able to finance the

  development of apps that can just go out

  and see how big of an audience they can

  get they can garner and worry less about

  the immediate return and outcome and

  squeezing every penny out of the app in

  the near term I can as I can and so I

  think I'm just gonna make the app

  totally free no in-app purchases no ads

  no barriers or pain points no nothing to

  try and create like a point of

  hesitation that if someone is

  potentially interested in this they can

  go and get it and try it you try the

  full experience and like the only kind

  of vague monetization II kind of thing

  I'm gonna do is have links to my other

  apps which are related and potentially

  interesting to that person in the app

  just as a that seems like a reasonable

  best practice kind of a thing but not

  even really expecting to make much from

  that but anyway like it's kind of this

  interesting model because I've never

  launched an app that had no or like it's

  just an app like this where I have no

  immediate like financial benefit it's

  entirely a a goal or a play of seeing

  how big of an interest I could get in

  this app when if I take away all of the

  potential limiters all the potential

  things that might get in to get in the

  way of its growth and then just see and

  like in a weird way there's a very small

  chance that it goes anywhere there's

  still a very most the most likely

  scenario is that even completely free no

  barriers no one no one downloads it or

  uses it and though in the long term but

  I can potentially rather than having a

  very high chance of having having like a

  very good chance of having a very small

  audience I have a very small chance of

  having a potentially big audience so I

  don't know is that crazy I'm probably

  not it's just it's hard to think about

  like it's hard for people like us who

  don't usually do future bets on growth

  and figure in and thinking like me we'll

  make money on this someday in the future

  like that's not something that we as

  indie iOS developers usually do and that

  is how a large part of the industry

  works it's probably worth considering

  that you know as you kind of mentioned

  you kind of said it was like analogous

  to a like a VC kind of model with the

  disclaimer that neither of us were

  venture capitalists I think that's not a

  bad idea it's not about metaphor you

  know in the VC world they know if you

  just have a big audience and more

  important if you have growth that seems

  to be consistent or accelerating there

  will be a way for that to be valuable

  like you know even if it isn't

  immediately apparent even if you defer

  that value until later and sometimes you

  know in many cases getting that growth

  is so important and so valuable that

  they intentionally defer any kind of

  modernization just to leave the doors as

  wide open as possible for people to come

  in and then they figure you know later

  down the road this can be worth

  something to somebody whether it's

  direct or whether it's then being sold

  to someone else and then they figure out

  how to monetize it or if it's if it

  never needs to be directly monetize at

  all you know there's lots of situations

  where where something has value to the

  people whom who make it or who fund it

  even if it never collects direct revenue

  you know there's all sorts of you know

  side benefits things can have or

  strategic benefits to some to some

  bigger picture that's not a bad idea and

  it's also not a bad idea to say I don't

  even know what

  the outcome could be but you know since

  it's already you know you've already

  made some money off of it

  the and that money has already dried up

  basically so it's like it on some level

  it's like well you know what are your

  options here you know like like you know

  you ran through the challenges of you

  know this particular app workouts plus

  plus like it's not there's not a lot of

  places it can be easily monetized in a

  way that are like in ways are likely to

  succeed because it is you know mostly

  used on the watch it's hardly ever

  launched on the phone you know that

  there's that's just gonna be really

  really hard to monetize it in a

  meaningful way

  so I think you you're kind of in a

  corner here that I don't really think

  you have a lot of other options but

  that's not necessarily a bad thing

  because it's it would be kind of freeing

  to just let go of the idea of direct

  monetization with this app and just see

  what happens I mean you have enough apps

  and enough experience out there that you

  know the kinds of user numbers that you

  can get when something has no boundaries

  like whether it's one it's totally free

  or when it's free with in-app purchase

  like you've seen those numbers and

  you've seen what it gets when it's paid

  up front too and I think you have enough

  experience and data to be able to make

  that kind of decision and I think

  something that it it's a weird thing to

  say but I feel like the thing that makes

  me want to do this most is that I've

  never done it before and something that

  I have found time and time again like in

  the many many years but it's at almost

  nine years of being an iOS developer

  like is that the time that I've things

  that I've like learned from the learn

  from the most or expanded my business

  the most have tended to be the things

  and the times when I'm doing something

  new where I'm doing something that I

  haven't tried before

  because otherwise I imagine like the

  problem I run I so often will fall into

  I think is that I am doing things the

  same way that I've done them before and

  sometimes that's good like there's a

  like a good lesson to be learned or

  there's a best

  that you can pull from something but

  very often I think that I get stuck on

  like well I did this I did this this way

  before so let me do it that way again

  and that is probably in the long term

  like like the death of my business like

  that if I keep trying to just do the

  same thing in the same way even it can

  be effective in this year in the short

  term like I kind of get nervous and they

  in this fun and funny way like as soon

  as I had this idea then I was like

  sending those like you know what if I

  just make it totally free and not even

  though like the fact that like in many

  ways that is like foolish like in the in

  the I'm you know I'm giving up a there's

  a definite downside in a financial cost

  like I have a reasonable expectation

  that like if I'd you know have a big a

  big update and I've you know get a

  little press and do my little things

  that I would have a nice couple of weeks

  of income but it's the understanding

  that like maybe it's better to not worry

  about that and because I've never done

  had that perspective like even that's

  like that's just exciting and

  interesting to me in a funny way and I

  think it reminds me of the importance of

  not being complacent with anything like

  to just always be looking for

  opportunities to try and like in this

  case like it's a good thing to try

  because it's not doing anything for me

  now like I have this thing that maybe

  has a potential upside or potential

  interest somewhere down the road that's

  never going to be realized in its

  current state so let's try it and see

  and you know maybe it'll be a podcast in

  a couple of weeks or a couple of months

  where I'm like that was a terrible idea

  and then I can change course or you

  decide what I want to do at that point

  but it's weird in a weird way it's

  almost like whenever I encounter a place

  that's like I've never done that before

  that makes me like doubly and perhaps

  slightly irrationally interested in

  trying it just so that I can finally I

  can add that data point into my

  collection of other data points and kind

  of be able to make a better decision for

  whatever my next step is whatever that

  may be well there's also there's other

  value here too like you know for direct

  value like you know you're getting these

  users and you know you mentioned earlier

  that you you know some of them will buy

  your other app so that's that's some

  value right there you're going to get a

  certain number of people in from from

  any kind

  press you get more of them we'll stick

  around because there's no barriers I'm

  sticking around so then you'll have even

  more people looking at your other apps

  you will you'll have some spillover

  press that were people who see the press

  will look at your other apps so there's

  all direct benefits there also you are

  not talking about it on a podcast

  episode you're probably going to talk

  about it again on at least one more

  podcast episode we get paid to do these

  podcast episodes so here so you're

  you're generating you know good topics

  for content for the things you do for

  other ways you get paid and then if new

  listeners come in because they wanted to

  hear how that turned out maybe you write

  a blog post about it

  right and so then and you know and you

  don't have ads in your site but then

  those people might come to the podcast

  where we have ads which I'm about to do

  in a minute and they might stick around

  so then not only where did you get paid

  for that episode where we talked about

  this but then if they stick around we

  can raise our rates down the road and

  then that person has delivered you value

  down the road of increased money per per

  podcast episode so like there's a lot of

  like network effect here that builds

  over time also next time you have a new

  app to launch you have a place you can

  promote that where there's more people

  listening both the podcast will have

  more listeners and then you can even do

  an in-app promotion in workouts plus

  plus which has this now massive free

  audience and and then you can sell

  another app so like there is a lot of

  network benefit here to you even if that

  one app itself does not directly make

  the money it can cause this network

  effect to happen but I know this is not

  the parties of network effect it can

  cause these side effects to happen that

  themselves can bring you value yeah and

  I think what's liberating in a weird way

  about that is it's I think it's so easy

  to and maybe it certainly it's different

  I appreciate that I am in a privileged

  position to have other apps and other

  what other means of support that allow

  me to do things like this like it's

  probably fair to say just like yep I

  totally get that the the privileged

  position that that is that if this was

  my first app this would probably not be

  a great idea

  but because it isn't because I do have

  this opportunity like it's interesting -

  yeah it's like as you're saying like

  there's all of these other things that

  these other potential avenues for

  benefit that I typically close myself

  off to because I get to folk too

  short-sighted that and in a weird way

  like I mean it's so easy I think for

  myself and I mean generally I'd say like

  the surf TV more indie development

  community to kind of look down our noses

  at the more like MBA business II folks

  who will probably honestly have a better

  understanding of all those kind of

  ciliary benefits that you were just

  talking about like all of these other

  effects and things that maybe they

  quantify maybe they don't but they have

  a better understanding of the fact that

  it's like don't worry you know just

  worrying about what I'm going to the

  income I'm gonna get from an app in the

  near term is almost certainly not to

  take me to account the full the full

  picture or the full understanding of

  like what possibly could be coming down

  the road and so as like independent

  developers you might have to be shooting

  ourselves in the foot as a results

  because we're so focused on this or like

  what's gonna happen now and maybe when

  you're starting out and you're trying to

  launch your first app like that initial

  burst of income and having a sustainable

  living and paying for medical insurance

  and like all of that yet it's like it's

  much more important but understanding

  that that's not the only way to live is

  probably you know it's like it's

  definitely better to have that kind of a

  bigger breadth of perspective and maybe

  try and learn from another world like I

  tend to I think I like consciously and

  unconsciously I like look down on BC

  apps in a weird way like it's and that

  kind of any kind of any time I find

  myself being kind of you know elitist or

  biased or whatever you like you know

  sort of having a prejudice against

  something like that like that's probably

  not a good thing right like that's in in

  general in life like being prejudiced

  just sort of without basis is not good

  so maybe like it's good to stretch

  ourselves good to think about these side

  of things and try and learn and you know

  learned learned from the result we

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  this show so I want to talk a little bit

  about an example I have from this from

  this world that I'm developing is my

  podcast mp3 encoder called forecast this

  is I've gone through similar thoughts as

  you with with like what I should do with

  monetizing this and you know this is a

  this is a specialized tool it's it's a

  Mac podcast mp3 encoder that lets you

  make chapters and stuff in them and so

  this is this is going to have a very

  small audience you know I think I'd be

  lucky to have hundreds of people using

  it certainly not more than that and if

  you you know do some quick math like how

  much do you have to charge money to make

  meaningful money when your customer base

  is that small like I did like you know

  quick math

  suppose I charge 50 bucks for the app

  which is I think decent for like a a Mac

  a good Mac utility so suppose it's 50

  bucks if I get 500 customers which is

  way higher than I think I will get

  especially if it cost 50 bucks that's

  $25,000 gross after taxes that's more

  like $15,000 thanks New York and so you

  know it's like I'm gonna have to build

  up the infrastructure and provide the

  level of support that people would

  expect from a 50 dollar app to only make

  at most maybe $15,000 over the lifetime

  of this app like that's that's a balance

  that like the what you have to put in

  place to support a $50 app properly lit

  to what customers would expect from that

  I don't it's not worth that to me for to

  make that amount of money like I would I

  would want to be making more money if I

  was going to set that up at all and if

  it's 50 bucks

  like I think 500 customers is actually

  pretty optimistic I think a way more

  likely number is 100 yes to it which

  gives I'm making $3,000 which I can buy

  a MacBook Pro but that's about it not I

  can buy most of a MacBook Pro but like

  that like this is not we're not talking

  major money here and so it wouldn't be

  worth the overhead to me of having to

  support having having it be a paid app

  so I started looking at like you know

  what are the other benefits of this app

  existing I mean and one of them and and

  you know you mentioned like you use

  workouts plus plus you like it and so

  you know I use forecast a lot of my

  podcaster friends use it soon once I

  release it other people will be able to

  use it too and it benefits us all simply

  by existing like the fact just that I

  wrote it that is a benefit to me because

  it saves me time every week and lets me

  make podcasts better like and the

  podcasts make money so like even if I

  never make a dime from it and even if it

  has even if I never even distributed

  anybody else it already has been worth

  the time I put into making it just for

  the value it provides to me and then

  also there's things like political goals

  like I you know like I believe that it

  would benefit podcasting as a whole if

  more people use tools like this and and

  I can advance certain goals I have like

  I think mp3 is the best format for

  distributing podcast right now not AAC

  and

  people currently want to use chapters

  they often use AAC and so I think the

  mp3 is better for that so I can put this

  tool to kind of advance that agenda and

  I have this other app overcast which has

  you know it that doesn't make money and

  there are ways that a podcast encoder

  could benefit overcast so for instance

  overcast we will always support every

  forecast feature like you know I if I

  can make sure that like the way I do

  chapters in forecast will work in

  overcast cuz I'm writing both sides that

  it's using the same library both on both

  ends I can make sure that always works

  properly

  I can also build new features into

  overcast that require some kind of

  metadata on the encoding side and I can

  add that to forecast and I can have this

  you know there's at least the podcasts

  who use it they can then use these

  features that get that I can integrate

  into overcast and so like that there are

  there are options I have there and and

  there are lots of alternative business

  models I can use besides paid upfront

  obviously there's like you know trials

  and you know nag ware and stuff like

  that I I don't really want to do that

  there is one thing though that that

  could be a direct benefit here is that

  forecast is used by podcast producers I

  need to reach podcast listeners for

  overcast

  I need podcast producers to promote

  overcast so yeah I could make it just

  like the deal is if you use forecast you

  need to either either buy some kind of

  like goodwill policy or buy like

  forcibly embedding a promo unless you

  pay or something like that I could

  require users of forecast to promote

  overcast in their shows that's a little

  gross I you know I don't like having it

  be a hard requirement but I could just

  put like a little piece of text

  somewhere saying hey you know please

  promote overcast periodically in your

  shows if you like this you know and and

  that you know not everybody would do

  that probably a very low percentage of

  the users would do it but if any of them

  do it that's still a benefit so there

  are lots of ways that I can look at this

  and like it's very clear to me that I do

  not want this to be a paid up front app

  because it wouldn't bring in enough

  money to be worth the hassle and the

  support costs but there's lots of other

  things that can do that the more people

  use it the better these effects get so

  it probably should be free yeah and I

  think

  what you as you're unpacked sort of

  unpacking that what I see is it's

  exactly the same sort of situation that

  you were outlining for what I'm finding

  myself with where it's the these

  auxilary effects or network effects or

  whatever these like these sort of these

  vague kind of slightly amorphous but

  definite benefits that just having it

  out there as broadly as possible because

  taking advantage of the fact that it

  doesn't like cost us we're not producing

  a physical object that we costs us money

  to produce like an extra copy it's just

  we can just put the put it out there and

  it's as many people whose use it as

  possible like there's no ongoing cost to

  us that that nests are almost

  necessarily accrues all these other

  little side benefits that are wonderful

  and especially because it's it's like

  it's not totally orthogonal to like your

  main business like if it were like you

  wrote this Matthews you wrote a to-do

  list manager on for the Mac like okay

  that's a bit more complicated to have

  these kind of these beneficial overlaps

  but like even just the fact of like

  podcast producers be knowing about

  overcast is a great thing if keeping in

  mind that over people the people who buy

  the ads that are shown in overcast our

  podcast producers currently right right

  exactly like just making them aware of

  overcast and having it be a marketing

  tool like in a weird way it's like

  whatever a potential cost you are giving

  up whatever that few thousand dollars is

  and not have not trying to get money

  from it it's like just viewing it as a

  strict marketing expense like the

  forecast is a elaborate advertisement

  for overcast that is targeted at a very

  specific demographic but turns out to be

  the demographic that you are trying to

  reach to buy ads in your app like it is

  such an interesting thing when you stop

  if you like when you like all these

  little benefits that can appear when you

  don't worry about the short-term benefit

  of it like all these down the road like

  just it's hard to quantify it's hard to

  know but I'm almost certainly the more

  people who know about overcast that's

  better than not so like making it free

  and just have

  in having the goal of it being you know

  that as many as a higher number of

  podcast producers as possible are using

  it you know that's awesome

  and especially because like I know which

  of the apps that podcast that I listen

  to are using forecast because they have

  raged like that they have great chapters

  and the way the chapters work like it

  all works seamlessly in overcast and so

  that makes overcast look good like the

  more people who do that the better it

  would be so like seems like it's a win

  win everywhere exactly well thank you

  everybody for listening we're out of

  time this week make sure that you

  download workouts plus plus buy it while

  you said well it's still paid and then

  by all david's other apps and then make

  sure you I use forecast when I release

  it in the meantime please use overcast

  and please patronize our fine sponsors

  on the show thanks for listening

  everybody please like and subscribe and

  we'll talk to you next week bye