Under the Radar

55: Black Friday Sale


00:00:00   Welcome to Under the Radar, a show about independent iOS app development.

00:00:03   I'm Marco Arment.

00:00:04   And I'm David Smith.

00:00:06   Under the Radar is never longer than 30 minutes, so let's get started.

00:00:10   So today, in honor of Black Friday, which is this week as we are recording, we wanted

00:00:16   to talk a little bit about sales or about variable pricing in general.

00:00:20   Should we make our podcast like 20% shorter to celebrate Black Friday?

00:00:24   It seems fair.

00:00:25   Never longer than 26 minutes or something like that today.

00:00:31   But it's a funny thing that happens this time of year where all of a sudden, all these things,

00:00:38   companies invent these ways to try and create demand for their products that wasn't necessarily

00:00:42   there before or you're dropping, you know, people are sort of interested in buying something,

00:00:47   you're trying to drop it just below the threshold such that they're interested in actually buying

00:00:51   it.

00:00:52   So it just applies to all these big box stores or all the crazy frenzies you see in videos

00:00:59   that are typically this time of year, as well as just in the App Store, where hopefully

00:01:03   with less frenzied buying, but it is certainly something that I think a lot of developers

00:01:07   do this time of year because there's a lot of sort of anticipation or expectation that

00:01:13   people have that, "Hey, today it's Black Friday or Cyber Monday or whatever holiday they've

00:01:18   kind of invented around reducing prices."

00:01:22   And wonder if there's any good deals.

00:01:24   And you can kind of go around and see, "Hey, is there something that's good to take advantage

00:01:29   of as a result?"

00:01:31   And it's something that I know for myself I struggle a lot with in terms of whether

00:01:36   it's something I should sort of take part in and get into because I feel like there's

00:01:39   this weird tension between what that does to the perceived value of your software or

00:01:46   the expectations you're setting for your future customers and the way you're treating

00:01:53   your past customers.

00:01:54   And then you serve on the one side and then on the other side, it's like it definitely

00:01:57   works and is definitely a powerful tool to, in the short term, get a lot of sales.

00:02:06   Because I know this for myself, even if you're not around something like Black Friday or

00:02:11   around Christmas or around New Year's or something like that, even if you just randomly

00:02:15   change your price one day, you will almost inevitably see a spike in downloads.

00:02:21   And that's just the reality.

00:02:23   But it's a tricky thing to get into the habit of doing.

00:02:25   I actually remember back in the very early days of the App Store, I had an app that was

00:02:32   paid, I think it was $2 or $3, and I found that I could maximize my revenue by, because

00:02:41   it was my recipe management app, which had most of its downloads happen on the weekend

00:02:47   when people are more likely to be cooking at home.

00:02:52   And I got into this habit where I wanted to be ranking really well on the weekend.

00:02:57   And so I would make the app $3 on the weekend, which was its regular price, but on Thursday

00:03:02   and Friday I would drop the price to 99 cents every week for a few months.

00:03:08   And I got this big jump in sales because the volume went up, and so I would rank better

00:03:14   in the charts, and then I'd raise the price and take advantage of it and come back down.

00:03:18   And I did this for a little while, but after a while, A, it didn't feel great.

00:03:22   It was one of these things like I'd solved an optimization problem.

00:03:25   I did overall average out to more money by doing this.

00:03:28   But I definitely got a lot of people who were kind of grumpy about when they bought it on

00:03:33   the weekend, which is most of my customers in many ways were buying it on the weekend,

00:03:37   and they were paying this higher price, and that didn't seem quite right or quite fair.

00:03:42   And it created these strange expectations and dynamics, and in the end I just decided

00:03:46   like this was a bad idea.

00:03:47   I should just stop doing this.

00:03:49   It's one thing maybe to put an app on sale on a semi-regular basis, like a couple times

00:03:53   a year, but to be doing it in this very structured, calculating way started to feel kind of bad.

00:04:01   But there's always this tension, and it's something that I feel like we all just kind

00:04:04   of have to work through for working out where we feel most comfortable with and make choices

00:04:09   for us accordingly.

00:04:10   Yeah, I mean, because you can tweak the price like you did.

00:04:14   You're basically micromanaging the price to ride these waves and optimize for promotion.

00:04:21   And I think part of the reason why you get so many new downloads when you change the

00:04:24   price is that there are sites like App Shopper, I think is one of the biggest ones, if not

00:04:28   the biggest one, where there are sites that track app store pricing.

00:04:32   And you can just change the price on your app, and if it's at all popular, they will

00:04:38   report on that.

00:04:39   And there are people who watch their feed, who like, any app that comes up that they've

00:04:44   heard of, if it's on sale, you're gonna just buy it right there.

00:04:48   And so like, without even having to put any effort into promoting a price drop, if you

00:04:53   just drop your price, somebody like App Shopper will probably automatically report on it and

00:04:57   you will automatically get more sales.

00:05:00   So you can take advantage of that for a while, but I think obviously anything about the app

00:05:05   store, people are going to try to scam.

00:05:08   Developers are going to try to scam.

00:05:10   And not you, dear developers, not you listeners, other developers, the scammy ones, not you,

00:05:16   of course not, right?

00:05:19   You would never do anything like this.

00:05:20   But there are lots of, any way that you can make money on the internet or on the app store,

00:05:27   there are going to be a whole bunch of people trying to scam it at all times.

00:05:31   So that is the rule of making money on the internet.

00:05:35   And probably anywhere in life, really, but this is what we know.

00:05:37   So you can do things like writing these price changes, but if you do it too much, as you

00:05:44   said, you start having these problems.

00:05:46   And I think one of the problems would probably be that a place like App Shopper would probably

00:05:50   stop reporting it.

00:05:51   They probably have some kind of threshold where they will only report a certain limited

00:05:54   number of price changes for the same app at any given time or something like that.

00:05:57   Because they probably have to do something like that just to prevent constant spam from

00:06:01   people who are looking to exploit the system.

00:06:05   And I think the way your customers will deal with it also, nobody likes feeling like they

00:06:11   got ripped off.

00:06:12   And if you pay a price for an app and you go right back the next day and you see it's

00:06:17   listing and you see it's lower, that's going to make you a little bit upset.

00:06:23   Even if it's a small amount of money, because one thing that developers, especially developers

00:06:29   of paid up front apps, often complain about or have trouble understanding is we're talking

00:06:35   about relatively small sums of money here.

00:06:38   We're talking about dropping a price from $3 to $2 or from $3 to $1.

00:06:46   This is not major amounts of money.

00:06:49   But the way it's perceived by your customers has little to do with the actual amounts.

00:06:55   It's all about the feeling of being wrong, the feeling of being ripped off.

00:07:01   And it's the same thing that makes people really mad if you have a paid up front app,

00:07:05   they buy it, it's not really what they expected it to be, and so then they go leave a one

00:07:09   star review and say, "This app is horrible, I wasted my money."

00:07:12   And it's like, would they really get that mad over like $2?

00:07:16   Well the answer is, if they feel ripped off, yes, yes they will.

00:07:20   They could feel ripped off over 25 cents and they would get that mad.

00:07:24   The amount doesn't really matter, what matters is the psychology.

00:07:27   And so that all plays in here to any kind of price change and price decision.

00:07:33   If you change your price, no matter what you're changing it to or from, if you change it downwards,

00:07:40   you're going to have more people buying it.

00:07:41   If you change it upwards, you're going to have mad people.

00:07:45   It doesn't really matter what the amounts are.

00:07:48   And it creates this strange feeling too of, one of the things that I always, I notice

00:07:54   this most in web services, it's not something that I think you see as much in the app store,

00:07:58   but in that same vein is this weird feeling of, anytime I sign up for something online,

00:08:04   and right before the buy button they have a little box that says promotion code, or

00:08:10   coupon code.

00:08:11   Oh, I hate that.

00:08:12   And obviously this is a complicated thing, we have promotion codes in our sponsor reads

00:08:16   and things.

00:08:17   It's a very powerful tool for a sponsor to have that if you are signing up for a product

00:08:24   or a service as a result of hearing it somewhere else, they need a way to incentivize you to

00:08:29   let them know so they can do things accordingly.

00:08:31   Or it's just a tool for them to be able to do marketing and targeted discounting.

00:08:37   That makes a lot of sense.

00:08:38   But as a consumer, and this is the thing that I always struggle with in terms of the way

00:08:42   in which I'll do it, like in Feed Wrangler, the only sort of subscription web service

00:08:46   that I run, but I early on made a decision that I was never going to use discounted promotion,

00:08:52   that is.

00:08:53   If I did any price changes ever, I was just going to apply them across the board.

00:08:57   Because it reminds me in a weird way too of the way Apple does their pricing, right?

00:09:02   An Apple product's price is essentially static over its entire lifetime.

00:09:09   And it'll only ever change usually if it's replaced by something newer.

00:09:14   So the iPhone 6s right now is $100 less than it was when it was introduced.

00:09:19   These are very predictable and defined changes.

00:09:25   It's the same price for everybody.

00:09:26   There's not really like, "Oh, if you're this kind of special person or you have this kind

00:09:30   of code, you can get a different thing."

00:09:32   And there's a weird thing there both in terms of segmenting your marketplace.

00:09:37   As a consumer, I feel slightly ripped off any time I see one of those coupon code boxes

00:09:41   because it makes me feel like someone else is getting a better deal than I am.

00:09:48   And whether that's true or not, I'm going to always assume that that's the case.

00:09:51   If I see a box that's like, "If I had this magic code, I would have to pay less for this

00:09:57   thing."

00:09:58   But it also creates a moment of doubt.

00:10:00   It creates this moment of, "Should I buy this now or should I wait?"

00:10:08   Or in the case of an online service, it's a coupon code.

00:10:10   It's like, "Should I go scour the internet to see if I can find a code to get 10% off

00:10:15   this?"

00:10:16   And more often than not, if I do scour the internet, I will find a code.

00:10:19   And so there's a lot of confirmation there that that's probably a good thing to do.

00:10:24   But I have the opposite problem.

00:10:25   Every time I see one of those promo code boxes, I'm like, "You know, now I feel bad.

00:10:30   Now I feel like I'm a chump for about to be paying this full price."

00:10:32   So I go and look, and I don't find any.

00:10:35   Or the only ones I find are on those scammy coupon sites, and they've all expired, and

00:10:39   they're all invalid.

00:10:40   It's like, "Damn it."

00:10:41   So then I proceed anyway, and I'm like, "I know I could have gotten a better price on

00:10:45   this, but I didn't, and now I feel ripped off."

00:10:47   Yeah.

00:10:48   But that's the best case, right?

00:10:50   That you did actually keep going through.

00:10:52   Like, anytime I think getting a sale, someone to open up their wallet and give you money

00:10:57   is in general such a hard thing.

00:11:01   Any of these little barriers that we can create to making somebody have to think about it,

00:11:06   and the longer they have to pause and hover their mouse over the buy button or their finger

00:11:11   over the buy button on an app, the longer that pause is there, my guess is there's this

00:11:15   dramatic drop-off.

00:11:17   In a weird way, you want it to be almost as impulsive and quick of a transaction as possible.

00:11:25   The longer they consider it, the more and more they probably won't do it.

00:11:30   And that's just speaking to the fact that most of what we make is confectionary.

00:11:35   We're not making meat and potatoes for people's lives that they absolutely need, and no matter

00:11:40   what, they're going to have to get it.

00:11:43   As cool as some of our products might be as app developers, very few of us are making

00:11:47   products that would fall into that essentials category, and so it is a choice.

00:11:52   And it's confectionary, and they can be like, "Hmm, maybe I will have this, maybe I won't."

00:11:56   But it's a weird thing.

00:11:57   And fair enough, we don't have promotion codes in the app store, but I feel like getting

00:12:00   into a habit of changing price a lot, and if someone goes to App Shopper for your app,

00:12:08   and they see that you're constantly changing your price—and I know I do this sometimes,

00:12:11   especially if I'm trying to buy something kind of expensive.

00:12:13   Like I'll see an app that's expensive, it's $20.

00:12:16   I'm like, "Whoa, $20, this is crazy!"

00:12:19   It's all relative.

00:12:20   Yeah, but I'll see that, and I'll see that there's this—it's like, "Oh, but it goes

00:12:24   on sale every few months for half off, say."

00:12:28   Like, there's a good chance I won't buy it then, unless I absolutely feel like I need it

00:12:32   at that moment.

00:12:33   It's like, "Maybe I'll wait."

00:12:34   And that's awkward.

00:12:36   I mean, it's probably—and I feel like if you can get away with never changing your price

00:12:41   and avoiding that perception that there's going to be a better deal somewhere else,

00:12:45   it probably benefits you in the long run, but it's always going to hurt you in the short

00:12:49   run.

00:12:50   Yeah, I mean, I have not found that it's useful to experiment much with pricing in general

00:12:57   in my apps.

00:12:58   And with Overcast, this has been a little bit different, because it was not paid up

00:13:01   front.

00:13:02   And this is another thing, too.

00:13:03   Obviously, the type of payment that your app has, this will work differently for all these

00:13:09   things, right?

00:13:11   Price changes tend to have the largest impact on paid up front apps, not on in-app purchase

00:13:15   unlocks as far as I can tell or as far as I know.

00:13:18   So back when I had a paid up front app in Instapaper, I changed the price a few times,

00:13:25   but they were for long-term changes.

00:13:27   It was not just playing with sales, because I was afraid of this effect.

00:13:33   I had what was considered a fairly expensive app in its $5 price for most of its time,

00:13:43   and I didn't want that effect.

00:13:44   Because I would often get emails from people saying, "Hey, your app looks really good.

00:13:50   I'm thinking about getting it.

00:13:52   Maybe someday I will."

00:13:54   And it's like, if people are putting that much delay and forethought and planning into

00:14:00   your $5 app, let's be realistic.

00:14:03   They're probably not going to buy it.

00:14:05   That's probably a lost sale to you if people have to think about it.

00:14:11   And part of the psychology of price drops is creating the sense of urgency and the sense

00:14:15   of a limited time offer where you're trying to bypass that.

00:14:20   You're trying to say, "Well, I was planning on buying this maybe in the future, maybe

00:14:25   someday anyway, but now it's only $3.

00:14:28   So I really should buy it right now."

00:14:31   And that works.

00:14:32   That psychology does work.

00:14:34   That's why price changes like this are effective once or twice.

00:14:38   But the more expensive your app is, the more you're going to have that problem of people

00:14:43   who know that the price has changed in the past and then hold off even more for buying

00:14:49   it when they were already maybe going to hold off.

00:14:51   And that's not going to do any favors for your sales.

00:14:54   Sure.

00:14:55   And it's also, I mean, obviously the biggest reason, and probably a lot of people do sales,

00:15:00   is -- and this thing is probably worth discussing too -- is it's not just the impact of lowering

00:15:05   the price in and of itself.

00:15:07   It's that lowering your price is a way to get attention for an app when you don't have

00:15:13   anything else to promote it for.

00:15:15   Sort of like a non-content promotion where usually a lot of app development, for better

00:15:21   and worse, is promoted around new updates to the app.

00:15:27   There's something new that you have to show, and that can be problematic if we're just

00:15:30   inventing things that are different for the purposes of trying to get some attention,

00:15:34   which is certainly something that you can do.

00:15:37   But it's also the case that if you have nothing to show, but you want to try to be in one

00:15:44   of these big roundup posts, or a lot of sites will have lists or Twitter feeds that link

00:15:50   to apps based on their price changes.

00:15:53   And it's a way to get on that next level up marketing's radar.

00:16:01   I could even imagine, think of things like the free app of the week in the app store

00:16:06   is probably the most extreme version of this, where there's this very premium spot in the

00:16:12   featured tab of the app store that is available only to an app that is willing to take a paid

00:16:18   upfront app and make it free for a week.

00:16:21   And you're essentially saying that I have some other way that I'm going to benefit from

00:16:26   that beyond just the sales that I'm giving up by making it free.

00:16:32   Or similarly, I think you actually did this with Instapaper, right?

00:16:34   There's the thing they do with Starbucks where they give away apps for free at Starbucks.

00:16:39   - Yeah, the little cards, yep, I did that with Instapaper.

00:16:42   - And it's the same kind of thing, right?

00:16:43   It's like you're marketing it based on a sale, on a price drop rather than on an actual content

00:16:49   change.

00:16:50   - Exactly.

00:16:51   And there is a time and a place for that, for sure.

00:16:54   That should be considered as part of any marketing strategy for your app.

00:16:59   But yeah, you're right.

00:17:01   So often people will buy it in that kind of situation only because it's a good deal, not

00:17:06   because they were necessarily going to buy it otherwise.

00:17:09   The psychology of it does work.

00:17:12   That's why people do it.

00:17:13   But it also, I think if you are, if you're resorting to things like that, it does kind

00:17:21   of make your app look less premium and less in demand.

00:17:25   So for instance, if you look around on Black Friday today, look around at all the different

00:17:29   sales.

00:17:30   Look at what's on sale.

00:17:32   Apple products, which are these prestigious, high priced, usually in high demand products,

00:17:38   are barely on sale.

00:17:40   Like Apple does a token sale where they might cut like five or 10% off some prices, not

00:17:46   even on their best stuff usually.

00:17:47   - Yeah, well I think today's promotion, all of the things that have their, they don't

00:17:51   even do the deal, their prices are the same, but they're doing the you get a free gift

00:17:54   card.

00:17:55   - Yeah, exactly.

00:17:56   - The only products that that's eligible on is all their old stuff.

00:17:59   - Exactly, yeah.

00:18:00   - If you wanted to buy an iPhone 6s today, you get a discount.

00:18:03   If you wanted to buy a Series 1 watch, there's a discount.

00:18:05   If you wanted to buy a non-new MacBook Pro, there's a discount.

00:18:09   - Or the Mac Pro, the Mac Pro's included in this promotion.

00:18:12   - That is kind of desperate.

00:18:14   - It's kind of sad.

00:18:15   But yeah, like a premium seller like Apple, they don't need to do price cuts to get people

00:18:22   to buy their stuff.

00:18:23   People buy their stuff anyway.

00:18:24   Also if your market is somewhat narrow or specialized or professional.

00:18:28   So like looking around, as many people do, I looked around to see the kind of overall

00:18:34   stuff I tend to buy for my pro needs.

00:18:37   Things like microphones and camera gear.

00:18:40   I looked around, are there any deals on that?

00:18:42   And basically the answer is no.

00:18:44   Because pro gear, things that are made for narrower professional markets don't need to

00:18:50   go on sale on Black Friday.

00:18:52   Because the people who need those things are gonna need them anyway.

00:18:55   And so they're gonna buy them whenever they need them.

00:18:57   It doesn't really matter if they're ever on sale or not.

00:19:01   And so if your app or your service is something like that, where it's not really like mass

00:19:06   consumer focused, all the benefits of the price drop and sale marketing machine are

00:19:12   substantially lessened on you.

00:19:14   So you might be able to put your stuff on sale, but you just might be just losing money

00:19:18   on it.

00:19:19   Now you're just making less money from sales you would have already had anyway.

00:19:23   So this kind of marketing is not for every app.

00:19:26   It probably works very well for things like games and mass market productivity apps, entertainment

00:19:32   apps.

00:19:33   But I wouldn't assume that it would work very well for things that are targeting professionals.

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00:21:35   And the other, I guess the next thing that's probably just worth touching on briefly with

00:21:38   pricing is the, I guess it's understanding that in the modern app store, like price is,

00:21:47   in a weird way it feels odd to be talking about it because I think increasingly price

00:21:52   is just gone to zero.

00:21:54   And like you can't discount zero more.

00:21:57   The ultimate Black Friday sale.

00:21:59   Everything in the app store is now free.

00:22:01   It's just free and that's where it is.

00:22:02   And in a weird way, it's a slight bit of a relief for this kind of a problem because

00:22:09   I did used to anguish over a lot of these things where I would come to it in Black Friday

00:22:15   and you get little notes from reporters or people saying, "Hey, are you going to do any

00:22:22   discounts?"

00:22:23   Or things like that.

00:22:24   And you're like, "I really don't want to.

00:22:25   It didn't seem like that was something that was great to do."

00:22:27   Or something like the free app of the week.

00:22:30   It's like, "Hmm, that's interesting, but I don't know, is that a great use for me?"

00:22:33   And in a weird way, it's kind of a relief now that it's like all my apps are essentially

00:22:37   permanently on sale because I just give them away for free.

00:22:41   And that is kind of nice in a weird way.

00:22:44   Like it's kind of backwards and broken that I would anguish about taking it from $3 to

00:22:49   $1, but going from $1 to $0, somehow it just feels fine.

00:22:54   And obviously it's because it's a different business model.

00:22:56   Like I'm making money in a different way.

00:22:59   But it is kind of nice.

00:23:00   It's just something that feels good on a day like today when you look at something like

00:23:06   sale pricing and it gets kind of weird and murky and makes you feel kind of funny sometimes.

00:23:12   Or at least it's really complicated to feel like you're making the right choice about.

00:23:16   To then just essentially be giving all your stuff away for free and then you're just like,

00:23:20   "Well, I don't have to worry about it."

00:23:22   Pricing is a decision I made that I was just going to say, "I did the binary decision of

00:23:27   do I want to charge money upfront or not?

00:23:30   I didn't.

00:23:31   And great.

00:23:32   Now that's that."

00:23:33   And I can just focus entirely on other aspects of the development process.

00:23:37   And as someone who's more of a developer than a business person or a marketing person or

00:23:42   those types of things, in a weird way it is kind of nice that I can take this whole class

00:23:46   of decision and problem and just put it to the side and say, "You know what I'm going

00:23:50   to do instead?

00:23:51   I'm just going to make my money other ways.

00:23:52   I'm going to make it from tip jars or advertising."

00:23:56   At this point, honestly, mostly it's just advertising.

00:23:58   It's where I make my money.

00:24:00   My goal is to make as many people want to stay in my app as long as they can so they'll

00:24:04   see the ads.

00:24:05   I'm like, "That's a great combination of incentives that I don't feel like anyone's going to feel

00:24:09   ripped off."

00:24:12   And I definitely have noticed this too, that one of the reasons I love making an app free

00:24:15   is, as we were talking about at the beginning of this show, where people can get really

00:24:19   upset about seemingly small amounts of money.

00:24:22   People will still get upset every now and then for a free app.

00:24:25   But in general, if they download it, they don't like it, they'll just ignore it or forget

00:24:30   about it because they haven't invested themselves in it.

00:24:34   And there's certainly a downside that you don't create that same level of commitment

00:24:39   and loyalty in your customer because they didn't have to pay a cover charge to get into

00:24:47   the club so the club feels less cool maybe.

00:24:51   But it definitely is a nice thing on the flip side of that, that if people don't like what

00:24:56   they get to go in to extend that club analogy, it's like if they don't like what the band's

00:25:00   playing, they can just leave and that's fine.

00:25:03   They don't feel like they're not going to be angry as a result.

00:25:05   I'm laughing so hard in my head thinking about the two of us trying to start a club to make

00:25:10   people feel cool.

00:25:13   That would be something.

00:25:15   It's probably not in our core competency.

00:25:20   I don't think if we end up… if the app business just ends up being a terrible idea and doesn't

00:25:25   work at some point, I doubt that's going to be our next career path going into night

00:25:29   life entertainment.

00:25:31   We should try it for one weekend though just to see how it goes.

00:25:34   It's fine.

00:25:35   And if it didn't work, it would probably only be on for 30 minutes or less.

00:25:39   Exactly.

00:25:40   It'd be the worst club ever.

00:25:41   It'd be in the middle of the day.

00:25:43   It'd be in 30 minutes.

00:25:46   Anyway, it'd be very well lit.

00:25:49   Yes.

00:25:50   Very quiet.

00:25:51   We'd do it with acoustic foam on the roof to make sure that it's really quiet.

00:25:54   Oh, that would be amazing.

00:25:57   We'd serve coffee, of course, like nothing else.

00:25:59   Oh wow.

00:26:00   All right.

00:26:01   Yeah, well, I guess we could end here with our special Black Friday episode that's

00:26:07   15% shorter.

00:26:08   Thanks a lot to our sponsor, Linode.

00:26:11   Thank you everybody for listening and we'll talk to you next week.

00:26:14   Bye.

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