Developing Perspective

#86: App Pricing.


00:00:00   Hello and welcome to Developing Perspective. Developing Perspective is a podcast discussing

00:00:04   news of note in iOS development, Apple, and the like. I'm your host, David Smith. I'm an

00:00:08   independent iOS and Mac developer based in Herndon, Virginia. This is show number 86,

00:00:12   and today is Friday, October 5th. Developing Perspective is never longer than 15 minutes,

00:00:17   so let's get started. All right, so I'm going to start off today's show just with a moment of

00:00:21   silence. To commemorate, this is the one-year anniversary of the passing of Steve Jobs,

00:00:26   which is a sad day.

00:00:29   I mean, it's been a long time, and I think I was thinking about it a bit today.

00:00:34   It's one of those things that the best analogy for how that feels is the difference.

00:00:39   It's kind of like when you have a wound, and at first it's fresh and kind of painful.

00:00:46   And at this point, it's not really a wound anymore.

00:00:49   It's just kind of like a scar that you carry around with you.

00:00:52   You know it's never quite the same again.

00:00:55   And that's sad.

00:00:58   So anyway, I was just going to start off

00:01:00   the show with a little moment of silence

00:01:02   and then get into the main topic.

00:01:04   All right, so what I'm going to be getting

00:01:16   into the rest of the show is something

00:01:19   been struggling with a lot recently.

00:01:22   And hopefully this is one of those things that I think a lot of people

00:01:25   struggle with.

00:01:26   And it's something that was one of the harder topics

00:01:28   to talk about in some ways.

00:01:30   Because I see a couple shows ago where I said talking about money

00:01:35   is kind of a funny thing.

00:01:37   And I was kind of tricky and awkward.

00:01:39   But I was going to talk about pricing, and specifically app pricing,

00:01:43   and kind of my thoughts on it, and the state of that,

00:01:47   and where we are as an industry.

00:01:50   And specifically, I'm thinking there's two things

00:01:52   that I'm working on for apps and work

00:01:55   that I'm doing that have big pricing concerns.

00:01:57   So the first one's the weather app

00:01:58   that I've been going on and on about coming soon,

00:02:01   and what I want to price that at initially.

00:02:04   And then the second is I'm working

00:02:06   on a syncing solution for my recipe book app that'll

00:02:11   let you sync your recipes between multiple sites,

00:02:13   between websites, all those kinds of things.

00:02:16   I'm trying to decide-- and as part of that, I'm also going to introduce an iPhone version of my

00:02:19   currently iPad-only app.

00:02:21   And so the big question is, you know, what do I do? Do I want to make that

00:02:25   universal? Do I want to

00:02:26   make it a separate thing with a paid upgrade? You know, there's lots of choices. Do I want to do subscription

00:02:30   pricing for Sync? Do I not?

00:02:32   You know, it's

00:02:34   lots and lots of choices and things like that, so it's just really kind of a funny

00:02:38   question

00:02:39   of, well, how do you come up with pricing? How do you define what is-- what makes sense for

00:02:43   you?

00:02:44   And I think first, and this is I think especially relevant given the whole topic I talked about

00:02:50   in the last show, is that ultimately you have to be very practical about this.

00:02:53   You have to be very pragmatic.

00:02:54   You have to be sort of sticking to whatever your pricing goals are on principle is likely

00:03:04   not going to survive contact with the enemy, as they say.

00:03:07   So it's kind of like you can have these great ideals of, "Oh man, I think software should

00:03:12   be really expensive and people should view it as a really valuable and intrinsically

00:03:17   useful thing that they're willing to pay lots of money for.

00:03:20   And Apple's eroded that with the way they've done pricing in the App Store and the way

00:03:23   they do charts and graphs and things, charts and graphs, with the way they do charts and

00:03:29   rankings.

00:03:31   And basically, I think that's all true.

00:03:35   But at the end of the day, it comes down to, would you rather be successful financially

00:03:41   or be sort of stick to your guns if you hold that view very strongly.

00:03:47   And at the end of the day, for me, my chief goal is to provide for my family.

00:03:52   And ideally do that in a way that I can continue to be independent.

00:03:58   That's one of the things that I really enjoy about my current situation, my

00:04:01   current job, my current work I do is that I'm independent, that I don't really have

00:04:05   a boss.

00:04:05   I actually was kind of amusing.

00:04:07   I realized that six years since I formed my first LLC and went independent,

00:04:11   So that's quite a long time that I've been doing this.

00:04:14   And doing that is not an easy thing.

00:04:17   And a lot of the ways in which that I've

00:04:19   been able to keep doing that is to just be realistic about,

00:04:22   OK, my goal is to make money.

00:04:24   And I guess the really negative spin on it

00:04:28   would be to say at some point you just kind of sell out.

00:04:31   Maybe a more positive view is that you

00:04:33   have a realistic view on the market,

00:04:35   and you adapt your pricing and approaches and investments

00:04:39   accordingly.

00:04:41   And so this is kind of essentially where I'm heading, is I typically have a fairly loose

00:04:48   view on pricing.

00:04:49   And I've talked about this a little bit before, and I keep saying that, but I guess that's

00:04:53   the downside of having 86 episodes is at this point I've talked about a lot of the things

00:04:57   at least once, and hopefully I'm still adding new and unique and interesting spins on things.

00:05:02   But I guess that's just the downside.

00:05:04   I've been doing this for a while.

00:05:06   But the reality is, my goal is that I want to price something such that I can get the

00:05:13   most money back for the effort I put into it.

00:05:17   I don't typically assign value or some kind of ephemeral sort of moral or whatever to

00:05:25   the price.

00:05:27   If I can make the most money at 99 cents, I'll make the most money at 99 cents.

00:05:30   If I make the most money at free, I'll do it free.

00:05:32   If I make the most money at $50, I'll make the most money at $50.

00:05:38   That ultimately is my goal.

00:05:41   And I'm not sure-- I think there are certain lines that you draw, and these are the kind

00:05:45   of things where it's like, I don't really want to make my money from something that

00:05:48   I would say is manipulative, that's cheating, that's lying.

00:05:53   You kind of get into the classics, sort of like the Zynga premium games, where there's

00:05:57   a lot of deep psychology going on to manipulate people and to make them part of their minds.

00:06:02   money, those are the kinds of lines I draw.

00:06:05   But I don't draw lines in terms of any particular price being

00:06:08   more valid than any other.

00:06:12   And so I sell my software to people, and they buy it.

00:06:15   And so typically what I do, and as I think about this,

00:06:19   though, is how do you find that price?

00:06:23   How do you know what that is?

00:06:25   And really, the only way you can know is to try other prices

00:06:29   and see where it ends up balancing off.

00:06:35   And that's just a trial and error.

00:06:36   And I've done this many times with many apps.

00:06:39   And typically in the App Store, I

00:06:41   would say the overall rule-- certainly in the iOS App Store.

00:06:44   It's slightly different than the Mac App Store, I think.

00:06:46   But the most money is made the lower the price

00:06:49   if you are ranking.

00:06:51   If you are in the charts at all, you

00:06:53   want to have as low a price as possible,

00:06:55   because that'll help keep you there.

00:06:58   and the longer you're there the more money you make at that price

00:07:02   and so but as soon as you start not ranking from a charting perspective you

00:07:06   may as well raise your price a bit

00:07:08   you may as well make it whatever three four five six seven eight nine ten dollars you

00:07:12   know kind of really

00:07:13   you can raise it up

00:07:14   because people who are discovering your app at that point are either word of mouth

00:07:17   customers

00:07:18   or customers who are searching for it

00:07:20   and so I don't think so by definition they are more

00:07:25   invested in trying to find it

00:07:27   I guess is the right way to think about it.

00:07:29   You know, they're not browsing casually looking for things.

00:07:32   They are looking for your app or an app very similar to yours.

00:07:36   And so doing it that way, I think seems to have overall made the most sense to me.

00:07:41   And so that said, I have a, you know, there's a, it wouldn't surprise me if at

00:07:48   some point check the weather ended up being a 99 cent app.

00:07:52   The economics I've made sure work for that.

00:07:54   And it, which is an important thing to probably have a little sidebar on.

00:07:57   is you need to make sure that if you have a back end

00:07:59   service that is required for your application,

00:08:02   you need to make sure that the economics of that back end

00:08:04   service makes sense at a low price.

00:08:07   If your app can only make money at a high price,

00:08:10   I think you're really going to struggle in the app store

00:08:13   to not have any flexibility there.

00:08:15   And so I work it out and I say, if a person buys my app

00:08:17   and uses it for 18 months, that will likely

00:08:21   result in server calls.

00:08:23   And server calls to my weather data provider

00:08:26   costs so many per call, sort of.

00:08:28   I mean, that's not the way they do pricing.

00:08:29   But you average it all out, and you say, OK, I

00:08:32   can support that at $0.99.

00:08:35   And if that's the case, then great.

00:08:37   That's it.

00:08:37   What I'm probably going to do is I'm

00:08:39   going to launch the app probably at probably about $3,

00:08:43   is where I'm hoping it would end up.

00:08:45   And I'll see what happens.

00:08:49   I think I'd rather start high and then work down,

00:08:53   rather than start low and then have to raise it.

00:08:55   and then not go anywhere and raise it up.

00:08:58   That's probably where I'm going to be going on it.

00:09:01   There's certainly a part of me that is always

00:09:04   inclined at this point to just go to 99 cents

00:09:06   and just stop worrying about it.

00:09:08   But I feel like there's a certain connotation that that

00:09:13   brings to it that I don't necessarily want.

00:09:16   And it's not because I think 99 cents is a bad price.

00:09:18   I just think there's something better about it.

00:09:21   I'm saying something-- if I start off

00:09:23   saying that it's three dollars

00:09:25   i'm sc's i'm trying to communicate something to the world

00:09:28   about the quality the craftsmanship and the effort that has gone into that

00:09:32   you find a backing away from that because it's breaking really well

00:09:36   and it's you know if it's flying up the charts and i feel like at some point

00:09:39   lowering the price would do a lot of things to

00:09:42   help me

00:09:43   keep it there

00:09:44   absolutely i'm more than happy to do that and that'll just be

00:09:47   choice i make

00:09:48   uh... the media of the upset a few people may be on the way people got a

00:09:52   $3 when they see it go down to $2.

00:09:56   You've got a few grumpy people, but that's just the reality of it.

00:09:59   And some people are always waiting for it to go on sale,

00:10:03   or those types of users.

00:10:06   And it's like, that's just the reality of the store we live in.

00:10:09   And I'm not going to complain about that.

00:10:10   I'm just going to do what I can.

00:10:12   And that's kind of the way that I do it.

00:10:15   And I think hopefully that sort of very practical approach seems to work.

00:10:19   that you communicate something with price.

00:10:23   So having a large number, I think, hopefully, at least initially,

00:10:26   can say something about your app.

00:10:30   You're communicating both to you and to Apple

00:10:32   that you think it's worth it, that you think it's valuable, that you think

00:10:36   it's not a throwaway app.

00:10:39   Then you just need to be flexible.

00:10:40   And you need to ease back on that.

00:10:42   And certainly the ceiling has come down.

00:10:43   I don't think launching an app at $10 in the iOS App Store,

00:10:47   especially on the iPhone, maybe on the iPad, but definitely on the iPhone. I think it's

00:10:50   way too much. $5 probably getting even too much these days.

00:10:55   That's just a natural reaction to the competitiveness. I don't think that's a reduction in the value

00:11:00   or the quality of the software. I think that's a result of the competitiveness of the market

00:11:04   and the size of the market. That people can make good livings selling an app for 99 cents

00:11:10   because there are hundreds of millions of people who are buying those apps. And you

00:11:15   you don't need a very high percentage of that customer base to be interested in it for you

00:11:21   to make a viable business.

00:11:23   Because at the end of the day, I'm not in this to win the lottery.

00:11:28   Well, that'd be great.

00:11:30   If somehow one of my apps ever just took off and made me wealthy beyond my imagination,

00:11:37   that'd be awesome.

00:11:38   Who wouldn't like that?

00:11:40   But that's not what I'm doing this for.

00:11:42   I'm doing this because this is better than a nine to five job for me.

00:11:46   And so I just need to make enough that that's the case.

00:11:49   And so far I've been blessed to be able to do that.

00:11:51   That I've been able to be independent for years and years.

00:11:54   And the app store is how I do that.

00:11:55   And I introduce new apps to diversify my income stream

00:11:58   to make that more likely.

00:12:00   But at the end of the day, you just want

00:12:01   to price something so that you can have the most total revenue

00:12:07   at the end of the day.

00:12:08   And I feel like being good about experimenting with that

00:12:11   makes a lot of sense.

00:12:12   I feel like being non-moralistic about it makes a lot of sense.

00:12:18   Not getting too caught up in like, oh, man,

00:12:20   I don't want to be part of the race to the bottom.

00:12:21   It's like, well, that race is already over.

00:12:23   The racers have already gone home.

00:12:26   That's just the reality of the store we work in.

00:12:28   And I don't think that's going to change, because it

00:12:32   becomes more and more competitive as the customer base grows.

00:12:37   The thing is, at the end of the day, you're competing against somebody

00:12:40   who may have different costs than you,

00:12:44   may have different goals than you.

00:12:46   It's like the classic challenge of if you're, for example,

00:12:49   competing against either a venture-backed company

00:12:52   or a company with a brand who is not

00:12:55   interested in profiting from the app directly,

00:12:57   they're just trying to get recognition,

00:12:59   then you have some tricky, tricky things there.

00:13:01   Because they can make their app free,

00:13:02   or they can make it very low cost

00:13:04   and provide a huge amount of value

00:13:05   because they're trying to get that value back some other way.

00:13:08   And you just have to understand that.

00:13:10   And you just have to embrace and not worry about it too much and say,

00:13:15   if I'm just trying to make a living, I just want to set my prices at prices that will support me in my work.

00:13:20   And not worry about it too much.

00:13:27   I feel like you can easily get wrapped around in it.

00:13:28   And I've changed prices probably hundreds of times for various apps in the store.

00:13:30   Just trying different things.

00:13:36   What happens if I make it lower price during the week and higher price on the weekend?

00:13:36   does that do anything?

00:13:37   It's like anything you can think of, just try it.

00:13:40   Go into iTunes Connect and play around.

00:13:42   I think that's the biggest part of it, is just being flexible.

00:13:45   And so that's kind of some of my thoughts on pricing,

00:13:48   and kind of where I'm going.

00:13:49   And so in summary, let's check the weather.

00:13:51   I'm probably going to make it a $3 app, because that's

00:13:54   kind of where I suspect it'll end up.

00:13:57   If it ends up charting really well, I may lower that.

00:13:59   But generally speaking, that's where I'm going to start,

00:14:02   because that's kind of where I think it's worth,

00:14:04   her worth in the scale of, you know, apps in the App Store.

00:14:08   Probably a good clarification.

00:14:10   And otherwise, I'll see what happens.

00:14:12   All right, as always, if you have any questions, comments,

00:14:13   concerns, complaints, I'm on Twitter @_DavidSmith.

00:14:16   I'm on AppNet @DavidSmith.

00:14:18   You can email me from the link on the website.

00:14:20   And otherwise, I hope you have a great weekend.

00:14:22   Happy coding.

00:14:23   I'll talk to you later.