We seem to go through this every few months in the world of App Stores: developers get together and start discussing how the lack of iOS App Store options such as upgrades means that developers can’t make a living. This kicked off again last week when David Smith mentioned that the lack of upgrade pricing for the $200 Logic Pro X app from Apple meant that upgrades weren’t going to happen. The guys on the Accidental Tech Podcast picked it up and had a long conversation about it as well [1].
First thing I recommend is a marketing 101 class then we can discuss this again.
The problem with app pricing has almost nothing to do with pricing. (Surprise!) The problem is distribution. And this also happens to be one aspect of the iOS ecosystem that everyone loves.
In the iOS world, there is only one place to buy apps: the App Store. Because there is only one place to buy apps, everyone goes there to find them. Because everyone goes there to find them and the contents are exactly the same for every app (a description, some keywords and a few pictures), it is nearly impossible to differentiate your product.
Saturday I walked in the grocery store looking for mustard. When I got to that shelf I found 10 different varieties from 7 different companies. Which did I buy? The cheapest one. Why? Because none of the brands were differentiated to me.
For 99% of us, there is no differentiation in the App Store. One company’s calculator is just like another company’s calculator. Sure, there are reviews to read and maybe you heard about a product on a blog somewhere, but most haven’t.
This is a vicious cycle. The lack of differentiation means the price drops, which means the money available to market an app drops, which means it is harder to differentiate.
What could help? Trials could help. That would allow someone to download an app and see the difference first hand, not just trust a screenshot. Apple has been clear, though. They prefer freemium. Getting out of the App Store itself can help. Building enough value to charge a subscription could help.
Productivity apps can’t survive and bring the long-term value customers demand at $2.99 or $4.99. At the end of the day, though, the app stores, whether Apple, Google or the like, are not going to solve our problem [2]. The only thing that will is rethinking the products so we can get out of the app stores and differentiate.
—
[1] Listening to Marco Arment talk about this problem is frustrating. The guy has an incredible personal brand, like Loren Brichter, and the things he touch get instant echo in the iOS chamber. Would The Magazine had been such a success if I had built it? No way. His personal echo chamber made that happen. (Note that I am not complaining in the least about his ability to do this. If anything I’m a little jealous.) [My apologies to Loren for misspelling his name in the original footnote.]
Update: I want to clarify that I meant it helps Marco’s app get initial interest, not that it guarantees success over the long-term.
[2] Are there App Store problems? Of course, and things Apple can do to fix them.
Elia Insider 
It’s Loren Brichter.
You suggest that having a demo might increase sales. However, there is data that suggests this has the opposite effect, by a large factor http://au.gamespot.com/news/game-demos-can-hurt-sales-suggests-research-6410863
Do you have data that supports your position?
The article may be right about games as games are very different from productivity apps. Trials definitely help productivity apps as they are meant to be used over a longer period of time.
On Mon, Jul 29, 2013 at 9:51 AM, Elia Insider
When you say “definitely” do you mean you have data on that, or you just thing it does?
By definitely I mean I have personal experience that having a trial helped me sell high priced software and without it I could not have supported a higher price point. Trials are besides the point, though. Do I think they could help? Yes. But I believe Apple has thrown their lot behind freemium and expect that if we want to provide restricted versions that’s the direction to go.
Sounds like a badly controlled experiment since you were obviously competing in a market where trials already existed, vs adding trials into a market.
Is there a big difference between “freemium” and a trial? By a trial I guess you must mean a specifically time limited trial?
Freemium implies some base features are always free with premium features for upgrade where trial means a product that stops working at some point in time. We’ve done both throughout our history, even freemium before it was called that name.
On Tue, Jul 30, 2013 at 8:45 AM, Elia Insider
Apple takes 30% IRS takes 30% basically you are working for free
Pingback: How to Improve App Store Search Ranking | improve-app-ranking
Pingback: How to Improve App Store Search Ranking | app-rank-boosting
I don’t think trials are the solution for productivity apps. In fact, the paid upgrade model doesn’t work either.
Selling software has been broken for a long time. The only reason the trial & paid-upgrade model worked for so long was because the industry was in its infancy and the speed of innovation was so fast that it could support this.
Now that the industry has matured, selling something that lasts forever and provides daily value for a one-time price has proven to be unsustainable.
Adobe has discovered this, of course. Their subscription model is the only one that I can think of that makes sense from a developer & user point of view. Admittedly, the specifics of their current offering could use some refinement, but the concept makes sense.
Absolutely agree. Ben Thompson’s wrote some amazing stuff on this. For instance: http://stratechery.com/2013/adobes-subscription-model-why-platform-owners-should-care/
On Wed, Jul 31, 2013 at 11:05 AM, Elia Insider
Pingback: The Forgotten Marketing Basics | Lift - The SeriesC Blog
Pingback: Thursday Morning News
It’s “Accidental Tech Podcast” instead of The Accidental Podcast. Good read.
Thanks. I fixed it. Had a dyslexic moment.
Pingback: Boot up: Android to pass iOS store?, Samsung benchmarking redux, and more - Global News Platform - Global News Platform
Pingback: Samsung benchmarking redux, Android to pass iOS store? and more | Nur, was da steht
Pingback: %post_,title% | %blog_title, %
Here is the problem I’ve got with most IOS and Android mobile and tablet games: they are utter garbage, horrible touch controls, rubbish graphics and boring gameplay, they don’t compare to current gen console games, let alone the next gen PS4 and XboxOne games. A lot of the little kids and casuals who play mobile games will grow up and soon get very, very, very, bored of crappy cheap mobile games and will graduate to play proper next gen games on the PS4 or XboxOne which will have mind blowing graphics on a large screen TV, with immersive gameplay and AI and a proper
controller.
I’m not a gamer so don’t experience the issue you are describing, but I can understand where you are coming from. I wonder how technology changes will affect this?
Pingback: Success And the App Store | techsnark
Pingback: Boot up: Android to pass iOS store?, Samsung benchmarking redux, and more | TechNewzie
Pingback: Boot up: Android to pass iOS store?, Samsung benchmarking redux, and more | My Blog
Nice post Elia. As you say, there is little to differentiate between apps that do the same thing, so the customer will inevitably use pricing. And that means the free app will win over the 99c app almost every time. As reported by Flurry, no 90% of Apps are free (source: http://blog.flurry.com/bid/99013/The-History-of-App-Pricing-And-Why-Most-Apps-Are-Free).
Being an iOS App developer, this means we are forced to use In App Purchases and advertising to generate revenue. Given the choice, I’d much rather just charge for the software (and for updates) instead, but this is no longer feasible with rock bottom App Store pricing.
I still believe in the “two different app stores” concept: a paid store and a free store. The problem is the paid store is price sensitive and there aren’t as many of them.
Interesting: no one is talking about other ways of letting the prospect consumers the benefits of the apps. Of course the App Store offers no good way to differenciate your app, just like the grocery store offers no way to differenciate mustard brands. That’s what advertising and communication strategies are for. There are many channels to get in touch with consumers, and app developers must know not only how to program (too crowded place) but how to sell. Learn marketing, study communication and advertising. Just like designers (you work with designers, right?) marketing people are essential in this ecosystem. Price is not the most important variable, a price war only hurts everyone (even the consumer) in the long run.
Pingback: Introducing Equals or How We Will All Work With Numbers In The Future | Elia Insider