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.

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[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.

David Smith on the problem with in app purchases:

There seems to be a culture developing around designing games and apps that are intended to intentionally mislead and coerce customers into making more and more purchases.

My most basic concern with this revenue model (and how it is currently being applied) is how it can become dishonest and intentionally misleading to customers. I don’t think anyone would contend that making a customer feel cheated or regretful of their purchases would be a good thing. The nature of many of the techniques currently employed is to create environments where customers make impulse decisions in the moment that they would not make with more context.

In it he refers to an article that talks openly about the tricks developers are using to get people to buy more with in app purchases. It is also worth referring to this post on how Nielsen’s usability heuristics are manipulated across the Internet to do the same kinds of things, primarily with mailing lists. (Example: Click the box to not be emailed.)

He’s right, of course. Using people in this way is damaging over time. People come to not trust that company to do right by them. Credit card companies have played this game for years, making us read pages of documents to keep our information private, navigate tricky language, and then do it every year instead of once. And look how much we trust the finance industry these days!

It would be nice if just these companies developed a bad reputation but it doesn’t work that way. The problem is all of us who write code are affected by these games played by app makers. When customers stop trusting one, they stop trusting all of us.

Infinity Softworks received this support email this weekend, and by all accounts this is a fairly mild one:

Not what I expected. I needed actual Financial calculator not just the problem solving feature. I’d like either my money back or the option to have a calculator as option. I will voice my opinion regarding this. Very disappointed. Kind of pissed.

The author doesn’t trust us. We’ve been tarred and feathered by gimmicks and tricks of companies past. The author feels that we have misled and the only recourse will be to get vocal about it.

Never mind that it is probably a simple misunderstanding.

Ben Thompson wrote a series of great posts on App Store dynamics and, in particular, on sustainability for productivity apps. In the latest post on the topic Ben outlines what he sees succinctly:

Unfortunately, productivity apps are a terrible match for app store economics. The app store favors:

• Simple, inexpensive apps that are downloaded by a lot of people
• Free front-ends for for-pay or advertising-based services
• Games with repetitive mechanics that can monetize existing users through in-app purchases

The solutions for enabling sustainable productivity apps are actually pretty obvious – just look at how productivity apps make money elsewhere:

• More expensive apps with trials
• Paid updates
• Built-in subscription support

And yet, iOS 7 introduces radical change in nearly everything except for app monetization. Why doesn’t Apple do more to enable sustainable businesses on the app store?

He goes on to answer his own question. I think there are a couple of other possibilities:

APPLE IS BLINDED BY THE FOREST

This app market is so crazy and moving so fast that Apple may not even see the problem. To Apple it may look like one giant forest of apps when what is really going on is that a whole series of ecosystems are residing next to each other. The gaming and entertainment ecosystems are doing quite well. They have tools to make them more successful like in app purchases. Apple put special tools in place for news apps, too. But productivity blends in. Apple may not even recognize that there is a problem.

APPLE DOESN’T CARE

Let’s be honest here: my inability to make a living wage is not Apple’s problem. It is possible that Apple just doesn’t care, figuring the market will work itself out. They give us a lot of tools to work with: one-time purchases, free app distribution at no charge, news stand and subscriptions, in app purchases. From here, they may figure, it is our problem. Go figure it out.

APPLE IS WORKING ON SOMETHING

Apple is a very famously a quiet company. We don’t really know what is going on internally. Maybe Apple is and has been working on a major overhaul with all kinds of things developers have been asking for. Maybe Apple has a whole series of things in the works that are being held up by a massive overhaul of iTunes and its ten-year old infrastructure riddled with technical debt and spaghetti code. The massive overhaul that is iOS 7 may be followed by a massive overhaul of iTunes and its infrastructure next year. Since Apple is doubling down on secrecy we may not know until Apple decides it is time for us to know.

PURE SPECULATION

Personally, I think Apple has been very clear. They give us a number of tools and it is our job to figure it out. Apple has a way of indicating what is coming years in advance and I think the fact that Apple doesn’t charge us to host free apps in the App Store is a pretty good indicator. The App Store is an incredible distribution mechanism but, at least for productivity apps, a horrible monetization mechanism.

While away I gave a lot of thought to iOS 7 and what I should do as a developer. Here are a few thoughts:

1. Upgrading an old app to iOS 7 only is very problematic from a customer’s perspective. If the customer chooses not to upgrade he/she can never recover the app if they need to reinstall. There is no way to fix any lingering bugs for that old customer. Maybe the latter isn’t a problem as you are moving on but the former is a major problem. I have a hard time telling a customer I’m moving on and they can never recover our product if they have a device issue.
2. There are lots of devices that won’t support iOS 7. All but the most recent iPod touch (fifth generation) won’t support it. Furthermore the fourth generation was still on sale a month ago. The first iPad, a number of which are still around, and all iPhone’s not named 4, 4s, or 5 won’t support it.
3. Furthermore I would bet a number of customers won’t upgrade initially. The change from iOS 6 to iOS 7 is pretty extreme. Many may wait to see the reaction.
4. I like the idea of developing a new app that is iOS 7 only. It is a wonderful chance to streamline the code, fix any problems, remove feature bloat or fix the business model.
5. Charging for the new app, if the old one was a one-time purchase, is hard here. I did this once and got killed for it, albeit temporarily. This is a major change, though, so maybe customers will be more understanding.
6. In addition those old purchases don’t go away like they used to. You can remove them from the store but the customer can still recover them. This changed a year or two ago, which was a smart change.
7. I’ve been very vocal that one-time purchases don’t work well. Others believe the same. The prices are too low and the revenues too small to support customers long-term, and productivity apps need long legs. I’m contemplating a business model change at the same time we consider iOS 7 only apps.
8. The timeline is tight. It may not feel that way but if Apple maintains old schedules we are looking at an early October release. That’s only three months away and the summer months go fast. Apple is releasing betas quickly and things are going to change and break and get fixed and we are going to have to keep up with all of that. Not to mention other projects were started and need to be completed.
9. It may be necessary to contemplate a MVP app, a minimal viable product, that gets your foot in the door with some key features but doesn’t try to include everything from the previous release. This may mean keeping both the old and new products in the store until the features can be added. Of course this means maintaining two apps, one designed specifically for iOS 7 and one from the earlier generation that works on iOS 7.
10. One thing is very clear though: apps not designed specifically for iOS 7 are going to look awkward and out of place. iOS 7 is a tremendous opportunity to re-think everything that came before.

I know I’m excited to dig into the code… once I can get a few of these other projects out of the way. Oh boy, that clock sure is ticking.