Psychology of iPhone Pricing

When I started in this business 12 years ago, there was tried-and-true consumer price points: $9.99, $19.99, $29.99, $49.99, $99.99. Only a few apps — Microsoft Office, Adobe Photo suites come to mind — were able to price above those levels. Anything under $19.99 was considered an impulse buy and anything above $49.99 was considered professional quality.

This never was in the mobile/smartphone/PDA world. In this world pricing seemed to break down as $10, $15, $20, $29.99, and $39.99. Only the rare app was able to get more. We charged $59.99 for powerOne Finance but bundled both the Palm OS and Windows Mobile version together for that price. If we had been in the old model of consumer pricing, we would have been between $100 and $200 (with slightly different presentation and functionality). Impulse buy was anything less than $15; professional apps were at $29.99 and above.

Now those prices have morphed again, at least for iPhone. For whatever reason — first products in the AppStore, lack of trials, single purchasing location, Apple’s devious plan, natural laws of commoditization, Chris Anderson (just kidding) — all pricing have depressed even further. It seems that the new scale is $0.99, $1.99, $2.99, $3.99 and $4.99. Only the rare app can charge more.

The interesting thing to me is that the mentality hasn’t changed. Now, $0.99 is an impulse buy and $4.99 denotes professional quality.

Case in point: In April, a competitor was at $5.99 then $4.99 then $3.99. Never really impacted FastFigures’ sales, but we could never catch up with him, either. For a week, he went free. When he went free our sales shot through the roof. When he came back to the paid side at $3.99 he made no headway. It didn’t impact my sales at all (I was way ahead of him in Top Paid) and the same was true when he dropped to $0.99. He sold a lot more, catapulted above me in Top Paid, but it didn’t impact my sales. Only when he went back to $3.99 did my sales start to fall off as I was clearly losing units to him and he was able to stay ahead of me in Top Paid.

One conclusion: Top Paid position has a clear impact on sales. I think most people try the 1) cheapest and 2) first found product that they were looking for.

Price, though, also impacts sales. So where’s this cut-off point that attracts the alternative, professional customer we were looking for? Is the connotation that anything under $0.99 is a throw-away app? Or is that point $1.99 or $2.99? Clearly, $3.99 has a different connotation but I’m curious if that “professional level” actually falls in somewhere lower.

Or is my entire theory flawed, and the reality is that software is diving toward $0 price points, as my Building an iPhone Business surmises? I can definitely say the market is shifting. And I don’t believe, unlike other developers, that it’s Apple’s fault. I think they are just accelerating the curve.

FastFigures v2: From Good to Great

Version 1.0 is always so hard. When we wrote version 1.0 of FastFigures Finance Calculator and released it in February, we really didn’t know what we were doing. We were trying to figure out everything from what Objective-C is all about to how to make the user interface do the things we want it to do. Even worse, we hadn’t used the iPhone enough to have a clear understanding of how we should interact with it.

So we create and change and throw out and create some more and over the course of a few months — from November to February — we refine it enough to have something decent. Decent, mind you. Not great, but good.

Should we continue on for another month or two and keep creating and changing and throwing out until we approach great? Of course. Would it have been better if we could roll out a beta program to a few hundred, get their input, and keep refining until we are closer to great than good? Yes.

But after four or five months of staring at the same code, good feels good enough. So we shipped. And the response was solid. In the first few months, we sold a few thousand units, tried to manage the unmanageable (Top Paid position and search), and learned a ton from talking with and listening to customers who were using it every day in the field.

And with a break, we were ready for our next try. We took all those suggestions and all that feedback, took our new-found experience with iPhone development, boiled it down to a couple of things that we could do in a few months, and got to work. What did we add to FastFigures version 2? The following, all focused on speed, accuracy and ease-of-use:

  • Pop-up editors for improved data entry in the templates
  • Start-up options to get you where you want to go quicker
  • Faster navigation to the calculator
  • Improved button sizes and layouts for easier data entry in the calculator and templates
  • Memory locations and constants
  • Integrated help

In general, the application feels more like an iPhone application, it acts the way I’d expect, and I’ve already heard from a number of customers who dropped their other products to solely use FastFigures. We didn’t ship ‘good’ this time. We waited for great.

And now, with the learning curve behind us and the core in place, we can really get to work. The plans are exciting: template creation, add-ons, saving data, syncing to the web site, report generation… I can’t wait to get started.

Does Anti-Trust Pressure Force Apple, Palm To Play Nice?

It’s going to be a very busy couple of weeks in mobile land. This week, Palm finally ships the Pre. We’ll finally see if it lives up to the hype. And then next week, Apple will have their World Wide Developer Conference, with many and varied rumors of new devices.

The most interesting news, though, going into this Mobile June Extravaganza is the announcement that the Palm Pre syncs with iTunes (it excludes DRM protected media and applications). The big question and speculation of course is: 1) Is Apple giving Palm permission? and 2) If  not, when will Apple shut down Palm’s media sync?

This “relationship” is only heightened by the two companies. Palm’s been poaching Apple developers, precipitated by former Apple and now Palm executive Jonathan Rubenstein, the brains behind the iPod and revitalized Mac. Apple’s Tim Cook, current COO, has publicly said, “We’re going to go after anybody” who rips off Apple’s technology. “We’ll use whatever weapons we have at our disposal.” (quote from Fortune Magazine, June 8, 2009, p88)

To say the least, the relationship is full of animosity.

Sure sounds like Palm is “hacking” Apple’s iTunes. After all, why would Apple help the company they are trying to simultaneously ignore/kill? If so, I would expect a “kill switch” built into an update of iTunes in the near future.

Given all this, though, I’d be surprised if Palm is doing this without permission. Palm’s making a big deal out of the iTunes media sync, as they should. And would you make a big deal out of a major feature that could be ended at any time? No way.

My guess is there’s a ghost in the room. With the Democrats in power, don’t be surprised if there’s more discussion of anti-trust issues. Apple, with close to 90% market share with iTunes and the iPod, has got to be thinking about protecting its back side. No better way to do that than let a competitor or two sync with your system.

And with Apple’s public comments about Palm, I wouldn’t be surprised if it is Apple’s hubris allowing this relationship to happen. After all, why should Apple worry about Palm syncing if, according to Apple, Palm will not be around to take advantage?

To Flash or Not To Flash? That’s The Question

I’ve been following the news out of the Mobile World Congress (MWC). There are probably two items that struck my fancy: the first is the debate raging in the mobile world regarding Adobe Flash on smartphones and the second is the lack of Android/plethora of Windows Mobile announcements. I’ll address the first this week and talk about the second later on.

Ah… Flash. To some it is the holy grail. To others it’s bloated c***-ware that’s run its course. Flash, if you are unaware, is a programming language that runs in the browser. It was invented by Adobe to provide browser functionality that wasn’t native to the web languages of CSS and HTML. Probably its most popular use in the early 2000s was as a way to deliver interactive advertising on sites like Yahoo!, but over the years it has been used to develop web-based applications as well, such as Quicken Online.

Here’s the problem: Flash is an intensive memory hog designed for desktop use and that makes it difficult to use on mobile devices. After all, who wants half the battery time.

The news: at MWC Adobe announced a consortium of mobile platforms — including Nokia and Palm — who will support the development of a full version of Flash that runs on their devices. Why is this creating a stir in the mobile world? Steve Jobs, Apple’s CEO, announced vehemently that Flash would never run on an iPhone. Now the world is a-twitter with “has Apple missed the boat” conversation.

The reality, however, is that Flash on a mobile device doesn’t really matter. It’s a dying platform on the web anyway, being replaced by a JavaScript protocol called AJAX that’s far less memory intensive, supported by all the browsers, and not controlled by any single entity, a holy grail for the open-standards web.

Who does Flash on mobile help? The market followers. Those crying for Flash on mobile point to Twitter clients and Facebook clients and the like. But those applications are already available at Apple’s AppStore, the market leader for third-party software. It’s everyone else that benefits from it as they get Twitter clients and Facebook clients without having to worry about significant additional development, hypothetically. Significant is the key word, of course, because some changes have to take place to work on the small, smartphone screen.

So what do I think? I think the entire conversation is a distraction. The reality is this: if Palm sells 25 million units in its first two years and sets up an effective software sales and distribution model then developers will flock to the platform, writing applications using its native development tools. And if Palm doesn’t sell millions then it doesn’t matter if Flash runs on the Pre or not as no developer will spend time optimizing their code for a couple thousand users.

One Programmer’s Lament

Since Infinity Softworks had to get small in order to grow, I took on the task of programming again. Before 2007, I really hadn’t written any code since 2000. Since 2007 I have been involved in learning no less than five “development” languages: Objective-C for iPhone; RIM’s special Java flavor for BlackBerry; Ruby on Rails, CSS and HTML for the web version of FastFigures. This does not include the other one I still need to learn. We’ll need JavaScript for but I was overwhelmed with everything else and couldn’t manage any more programming knowledge in my measly little brain.

I wouldn’t call myself a great programmer. I’m competent and seem to be able to get the job done as long as it’s mainly focused on user interface. I can’t do the hard-core programming. Luckily, my other full-time developer handles all the guts of the applications.

My lament, though, is not over having to learn so many different languages but instead how quickly the knowledge seems to seep out of my head. Being engrossed in Apple’s Objective-C language for the past few months, we really haven’t touched the website. Now we are working on a UI overhaul and new web capabilities and I actually need a refresher course on those web languages. I literally stared at CSS and HTML code one morning for two hours, as if I was trying to read Ancient Egyptian hieroglyphics. It just made no sense at all. And this is something I have done a lot of over the years!

Albus Dumbledore has this really cool device called a pensive. In the Harry Potter books, he’d just drop his knowledge into this pensive. When he needed it again, he’d pull the knowledge out and put it back in his head.

Either that or I need someone to stick their fingers in my ears to plug the leak.