Tag Archives: iPhone

Psychology of iPhone Pricing

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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.

Brand Power

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In the late 1970s, when Hewlett-Packard wrote the HP-12c, copyright laws were different. If a company or individual didn’t expressly exert their right then the code was freely available for anyone to use. To copyright software, the copyright notice had to appear visibly to the user on the device and it must be noted in the source code. HP failed to do this with their calculators.

What has transpired over the years is a plethora of HP scientific and financial calculator emulators based on the late-70s products, that actually use HP’s original source code. These emulators have been released for every platform you could possibly think of, including at least four HP-12c emulators for the iPhone.

Because there is little difference between these various 12c emulators in the App Store, the Hewlett-Packard official version released last week and the “knock-offs”, I have watched these apps with great interest. It has proven to be an amazing lesson on the power of brand.

The most expensive of these products pre-HP release was the most popular, peaking in the high-20s for Finance Top Paid Apps. The developer was charging $19.99 for it. When HP came on the scene a week or so ago, with a $14.99 price point, the knock-off apps dropped like a rock while HP sky-rocketed, topping out at #1 in Finance Top Paid Apps. (The knock-offs have since recovered somewhat with much lower prices.) No multi-featured calculator product, in the six months I’ve been watching, has been ranked higher than 11 before the official HP-12c release, and that was a $0.99 application.

What has struck me is the power of the brand. Again, there is no discernible difference between HP’s version of the 12c and the knock-offs yet HP was able to run them off. Second, I’m amazed at the power of this ancient brand. It has been able to propel it to the top of the Finance category when far more interesting products have never gotten as close.

And the buzz for the HP-12c has been fantastic. Before HP released the 12c, most of the calculator conversation on the web had been about the built-in calculator’s ability to be turned into a scientific calculator by turning the device sideways. (Or, more worrying, the propensity of iPhone users trying to dial with their calculator.)

While I’m not convinced that brand building happens in the App Store, I am convinced that a powerful brand makes all the difference. The question I ask myself, of course, is how do I build such a powerful brand with FastFigures? Working on this and other questions as you read.

 

[Note 1: I convinced HP to develop the 12c emulator for iPhone. I was not involved with the development and never asked for nor received compensation for my consulting time with HP. If, however, HP wants to throw some money my way, I’d be happy to take it.]

[Note 2: In case you are wondering, HP’s release of the 12c has not had a negative impact on my sales. FastFigures is not an emulator but instead takes a fresh and truely smartphone look at calculating on the go. If anything our Top Paid position has actually improved over this time period.]

FastFigures v2: From Good to Great

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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?

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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?

Smart Thinking Destroyed By iPhone Gold Rush

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There are a couple of trends in mobile software development that I don’t understand: 1) the over-focus on iPhone and 2) the over-emphasis on locally-running (native) applications.

iPhone or Die
On point #1, don’t get me wrong. I use an iPhone, it’s a great product and platform and clearly has mental share in the market. But it’s 10% of the smartphone customers. RIM has twice the market share with BlackBerry; Symbian four times that sell in plus a large installed base.

Maybe Yahoo! isn’t the best example, as it’s a consumer-oriented service, but apparently they have stopped developing a BlackBerry app to focus on their iPhone app. Is that a reasonable decision? Maybe. If I’m deciding, though, I look at who my customers are first. Making an enterprise or government sale? Better focus on BlackBerry first. Apple’s App Store isn’t even set up to handle large corporate purchases. Are your customers mainly in Europe? Better focus on Symbian, which is dominating the EU.

What’s a Website?
The second trend that’s bothering me is the plethora of websites pretending to be applications. The most amazing thing about the iPhone is the web browser. And yet all these sites are making native applications that are nothing more than a web site. The data still has to be downloaded to make them work, so it’s not like “offline” has any meaning to them.

Do I really need a Wikipedia app? A Google app? A Netflix app? All they do is connect me back to the web site anyway. Heck, if Twitter had a half-decent interface then I’d use their website instead. I’d much rather see time spent on making these websites really mobile-enabled. For a great example, check out ESPN’s mobile site. They’ve done an incredible job of making it look-and-feel iPhone while keeping it on the web.