There are an awful lot of terrific free and inexpensive apps available for downloading from the AppStore and after reading a few recent blogs on pricing at the AppStore, I'm beginning to wonder why that is.
Many devs price their apps at the bottom of the money scale thinking the cheaper it is, the more they'll sell. Big sales numbers can move apps to the top of the most-popular list and that in turns sell even more. It all seems logical enough to me, but Andy Finell's post on the economics of app pricing on his Safe from the Losing Fight blog certainly hits on reality's bottom line.
Selling apps for short money just doesn't make sense, Finell says. If those apps don't float into the top 100 sales list, the devs are pretty much looking at standing in the line at the local soup kitchen with the rest of the outsiders. Apple isn't making much money on the apps that fall below the magic top-100 line, either. Meanwhile, consumers are becoming accustomed — even trained — to pay as little as possible for anything other than super high-quality apps. Where's the win-win?
There are a couple of solutions for developers. The first is to raise prices. It's not too late to do that, but time is running out. Some free to $9.99 apps really knock me out because I get a high-quality app for so little money. There are quite a few apps that I would even pay more for, but heck, if I can get good stuff cheap, I'm not going to argue against it.
The second option, according to Fred Wilson, who writes the A VC blog is for devs to "tease" consumers with a free or low-price product and once consumers actually see how good it is, they'll be willing to fork over for a more expensive premium version.
A developer would be much better off with 196 apps per day being downloaded with 180 of them free and 16 of them paid than 196 of them at $0.99 because there is no 'decision cost' on the free apps.
That's the strategy of Zynga — one of the companies in Wilson's portfolio — has adopted with Live Poker, which we reviewed here recently. Reviewer George Papas gave the free version one of our rare 10/10 scores. I'm sure avid poker players will bypass the free app and go straight to the $9.99 premium version based on that review alone.
I'm not a dev, but Finell and Wilson's perspectives make sense to me. But more important from the customer's point of view is that if a company consistently delivers a quality product, I'm more likely to continue buying from them because I'll know what I'm getting before I lay my money down. Meanwhile, I'll keep buying the apps that are top of charts because that's the only thing I have to go on.