Filed under: Analysis / Opinion, App Store
App Store Trends: Prices race to the bottom
Last spring, TUAW asked how much you would pay for iPhone software. Well, it looks like $0.99 and $1.99 are the new $39.99 and $49.99 as far as mobile distribution goes. The App Store bucked the trend of high-priced phone software and now is ratcheting those prices down even further.
Developers are responding to high application supply and dwindling demand by lowering their prices across the board. As the App Store novelty wears off and consumers forget about once-"hot" items, the typical price tag continues dropping. Games that cost $9.99 at launch are almost universally $4.99 and less.
Apps like Koi Pond proved that $0.99 can generate a lot of sales. Short term sales are quickly being eclipsed by long term price drops. We typically get our tips about upcoming price changes directly from developers; 148Apps has introduced a automated price drop detector.
As the App Store continues to evolve from "get rich quick" to make money slowly, devs are working to find that sweet spot -- charging enough to earn a living but not so much that they aren't out-competed.
Based on these downward pricing trends, I expect ad-supported apps to really start taking off soon, the way they are doing in the jailbreak world. If developers can't build their revenue stream from charging higher prices, they may turn to alternative monetizing models instead.
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Reader Comments (Page 1 of 2)
Joe said 4:17PM on 9-26-2008
Blackjack 21 just went to $1.99 (from $4.99)
http://tinyurl.com/5p6482
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Jash Sayani said 6:02AM on 9-27-2008
Yeah. The price-drop page is full of apps. I see only price-drops on AppStore !
Cydney said 2:01PM on 10-22-2008
Hey guys,
I wanted to get in touch with anyone that might be able to help me. I am looking for someone with iPhone and Video display driver programming experience to work on a contract in Salt Lake City Utah. If you are interested or know anyone that is, will you please email me at cwestgate@consultnet.com
Thank you!
Scotty said 4:29PM on 9-26-2008
Erica, if you insist on chewing sour grapes about the app store could you please at least have the journalistic integrity to let everyone know you are one of the loser developers whose app probably hasn't even earned enough money to get a check from Apple?
And in case you haven't heard? In an economy where a bank with nearly half a trillion dollars in assets and deposits can be nationalized and re-sold for a couple billion people might not have pockets full of cash to purchase high priced applications.
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MoonMan said 6:22PM on 9-26-2008
Wow Scotty, you really are a loser.
As Erica does point out, her apps are offered free. But getting past that, I find the article of some interest.
I think what Erica missed in her article, is the potential for temporary price drops, to improve popularity ratings. We have seen this before; Free apps that suddenly become Paid apps, but shoot to the top of the list because of number of downloads.
So, to summarize:
1) Scotty's an asshole
2) once the price drop helps put the app into the top ten, will the price go back up?
Erica Sadun said 4:32PM on 9-26-2008
Hey Scotty, it's a wee bit hard to earn enough money to get a check from Apple when all your App Store applications are free. Lessee, 70% of $0 is still $0. Yup. But thank you for your kind thoughts.
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sonicwind said 4:46PM on 9-26-2008
I was surprised at this. It seemed like Palm and Windows Mobile software is generally more expensive.
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mike said 4:55PM on 9-26-2008
i agree....Erica, get moving plz....you are no good.
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mark said 8:28PM on 9-26-2008
And loser #2 chimes in. Go back to your PSP, junior.
Craig said 4:58PM on 9-26-2008
The downward pricing trend is as perfect for us users as it gets. It will weed out the dozens of me too applications and will leave only the best in a category. A low price does not mean that you will make money - not even slowly - a relevant app that solves a problem, is differentiated and well coded will make the difference. It's not the dwindling demand you reference, that would imply dwindling sales and the opposite is the case, it is the fact that there is just too much same and too much junk out there.
App developers shouldn't just develop app's because they can (I wish I could) but because there's a demand, a need for the app they develop. Add continuous updates and great customer service a you can ensure that users rate the app highly and tell all their iPhone toting friends about it. If all that - and granted some more points - are taken into consideration, a premium price can be charged.
If you don't want to pay that price, no worries, get the cheap or free one, but don't complain about the ads or the fact that it's not supported as the other ones are.
Quality is the answer, not a low price.
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Adam said 4:59PM on 9-26-2008
I can't say I am not surprised. I am yet to pay for an app. I just don't see the need. There are either free apps that have the same functionality or I can find what I need online. I also can't stand not being able to know exactly what I am going to be buying by being able to demo a product. I don't want to waste money on something I am going to try out once. Even for $.99. Call me stingy, though I just don't see the need to waste that dollar.
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blinkcowz182 said 7:00PM on 9-26-2008
The problem with this attitude is if you never pay for any apps, then developers don't feel the need to make good applications because the only way they will sell is for $.99 a pop and quality apps never make it out. We've only just scratched the surface on iPhone app posibilities. As a developer myself, my app is doing just fine and making money listed at $.99 but I honestly feel the quality and work put into my app warrants a higher price. My customers disagree and leave me 1 star reviews calling my app crap and overpriced when they more than likely haven't even tried the app out. It seems funny that I get a majority of 4 and 5 stars and the people complaining about a higher price, give me 1. The problem is Apple has yet to address all the issues with the app store and its quickly becoming a mess of "me too" apps and 14 year old kids with nothing else to do but write "your app blows" reviews.
mentalsticks said 3:25AM on 9-27-2008
@blinkowicz:
That's kind of the stalinist version of capitalism that you're propagating. I always thought that our Free World was based on supply and demand, not on charitizing the supply side (in this case the developers). Would you pay double for your car so that GM *may* develop something stunning one day?
If they (or you) want lots of my money, you better come up with something so good that I will shell out more -- it's not the other way around. If you think your app is worth more than 99c, price it higher and see if I'll still buy it. If I do, you were right and it IS worth more. If I don't, you were wrong. Price is determined by supply and demand, and not by how much work went into it, otherwise every African farmer with a parcel of dried-out soil would fetch a million bucks for the measly quarter-bushel of corn he gets from it.
Frankly I don't give a rat's ass whether it took you 5 minutes or 5 years to build the program. That's your problem. You're the entrepreneur. I'm getting sick and tired of developers and their groupies telling me I shouldn't mind paying top dollar for stuff that I can get for less. Consider it an investment. The need to invest is a fundamental, if maybe less enjoyable, necessity of the capitalistic world order.
Jeff Scott said 5:46PM on 9-26-2008
I agree -- we'll see more and more ad-supported apps. In addition, we'll see more 99 cent toy apps (ala Koi Pond and Sonic Lighter). Guessing most indie game apps will come in around $1.99-$2.99 with the pro ones topping out at $5.99. Of course we could just be seeing the normal price reductions that games for non-mobile platforms see. Xbox 360/PS3 games are almost always 25% off after a few months and get down to 75% off original retail price after about a year.
Perhaps Tapulous has it right in going toward more of a widget app model.
And if the NDA gets lifted I think the Open Source projects will really take off. But I'm not sure that will happen any more.
Cheers,
Jeff (148apps.com)
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Don said 6:22PM on 9-26-2008
@Scotty
You know Scotty, you sound like a real prick. Just saying...
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Josh Anon said 6:39PM on 9-26-2008
Let me throw this out there, based on my own experience and observations. A good chunk of the first round of apps were rushed to get them on to the store for July 11, and the only clue to pricing that people had were from the few apps announced at WWDC. When people tried the apps, they were unhappy with what the 1.0 version provided, perhaps having high expectations (or in a number of cases, would experience some bug in the iPhone OS with the app and blame it on the developer, especially related to the app not running), and they would them claim that app wasn't worth the money. Plus, there were a number of good apps put out for free (or $1) by developers who make money via other means (e.g. the app complements a website, like Facebook), which created the expectation that there can be good apps, and they should be cheap. That's led to all devs reassessing their prices and frequently dropping the price. Truthfully, I still think my app, FlipBook, is worth $10--that's the price of a large pizza--and there is a free trial version so that users can try before they buy. Can anyone convince me that I'd double my sales if it were $5 instead of $10 :) Thoughts?
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fail said 10:18PM on 9-26-2008
happy birthday clown shoes!
operator said 6:48PM on 9-26-2008
It's too early to make any judgements on price of apps or the success of add supported apps. There is something very pure in buying quality. Actually charging for something is a simple business model that works. If you create quality and continue to improve your software, then people will pay.
I have an app that is competing with may offerings and free crap apps. It's doing just fine. Ours is not the get rich quick model, but the model of commitment to a product for the long haul.
Their is a willingness of consumers pay for software that solves problems and is of high quality. That is what makes a vibrant software market with software companies willing to solve customer problems.
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waypoint said 7:25PM on 9-26-2008
I have one of the more expensive apps on the app store and it is selling very well. There is not a free app that does what my app does. I offer very responsive customer support and plan to be here tomorrow.
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Ashwin Narasimhan said 7:46PM on 9-26-2008
If you are so confident, why don't you state what your app is, and give us a link to it.