Forget 99 cent smartphone apps, let's be fair to developers too

Forget 99 cent smartphone apps, let's be fair to developers too

Summary: I wrote about the BlackBerry App World minimum pricing plan back in March as RIM stated the minimum cost for a priced, not free, application would be $2.99. As I said then and still say today, 99 cent apps don't give most developers what they deserve for creating the application and is a bit ridiculous for consumers to use as a standard for mobile application pricing. Microsoft is holding some developer events this week in Redmond and has encourage developers to follow a strategy similar to RIM where apps are priced more reasonably in line with what is fair to both the developer and the consumer. It doesn't look like Microsoft will dictate this minimum price level and will let the market decide, but I sure hope we don't end up with thousands of 99 cent apps.

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I wrote about the BlackBerry App World minimum pricing plan back in March as RIM stated the minimum cost for a priced, not free, application would be $2.99. As I said then and still say today, 99 cent apps don't give most developers what they deserve for creating the application and is a bit ridiculous for consumers to use as a standard for mobile application pricing. Microsoft is holding some developer events this week in Redmond and has encourage developers to follow a strategy similar to RIM where apps are priced more reasonably in line with what is fair to both the developer and the consumer. It doesn't look like Microsoft will dictate this minimum price level and will let the market decide, but I sure hope we don't end up with thousands of 99 cent apps.

As Loke Uei, Microsoft Mobile Developer Experience team member, stated:

It's up to you play your pricing, but we would definitely want to promote that you make more money selling applications than selling your application in a dollar store.

In the past it was typical to pay $10 to $20 for a Windows Mobile application and in all honesty I always felt that I easily received that value back out of the game or application and never questioned those prices. Apple lowered the bar for mobile application pricing and IMHO went way too far with low pricing. If you look at the 65,000+ applications in the App Store you will find thousands and thousands of pieces of crap and now the store is extremely tiresome to browse through to try to find good apps. It isn't always great to have 500 tip calculators and hopefully the upcoming Windows Marketplace for Mobile can stay a bit cleaner and leaner with high quality applications priced fairly for both the consumer and the developer.

Topics: Software Development, Mobility, Smartphones

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21 comments
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  • Price floors don't help anyone

    First, setting a minimum price is a price floor. Basic microeconomics
    teaches that this lowers demand and raises supply, generating an
    inefficient surplus. I don't see how that's good.

    Second, you seem to imply in this article that $0.99 apps are Apple's
    fault. They are not. They are the market's "fault". And no one is getting
    shafted (unless they are choosing to shaft themselves) because
    developers choose their price. So no there's nothing unfair about it.
    jerkob1000
    • Agreed

      Unlike traditional media, 100% of the cost of the app is in the software programming. After that, in the app store, there are no carrying costs (i.e. floor space, inventory, manufacturing, advertising etc.) except maybe ongoing support which comes in the form of future releases. And even that is not "required" if a developer wants to throw something into the app store then forget about it. Therefore, whether a developer sells 1 at $99 or 100 at $.99 he see the same amount of profit and the same "overhead". So, a developer merely has to pick the price point that maximizes their return, for many apps that will be $.99. Truly worthy apps that require more "support" will be able to command a higher price. Take Rolando, a kickin game at a "fair" price.

      Is that "fair" well I don't know. The system would seem to be more geared to reward genuine talent. I.e. some college student spends a year making the "game of the year" that sells 2 million apps and he/she walks away a millionaire. And reward garbage, but maybe not as equally. I.e for e few days work the "fart app" make $50k in sales. The ones it would seem to hurt would be the traditional media folks who are used to spending several hundred thousand on a game, churning out essentially the same game with new skins, then asking $50 per sale, and getting it.

      Take TomTom for example. At $99 I am EXPECTING the best damn navigation app in the history of the iPhone if I dropped that kind of money on an it, and I better really REALLY "need" it. IMHO they are going to sell very few, their name alone is not going to support that price point. At a lesser price I would be inclined to buy it, even if I wasn't sure I would "need it" just to have it for the day the "want" arises. I would certainly be more inclined to but one of the "cheaper" navigation apps on the chance that they met my needs adequately.

      It's a new ballgame, the software producers must adapt or leave the game.
      oncall
      • Fair? Really?

        It's called capitalism, which any basic economics course would demonstrate is the best system yet to create the highest standard of living in the world. A free market will always establish the "fairest" price.

        Putting any kind of floor (even 99 cents) is harmful both to the consumer and supplier. Pricing should be based on value to the consumer which maximizes revenue (i.e., profit), not on the cost to the supplier. Hopefully, the cost will be less than the value or there is no reason for the app to be developed in the first place. In other words, even the cheapest apps are making money. Artificially raising the price of an app reduces the number of consumers will necessarily lower its revenue (i.e., profit) to the developer.

        Do RIM and MS really want to be known as the platform with the most expensive apps, especially when the same apps at market-driven prices are cheaper on the rival iPhone? They would be smarter by eliminating the floor altogether and stop making promises to developers they can't keep.
        rynning
        • I think...

          RIM and MS assume that by promising a higher floor price they will attract developers. Of course it probably will but it will also repel customers. There has to be some kind of floor though. In actuality the "floor" is $0.00 (free) of which there are many apps but above that there needs to be a "starting point", billing credit cards and keeping the servers humming and accounting does have some cost and Apple has probably said "It's $.99 or don't ask us to collect it at all and you can give it away for free." Could Apple make money off of $0.25 apps? (remember Apple only keeps like 30%) I don't know, but there is a point at which the cost of collection exceeds the return.
          oncall
          • Right

            Probably the only reason Apple set the 99 cent floor is because they'd lose money on processing the transaction if they make less than 30 cents. Makes sense.
            rynning
  • RE: Forget 99 cent smartphone apps, let's be fair to developers too

    99 cents was appropriate when it was fart, burp and beer apps. $2.99 is a good starting point for a worthy app though. Maybe others are simply making a statement about quality and usefulness with this pricing floor. In the end, I don?t think it matters to the consumer. I never bought a 99 cent app, but I have paid $20 for some killer apps that have saved me much more in productivity gains in the first couple of days of use.
    djmik
  • If flashlights and tip calculators are so trivial to program

    that there are hundreds or thousands of unique applications available, then perhaps we shouldn't be spending more than $.99 for them (in fact most are free in the Android market).

    You will notice that the programs that are more difficult to code and service and give the best value to the customer are the more expensive ones, like office apps that read MS formats and traffic GPS software. Action games are higher priced than solitaire games. Apps that expand the phone's functionality are more expensive than programs that mimic existing functionality. That is how it should be.
    Michael Kelly
  • All phone apps should be on UTorrent for free

    No reason developers or the company they work for should get paid. They are just trying to preserve a dead business model. They like RIAA and the MPAA should be driven out of business. I say boycott them!!!
    No_Ax_to_Grind
    • Repeal the 13th Amendment

      Yes but we can have the developers work for free until we reintroduce involuntary (oops I meant to say indentured we must hide the truth) servitude.
      Richardbz
      • I was under the assumption....

        That No Ax was being sarcastic. You were being sarcastic were you not No Ax? You cannot seriously be naive enough to believe the folks that spam all over RIAA and DRM discussions that "Because the technology exists to distribute software/music/books/movies for free (even if it's clearly illegal) then no one should have to pay for anything. And everyone will live happily ever after because developers will gladly continue to work and provide us with new music/movies/books/etc. for free".
        oncall
  • RE: Forget 99 cent smartphone apps, let's be fair to developers too

    As noted above, at Apple's store, the developers set the
    price.

    Having a $2.99 minimum a) will do nothing in terms of
    helping consumers find the app they want if there are still
    thousands of apps, b) will mean some apps will not sell
    because consumers will not think them worth $2.99, c)
    will encourage developers into overloading the interfaces with
    complexities, i.e, make worse apps, because the minimum
    pricing means they have meet a threshold of consumer
    expectation, and d) will eliminate the possibility of a free introductory
    version and paid-for fully-functioning version of an app,
    ignoring what is essentially the model for the
    software business.
    DannyO_0x98
  • RE: Forget 99 cent smartphone apps, let's be fair to developers too

    This is an absolutely ridiculous argument. Why place
    artificial limitations on pricing? Why not let the
    market decide? If you want to charge $30 for your app,
    why shouldn't someone else be able to undercut your
    price? If your app is truly worth more, people will be
    happy to pay that extra price. In the end, I think
    you'll find most apps that sell for 99 cents are priced
    appropriately. In fact, in many cases, the developer
    sells more units and thereby collects more revenue
    overall by having lower prices. Who are you to dictate
    what these prices should be?
    techconc
    • Since You Asked

      I'm in agreement with your general points.

      As to your last question: they are the shopkeepers and within their
      rights to say what they will and will not put on their shelves.

      More to the point, I think they see the device / developer / consumer
      mojo has moved to or is moving towards the iPhone and are trying to
      find ways to translate talking points and real issues at the App Store
      ("$0.99 are killing my $4.99 app" "People are gaming the listings"
      "Ratings are distorted by bogus astroturfing" "Apple is arbitrary about
      rejections and will not in an up-front unambiguous way say what is
      and isn't allowed.") into a developer redirection of effort.

      I also suspect they ran some numbers and think the margin on the
      sub 2.99 transaction, after deducting storage, bandwidth, credit card
      fees, and per-transaction accounting and billing costs is either too low
      or negative.

      I'm sure minimum pricing looks like win/win to an MBA-guy.
      DannyO_0x98
      • more on that...

        [i]" I think they see the device / developer /
        consumer mojo has moved to or is moving towards
        the iPhone and are trying to find ways to
        translate talking points and real issues at the
        App Store ("$0.99 are killing my $4.99 app"
        "[/i]

        But, that's just the point. If someone is able
        to successfully exist selling a simple app for
        99 cents, then that's what the market has
        accepted. Both the buyer and seller are happy
        with this price point. If you think there will
        be a perception that the $4.99 version of the
        same app that sells on Windows Mobile will
        somehow be perceived as better because it costs
        more, you're mistaken. This will only serve to
        make the Windows Mobile store seem more
        expensive and less worthwhile overall.

        [i] "People are gaming the listings"
        "Ratings are distorted by bogus
        astroturfing"[/i]

        This was an issue initially, but Apple solved
        that by only allowing people who purchased the
        app to comment on it. If someone wants to buy
        a thousand copies to say something good or bad,
        then I suppose they've paid for that right.
        Developers won't do this because 30% of the
        money goes to Apple.

        [i]"Apple is arbitrary about rejections and
        will not in an up-front unambiguous way say
        what is and isn't allowed.") into a developer
        redirection of effort."[/i]

        Yes, this would seem to be the one remaining
        issue. Of course, when you're pioneering a new
        concept, it's sort of expected that you're
        going to stumble somewhere along the way. I'm
        not sure the final word has been written on
        this topic yet.

        Anyway, as the other poster below "oncall" has
        written, 99 cents is a magical price point
        where people are very willing to take a chance
        on a marginal product. In short, if the
        product stinks, there's no real harm done.
        Once you're at a couple dollars, people are far
        less likely to take that chance. If your
        product is truly worth that much, then you
        should have no trouble selling it for that
        price. For example, Tom-Tom's app is $100 and
        I suspect it will sell quite well (relatively
        speaking).
        techconc
    • I can tell you this

      At $.99 I have bought a TON of apps on the thought "Well WTF even if it sucks at least I'll be amused for a few minutes". Hell, if such a game holds my interest for more than an hour that's s damn good deal IMHO. At a higher price point my expectations will be higher and my inclination to buy decreased.
      oncall
  • Pay "premium" price for "junk"?

    Developers, garage bands, and DJs have something in common; they all think they are the best thing since slice bread.
    There are very few gifted developers and musicians. To those I do and will support by paying for their products. To everyone else; I can do just as bad FOR FREE!
    kd5auq
  • RE: Forget 99 cent smartphone apps, let's be fair to developers too

    The real issue here, is the marketing of downloadable
    apps. Once apps become a "hit", that 99 cents is more
    than enough. The free-pay-for-extra has proven to be
    the best way to the $$$ ... look at the big winners.

    The AppStore/Android Market/MS blah/BB App World are
    not for marketing apps, they are app repositories.

    Developers looking to cash in should re-think their
    marketing strategies.
    trippytom
  • RE: Forget 99 cent smartphone apps, let's be fair to developers too

    The problem with any regulation on pricing is it eventually become a monopoly and a barrier to competition in order to keep the prices high. A good example are taxi cab boards. The best thing is to use the free market. It will take some perseverance that is one find something else to do and wait for the eventual market shake out as developers realize .99 apps will not pay the bill. I had the same problem on Ebay it is how I became successful.
    Richardbz
  • RE: Forget 99 cent smartphone apps, let's be fair to developers too

    Amen!!!
    keithcrozier
  • RE: Forget 99 cent smartphone apps, let's be fair to developers too

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    papayaone