This is exactly the problem with the app store. People have an idea in their heads of what an app is worth, no matter how much work it took to produce it. Price is completely decoupled from cost and from sales volume. This is like saying a Lamborghini and a Kia should both cost $9999 because they're cars.
Ultimately this is going to lead to a ton of low quality junk in the market. A quick perusal of the top 50 selling apps suggests we're already there.
Frankly the problem with the app store is app discovery (something apple clearly understands). The emphasis is on (a) stuff that makes money, (b) stuff that gets downloaded a lot, (c) stuff that lots of people like. Once you go into niches it's insanely hard to FIND things. And if something looks intriguing but is expensive, there's no free trial mechanism.
If the app store fixed the discovery problem (and supported free trials) I think most of these issues would go away.
There's nothing wrong with a flood of free stuff, much of which is crap, and a ton of good cheap stuff aimed at broad markets ... This is actually a sign of progress.
Agreed. The App ecosystem may soon become a race to the bottom.
On the developer side pricing this kind of consumer software per-device seems like poor marketing. It's unnecessarily reminding every potential customer about incremental cost. It also anchors the price incorrectly: "this software is worth $24.95, but you'll need to pay $49.90 to use it."
An unlimited $49.95 license makes more sense to me. Or a two-device license with upgrades to capture existing users who are willing to make additional upgrades based on sunk costs.
Even if you want, need and can, doesn't mean you should.
Personal purchases are almost never about economy but always about psychology. You buy to feel good afterwards. If high price spoils the pleasure for you then you are better off not buying even if you need, want and can afford.
Similarly low price or other circumstances like service or affiliation of the seller can spoil pleasure for some.
I remember once doing a charity event (training for a triathlon). I thought I had a good relationship with my parent's neighbor. I thought we had interesting conversations about life. He wrote me a tax-deductible check for $10 for my cause. That was the lowest donation out of the many I ended up raising.
Money is weird. It's free speech, in a way. You can express what you want by either paying it or with-holding it.
Did you happen to peek at his checking account on your way out the door? Maybe he just paid his property taxes earlier that afternoon, or his grandkid's tuition. Perhaps he wholeheartedly approved of your fundraiser but didn't feel like liquidating assets that morning to help you finance it.
Also fta:
Since arguing with Bartels, I have discovered Teleport, a newer, free,
Mac-only keyboard-and-mouse sharing app. Its existence made me think,
briefly, that I had won the argument. But Teleport has issues (the mouse
gets stuck on target machines) and I've found it, for me, unworkable.
That said, I kind of agree with underwater the vendor misprices the app: $24.90 per computer, when the software is literally useless without two computers, should be $50 per pair + $24.90 for 3rd, 4th, etc.
If I find a free app that does what I need, that is very nice. However, at a pricepoint of 50$, I have to think twice. Whatever I pay (I am a student) basically goes out of my monthly living allowance, which means out of my food money.
I have around 400$ (300€ really) a month for food and everything else after rent went off, 50$ is a significant part of that. I live several days off of that amount of money.
So in order to be worth spending this much money on an app, it sort of has to be essential. At that pricepoint, for me at least, the question is not "do I feel like shelling out that money that otherwise would have been used for nothing", the question that arises is "is this worth cutting a significant chunk out of my food budget for this month?".
It's a nice thing that many here don't have a problem like this, but generally saying that we just don't pay enough seems to be...arrogant.
For people, the calculation between necessity and price is necessarily different according to what they earn, but a lower price will more likely fall into more people's "impulse buy"-range.
A piece of software might be good and do the right thing, but the question for me (and maybe for the author just as well) is: is it necessary enough to warrant spending this much.
You definitely should think twice, but the $400 monthly figure seems like the wrong comparison. You likely spend most of that on monthly expenses that recur.
I have the same issue of a limited budget. But for some purchases (software, books, furniture, etc.) I consider them on the basis of "does this provide X$ of value to me?"
If the item does provide enough value, then I use money I've set aside for that purpose, and I buy it.
Setting money aside for this sort of one-off value purchase is part of my monthly budget.
(Of course, I also have to weigh a $50 app purchase against other uses for my saved money.)
edited to add: I'm not saying you should be buying $50 apps of course, that is a lot of money on your budget. I'm just saying the reference point should be long term rather than monthly.
The app in question is free for home use; but paid for corporate. Corporate customers have an unbelievably different concept of "expensive" from you and me.
I experimented with different prices for a corporate product, and found charging too little or too much reduced profits. (Sadly, this experiment seriously irritated at least one developer. Who knows, maybe a cheaper price would have lead to greater volume in the long-term.) I would love to price by customer (price discrimination), so corporates pay what suits them, and individual developers/small businesses pay what's reasonable for them. The standard approach is to have extra features in the "Enterprise" version, but I haven't found a way to make this work for me. Anyway... I'd rather everyone enjoy all features; not have version-config complexity; and get feedback/bug reports from everyone.
{rant: "Enterprise customers are an unbelievable pain. They take weeks to answer the simplest questions, they misunderstand, miscommunicate, make unfathomable mistakes, they have to go through Legal, Licensing, Management. And they tend to be discourteous, seemingly without realizing it. Their money - and they will spend more than you could realistically imagine - isn't worth it."}
And if you think the neterprise is bad, just try selling into the government channel. Jeebus frak, those guys are hideously cheap and supremely demanding. If it weren't for scandalously longterm lock-in due to high switching costs -- when everything is reviewed forever, almost nothing ever changes, including product selections -- no one would sell to the public sector EVER.
Just buy the app if you like it. Put your money where your mouth is.
I believe, that our pricing model was just the trigger for him to reflect on software pricing in general. It certainly isn't his everyday purchase decisioning scheme. :)
Pricing really is a very tricky thing. Especially for software where there is no cost of distribution. Users have to realize that there are a lot more factors that need to be taken into account than just development or delivery cost.
No matter what price ($0.99 - $9.99) I set, I make the same gross revenue. Reviews tend to be nicer when people buy it for $2.99 - $4.99.
As a content producer who works closely with engineers, I can vouch that good content requires no less training and effort than good apps. A novel-length ebook probably takes more time and effort to produce (for any level of quality) than an app. I'd imagine an album of music requires even more. Yet we we never hear stories about perfect price elasticity in content.
I'm genuinely curious if price elasticity holds true in content and, if so, why we haven't heard as much about it.
In spite of this my intuition tells me to price it at $.99 when Apple features it, and between $1.99 and $2.99 when people are hunting for it.
1. Knowledge: Part of it comes from the bike-shed phenomenon - I know how to clean, I don't know how to apply knock-down texture. So the more I know about something, the less I want to pay for it and consequently, the tougher I bargain. My solution to get a better deal is to simply learn more. I call up contractor A with absolutely no knowledge about how to fix the problem or what costs to expect. I get some idea (and learn industry-wide terminology) and then call contractor B. I use some of my new-found knowledge to show I'm not absolutely clueless. By the time I've called contractor E, I know more about my problem than anyone else, plus I have a good idea of the expected costs.
2. Past relationship: I only go through lots of contractors when I don't already have a good relationship with an existing one. I didn't have to get quotes from five tile installers because I did that three years ago and found a good guy to install tiles at my old house. This time I simply called him up and he gave me a reasonable quote. You could have a past relationship with the fine-suit tailor and don't need to negotiate 50c each time because you know he is already giving you a good deal.
3. Quality: In the end, you pay for quality at a given price point. I don't mind the cleaners missing a spot but I do mind the tile installer messing up a center tile. You don't want to negotiate too hard with the fine-suit tailor because a 1% risk of damaging a $400 suit due to cutting corners is a lot more expensive than 1% risk of damaging a $2 pen for the same reason.
4. Fungibility: All $2 Bic-black pens are same, not all $400 suits are. Same with cleaners vs. tile installers or painters. You do not want to use price as the only negotiation basis when advanced levels of workmanship is involved. Price can be the primary basis when it comes to common objects or services, available in many places.
5. Continued relationship: I don't much care if I buy another $2 pen from the same vendor in the future because there are many good stationery vendors but I'm not going to find another tailor, painter, or tile installer as easily.
6. Negative perception: I don't want higher cost contractors to think I'm a cheapskate who wants a $5 discount on a $8k project because then they will treat me like a cheapskate and will make decisions based primarily on cost-saving instead of the overall value. I don't want the tailor to use cheaper thread or tile-installer to use less thinset just to lower my immediate project cost because we all know this will cost me more in the long run. I don't mind what a stationery vendor does as long as he sells me the cheapest pen in original packaging.
My overall point is that it's not always irrational to find a better deal for cheaper objects than more expensive services.
The classic idea of how easy it is to criticize someone's work without having a full appreciation of how hard it is to do the work (because he does not do it himself)
It is one thing to write about a startup, another thing to build a product/build a customer base.
the correct price is the one the buyer and seller both freely agree to and come away happy with. simple as that. there are no other factors.
if the seller is selling too low and cant paynhis staff, thats his mis management. not something to talk about publicly. if they are succesfully selling the app at a high price and people buy it, and the seller treats his staff liks rock stars thats fine. nobody ripped anyone occ. there is nomneed to justify price, other than closing sales.
go watch carpet negotiations in morocco, i saw a guy pay 3000 usd for a nice rug, and a student pay 50 usd for the same size and type lof rig, same store. (all hand made so cant say they were the same). so what was the rug worth? to rich guy it was worth 3k because he went to morocco and got it himself, blah blah. to the student it was worth it because he negotiated the sales guy down from 5000 usd to 50 usd. in both cases, moreso in the latter, the salesman negotiated as if it were an art form, and in the end, made the point thAt once the parties avree on a price and close the deal there are no regrets. he wss happy he sold one rug for a huge amount of cash, and happy to sell one. henaply to a student who would appreciate it more. in both cases he made money, And we have. o ide what he true production cost is.
Its called scalping, or gouging, or blackmail or whatever. Consider buying a car, or health care, or insurance, or gas, or cable service from your monopolistic bloodsucking local cable king.
Makes me want to go live in a cave.
The response from the vendor (about it being hard to make money to pay his developers when selling a fairly niche tool) resonates with me, though. I built a fairly specific-use tool on the side last year and started selling it on the Mac App Store. I found that prices weren't very elastic, and I had to drop the price down to $2 to sell very many copies.
Even then, people think I'm some big company selling this software, when the revenue I generate from it isn't nearly enough to pay my bills, much less hire others to work on it. Even last year when I spent a while in the top 5 in dev tools, I wasn't netting more than $25 per day.
Ultimately, I think the app store concept is really cool and will be a net positive in the long run, but I wonder how many useful tools will fall through the cracks because buyers have been conditioned to think that a $5 app is "expensive", even though it isn't nearly enough to support some tools.
Spending $50 saves me a lot of time and frustration. Also, it is much cheaper than writing the software myself (which I was seriously considering). I'm more than happy to pay that.
I also hope that because the software is well priced, the company won't feel a need to diverge into multiple half-baked products. I've seen that happen to Ironic Software (Yep, and afterwards Leap, Deep, Fresh), I'm seeing it happen to IcyBlaze (iDocument, and then Sparkbox). I'd much rather see a company develop ONE well-supported and polished app than diverge into multiple bug-ridden ones.
> I also hope that [..] the company won't feel a need to diverge into multiple half-baked products.
You bet. Since 1998, we have a small set of well-maintained software products. ShareMouse is not a quick shot. We are here for the long run.
Why?
ssh othermachine 'pbpaste' | pbcopy
I'm convinced this is a significant insight. Most consumers are trained to assume that they're always buying from Megacorp and that cheating and complaining is perfectly valid behavior.
Back when I was landlording, I had a HUD tenant who was a total pain - until she found out that her rent minus my mortgage was about twenty bucks a month. She had just assumed that as a property owner, I was rolling in cash. After that, she was pretty nice.
There is apparent oversupply of app developers who seem to think they will make money but the evidence is very few will build sustainable businesses while the rest just help Apple out by adding diversity.
I've had apps in the iPad "what's hot" music app list many times but they're still only bringing chicken scratch compared to what I could have made consulting instead. The handful of home runs you hear about obscure the fact that for 99% of us the best way to make money in the app store is to charge by the hour for writing them for someone else.
Do you think it's ethical to exclude lower-income consumers just because it's more convenient for you? If you really believe in what you're doing, wouldn't you want it to be accessible to as many people as possible?
I don't think this is a real issue. Small developers love their apps and want people to have them, but are seldom filthy rich.
The equivalent of luxury goods are the crappy EA Tetris apps that people buy on the App Store for the name alone, and I doubt anyone involved in their production believes in what they do.
On the other hand, I really miss student discounts on the Mac App Store :(
ethics only come in when we start talking serious quality of life issues, like healthcare and food.... otherwise its all branding and marketing.
I borrowed a friend's iPhone a while ago, and I could not even find a decent free IRC client, I'm sure there might be one somewhere, but most were at best badly crippled. It was very depressing.
And I thought we dealt with the whole "it costs too much to build this software" issue ages ago, how much did it cost to build most open source projects? And who cares? The point is that people has good enough reasons to build software without needing to charge directly for it.
Low priced apps imply loads of users to make money.
The people whose price sensitivity falls close to your low price are more likely to be cheapskates or find your software marginally useful. They are far more likely to complain and require support.
God forbid you are selling at a one-time-fee (which is why I think the current mobile development land-grab will flame out and transform into services-on-your-phone). You are going to be expected to provide support forever, at the drop of a hat, for any version of your application. Figure out a way to get recurring.
If you go cheap/free, you monetize with ads (often ineffective and always annoying to your users) or by spying on your users. I doubt many of us want to do the latter (Although, sadly, enough of us might to knock out the ones who don't. Race to the bottom!)
I now want to pay good money for the apps I use: I want the developer(s) to eat and drive nice cars. I want them around and in the game for bugs, integration changes and general support. I want them to not feel any pressure to jam new features in just to get another rev out the door for the upgrade money. Effectively, I want to pay them a lot of money for their software, because it is often incredibly valuable to me, I just want to do it on a payment plan where I can opt out if I no longer find the software useful.
I think that model, in most cases, leads to better software than either the open source model, the one-time-fee model and the freemium model.
You're other option is to become a pirate (ARRhhhhh). Here in NYC, piracy seems to be such a pandemic that they're running Ad campaigns for people to report software piracy at small businesses (https://reporting.bsa.org/r/report/add.aspx?src=us).
Here's a business model I've been thinking of that I hope developers will adopt. I call it “Entrepreneur lay-a-way”. Basically if someone is a-self described entrepreneur you give them a full 1-year license to your software for free. At the end of the 1 year you charge that users credit card for the full license plus interest. The thought being if the entrepreneur is successful, in 1 year he'll be able to afford your software with interest. The entrepreneur benefits deferring payment for a year, and can use that money for other purposes (marketing, etc). He can then utilize you're wonderful tool to create value for his users and the world. It's a win-win all around.
Or maybe this could all be tied to a public profile like AngelList or Facebook, to ensure people aren't gaming the system. I'm just theorizing at this point...
Disclaimer: haven't used BizSpark personally
The content is correct in that pricing apps is complicated and there are factors that people don't often consider. And that support costs should be a factor.
But nowhere does it prove the should be paying more. Maybe the developers could charge more, but it doesn't even prove they should do that. It just opens up the possibility.
And I think that ShareMouse is overpriced. $25 per computer? And his reason is that he wants to pay his developers well? That's a stupid reason. He should be looking for market equilibrium instead, then. He should be looking for the point where he makes the most money, instead of just picking a price and sticking to it. Even in a professional setup I would choose Synergy over his price, despite the manual setup (took me like 10 minutes last time) and lack of file sharing (the drives are network shared anyhow in any situation I've been in).
Also, if the claims of his page are true, then support cost should be nearly nil. He claims the thing automatically sets itself up, including monitor configuration. But if it fails to do that and you need support, that's even worse than not having it be automatic in the first place. If he's really having so many support tickets about it, it's not worth the money anyhow.
Don't hesitate and make a suggestion. We have everything from "it should be free" to "It works so well, I'd paid $100" so far.
If it is the case that the pricing for this product is highly / almost completely elastic then a high price makes perfect sense. Just look at Apple's pricing strategies.
[Edit] fix grammar
There's a lot that goes into pricing, and most of it is not obvious at all.
>But all good things come to an end. Especially the free ones.
Why? For the past few years my desktop has been running very successfully on Open Source software. (With some blobs like flash that are just needed for legacy compatibility) I don't see that changing in the near or far future.
> I have had to stop using Synergy. Setting up this free, open-source app is a black art,
I remember when I was trying synergy. I opened the manual and thought "that is quite complicated" and quickly found quicksynergy (there are probably other equally fit GUIs). It's a bit counter intuitive what IPs to put where but after that it's just putting an IP or hostname in on each PC and click a button... That's much less "black magic" and didn't take me more than 5 minutes...
> and when CBS replaced my PC with a MacBook, giving me two-Mac setup (which, I admit, is extravagant), I couldn't get Synergy to work anymore.
So what was the error?
Of course that was not the point of the article. But he spent so much time explaining how he wouldn't buy the other application because it was too expensive I wondered why he didn't take that time to research why synergy didn't work or what GUI to use to make setting it up easy.
Please check out http://www.keyboard-and-mouse-sharing.com/synergy-alternativ... for more info.
At the core his point strikes me as inane - that he won't spend a tiny fraction of the cost of his other equipment to solve a problem, that he clearly underprices his time - but still, the pricing strategy here sounds flawed.
I use Synergy, too; I'm all Windows so Mac-compatibility isn't an issue, but it's a nice program. Note nice though. Not deal-breaker, not revolutionary, not transformative. Could I be persuaded to pay for a better version? Sure, but only so much. Elasticity of demand as highlighted in the article only goes so far; ultimately there will be a ceiling price above which your revenue falls.
It's a gadget, not a core tool, and (IMHO) needs to be priced at the 'impulse buy' level. $25 / machine is enough to make people think (even if it's a tiny fraction of total system cost) and you're suddenly out of impulse and into avoidance.
And this is ABSOLUTELY intentional.
We do NOT want impulse purchases. We don't believe that it is ethical to lure/seduce users to rush to their credit cards.
We don't believe that it is for any good if people buy something and then perhaps realize that they don't need it, are not able to use it properly and waste everybody's time in support and finally perhaps request a refund and are left with an unhappy experience.
No thanks.
We rather want users to be convinced. The software itself shall stand out and trigger the purchase decision. Not the price tag and not any sales tactics.
I believe, that there are cultural differences between the US and Europe regarding sales approaches but we are just fine with that.
Try the software. Become confident with it. Check prices. Review your options. Try other programs. Be back and we welcome you.
He said that he's particularly proud of those pieces and that price pretty much guarantees that whoever buys it will take care of it. They'll put it in a proper frame and display it somewhere where it can be appreciated. As opposed to the less expensive pieces which may go in a sleeve and put on a shelf.
On the one hand, my notion of how much software should cost says $50 for a Synergy clone is insanely expensive. But if I think of the benefit received, I've got to say that a Synergy clone which Just Works probably is easily worth $50.
people build their computer system and habits around Synergy until they get to its nasty bugs.
then they readily move to the better ShareMouse.
Similarly, most people start out with a small and cheap car. Then, for retirement, they buy a Mercedes.
-> First, you are hinged on, then you strive for the better.
The article itself doesn't really take that kind of position, it's just a linkbaity title, but gearing up for some moralizing annoyed me.
And it made me read the whole thing, so I guess the joke's on me and I should stop moralizing.
I'd love to see the data backing this claim up. That really intrigues me.
Additionally, as said in the article, the support load increases and the "quality" of support inquiries is affected by the app price.
I really wanted to say something pithy and wise here, but this subject truly confounds me. I have many types of product out there: websites, apps, and e-books. I charge nothing for websites, nothing for apps, and a good bit for my e-books.
I have to say as a content producer, I'm much happier selling ten copies of my book about being a ScrumMaster for fifty bucks each (shameless plug: http://tiny-giant-books.com/scrummaster.htm ) than I am having 20K people visit my wife's recipe site each month where I might make 40 bucks from ads. (http://hamburger-casserole-recipes.com/) Of course, she feels much differently about this!
I've been reading about startups and pricing for some time. It's my conclusion, for what it's worth, that you have to experiment and figure out this stuff as you go along. It wouldn't surprise me if different people with the same kinds of content have completely different pricing models. Looks to me like the pricing model is based more on how the usage scenario fits into a particular user demographic than the type of product you are selling (apps, content, books, services, etc.) The average usage scenario of a technical person wanting greater efficiency from his expensive set of computers is completely different than somebody looking for a list of instructions on how to prepare tater tot casserole. Or somebody wanting to share a random 140-character quip.