Monday, April 1, 2013 [Tweets] [Favorites]

Understanding App Store Pricing

Michael Jurewitz:

In fact, if we take a look at the percentages, apps on the Top Grossing list are, on average, 294% more expensive than apps on the Top Paid list. Meanwhile, the median price of an app on the Top Grossing list (again, the middle of the dataset) is 329% more expensive than the Top Paid list.

Part 2:

If you create a single serving app that mostly solves an occasional need then sure, I’ll give you a cup of coffee’s worth of cash for it. But if you fundamentally change my life, how I work, or make it easier for me to get more done with less effort, I will pay you truckloads of cash. Most users are exactly the same. Solve a big need for them in a simple, delightful, and thoughtful way and theywill give you money. Cheap apps might get downloads, but higher priced apps pay the bills.

Part 3:

As a simple thought experiment, I want you to think about the price of your app right now. Just think about it. Now think about how many people bought your app last week. If you doubled the price of your app, and you end up losing less than 50% of your buyers, you just made money. Think about that for a moment. If the percentage change in your price is greater than the percentage change in units sold, you just made money.

As it turns out there are a lot of other fringe benefits from higher prices. Fewer customers means lower supports costs. Lower support costs means more revenue going toward development and future products.

Part 4:

If you want to make money and be a lasting part of this community, find hard problems to solveand solve them. Be a domain expert in something. Solving hard problems not only helps the people who have these hard problems, it also creates a barrier to entry for the next person.

Part 5:

And yet, despite their looks they were typically very featureful and commanded an average selling price of $54.79. This was reassuring insofar as it made it clear we had a more premium market, operating at a sustainable price, and likely in desire of a well organized, easy to use tool. So with that in mind we set out to try Kaleidoscope 2 at two different price points — an initial launch at $34.99 and an eventual full price of $69.99.

1 Comment

[...] Adamson responds to Michael Jurewitz and Lex Friedman: So what’s the proper response? Obviously: don’t write apps for sale [...]

Stay up-to-date by subscribing to the Comments RSS Feed for this post.

Leave a Comment