App Store Pricing

Kicked off by a great series written by Michael Jurewitz (links below) a new discussion about pricing on the App Store has been spawned. Here’s my take on it, along with a few experiences.

TL;DR If you have an app on the App Store, do yourself and your fellow devs a favor, pause reading now, go to iTunes Connect and raise the price of your app(s) to what you honestly feel you deserve.

I assume there is room for improvement and that you can raise the price, because when you initially set the price you most likely fell into the trap of not being couragous enough to charge what it might be worth. Go for it – in case you are hesitant, just make it an experiment for the next two weeks. I did the same half a year ago, and I’m writing this to encourage you. Here are my findings…

A little bit of background…

All the experiences I’m talking about are based on what happened to iOctocat - GitHub for iOS within the last six months. Up to then it’s been a part time project of mine, which started four years ago and got developed further whenever I found the time and energy in my spare time. When the iPhone 5 came out I made the decision to either put it aside or develop it on a more serious basis, because the state back then was unsatisfying for both parties, customers and me: Important features were lacking and bugs took a long time to get fixed, because when you are a father of two, you got some more important things to do on your evenings and weekends.

Up to then the price was $4 (which was already high compared to the race-to-the-bottom prices we see all over the App Store) and I the income I made from that was far from covering the costs of development and support - and to be honest, somewhere along the way the cost of development neared zero, because I was just lacking the motivation to put more time into it.

So I decided to raise the price to around $10 (I experimented with variations over a couple of weeks) and see what happens: In case it takes off and I can make at least some more money off of it, I’ll start investing my time again - if not, I’ll let it sink, because there does not seem to be a market that allows sustainable development of that kind of thing anyway.

I personally did not really expect what happend, but having read so far, you might already guess the direction it went in…

More income

The amount of units sold stayed nearly the same, at first they dropped off a little – but that does not matter, because even if you double your price and only sell half the amount, you are winning: At least in theory there should be less costs for support and you validated that there still is a market for that kind of product in a higher price range. Of course this depends on the actual units sold, but you get the idea…

Then, after a while the sales started to increase. Not like they went through the roof, but the numbers improved. Don’t get me wrong: I’m not talking about wanting to become rich from the app (and even if I would, I’d be still far from it) - my point is that I wanted to find a price point that allows to develop/run/maintain the app on a sustainable basis, which you just cannot do for 89 cents as an independent developer.

iOctocat - just like most other apps - is an app with a one time fee: You pay it once and get all the updates for free. I thought about introducing other models while working on support for push notifications (that just landed btw), but I decided to keep everything as it is, because at that price point I can offer the additional services without charging an extra amount for push, which would have felt somewhat strange anyways.

Now I cover the costs by charging what I think the app is worth, which gives me the chance to also reinvest the money for things that will improve the customers experience, like services as HockeyApp, development apps like Deploymate or even giving back to people who contribute on GitHub - win win.

More loyal users

Besides the increased value on my side, it also feels like the customers value it more. Of course the perceived value automatically increases when you pay more for something, but first and foremost I am talking about that the customers tend to feel more involved in the app. I don’t think that iOctocat being open source makes it a special case, but now I even get sales and reviews that are like “Wanted to support the project, cheers!” (actual review from the App Store).

The feedback and reviews I get really improved when I increased the price. One factor for that seems to be that the higher price sieves out the people that spontaneously bought it and then were annoyed, that it does not also offer a code editor and the whole file management via Git.

Instead, customers seem to take the time to see whether or not it fits their needs and reach out to me via Twitter or ADN to ask if it supports what they expect. This way I have more contact to (potential) customers and can directly react to feedback and questions. I could go into a seperate discussion about how the current state of the App Store not allowing to answer reviews or offering trials does otherwise make this a problem in the first place, but that’s another topic.

The customers also feel like they have a say - and of course they do. I try to respond as best as I can to feature requests, issues and feedback I get, which brings me to my last point…

More motivation

Now that I can at least justify putting my spare time into the app, I really enjoy it again. I guess a look at the contributions chart on GitHub says it best…

iOctocat GitHub Contributions

There is a lot more coming and I’m really looking forward to dedicate at least one month of full time work to iOctocat this summer. The list of things I want to add and improve is still long - and hacking on the project is fun again.

So were do we go from here?

Well, we cannot sit and wait for Apple (or even expect them) to fix the pricing on the App Store. That ship has sailed and somehow we developers need to educate users and customers that running an app needs a sustainable basis that just cannot be achieved by charging 89 cents. And it already has begun, see the list of selected posts on that topic below, that were prior to this one.

At least from my experience people like to hand you their money if you make their life easier or more fun. This makes for a great conclusion too: Please don’t choose to compete on price, make quality and dedication to your product the main differentiator - your customers and fellow devs will thank you.

Further reading

iPhone app for GitHub

iOctocat

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