The App Store has been open for some time now, and it's become clear that we're at the dawn of a new market. Right now, it definitely has a "Wild West" feel to it. I mean there are tons of questions, and not nearly as many answers, not yet any way. People have started blogging about their experiences though, and it's useful to read these, as they cast some light onto the current state of the things.
One of the main concerns right now, is pricing vs. exposure and subsequent sales. Some personal experiences are starting to fill in the details, but the picture is still mixed.
The App Store seems to be really "hit driven" at least at first blush. Being featured, and very aggressive pricing, seem to be the paths that lead to ongoing success, by some accounts anyway.
In Craig Hockenberry's recent post,
Ringtone Apps, (he created the really nice Twitterific app, both on the desktop and the iPhone at
IconFactory, among other things), he talks about how it seems that the only successful App Store apps are "ringtone apps": those that are sold for 99 cents; and how it's nearly impossible to really fund iPhone app development at this pricing level.
"As an iPhone developer who’s been in the App Store since its launch, I’m starting to see a trend that concerns me: developers are lowering prices to the lowest possible level in order to get favorable placement in iTunes. This proliferation of 99¢ “ringtone apps” is affecting our product development."
I would tend to agree. I mean if you think of what your time is worth as a developer, now many hours it takes to create an iPhone app of any substance (as I've found out, this is far from trivial), and the price at which you must sell an application, the numbers have a hard time adding up in favor of the developer. This leads to a situation where developers don't spend "real" time on apps, but instead do "drive by" apps (or ringtone apps as Craig calls them) that take far less time and effort to produce.
What happens, if the pricing levels are set so low, to those who want to invest a great deal of time into their apps, and need to charge more for them to make up for the development cost? Can they succeed?
Well according to the source listed in this TUAW post,
Stats: 99 cent apps aren't selling any better, pricing your app at 99 cents DOESN'T increase sales. The data in the post they refer to is interesting. But I agree with Gruber,
when he says:
"grouping all apps that cost more than 99 cents together spoils the whole thing."
It's interesting, but far less enlightening than it could have been. It fails to show how different prices ABOVE 99 cents effect sales. What's the "sweet spot" for app pricing, if it's not 99 cents? Is there one? Is it largely dependent on the app?
The current problem with the store, as I see it anyway, is that it is the ONLY real source for apps right now. It's the only way to distribute, buy and sell iPhone apps. It's also for the most part, the only way to get real exposure for apps. There are a few complementary ways I suppose, Daring Fireball ads for one, which seem to have helped apps like
Classics and "Where To?". John Casasanta
blogged about what tap tap tap did to get exposure for their apps at the beginning. Remember though, that when he posted this, there were far fewer apps and far less competition. Still, it's interesting to see what worked and didn't.
But for most people, it's the App Store or nothing, and honestly, it currently doesn't do a great job of giving non-featured apps exposure yet.
This is backed up by the experiences of David Barnard (he doesn't say in his post, but I think it's David) at AppCubby who says:
"If I can find a cost effective way to market my apps, I would be willing to borrow money for marketing, but so far the strategy that has made the most fiscal sense is to spend money on development and hope for good placement with Apple and the press."
in his
Financial Realities of the App Store post.
Honestly though, I've been doing indie Mac development for a long time now, and the Mac market isn't much different in this regard, success can be based on who blogs about and who features your product. Still, the Mac market has so many more avenues for exposure, "good placement with Apple and the press" isn't quite as key for your typical Mac app to be a success, but it really helps. I actually like Gruber's
idea:
"What Apple could do is weight the best-seller list by revenue rather than unit sales. That way a $10 app with 1,000 sales could get ahead of a $1 app that sells 5,000."
At least I think it's his, at any rate, it'd go some distance towards fixing the race to the bottom we seem to be seeing now. But, being devil's advocate, is a $10 app more "valuable" than a $1 app, just because the developer wants 9 more dollars for it? Is this any more useful? I'd say that at the very least, it puts the brakes on the drive to the bottom in pricing at least.
So, what's a developer to do? I face this exact question myself. MacGourmet Touch, a MacGourmet companion app for the iPhone (and iPod touch), is currently in beta. Now, it remains to be seen how things work out for it when released. For one thing, it won't be going into the store without an existing audience. There are already lots of MacGourmet users clamoring for a companion application that will let them take their recipes with them. But, as detailed in the previous posts, iPhone app development isn't cheap. Will MacGourmet Touch pay for itself? If it does, how long will it take, and at what price point? In the current incarnation of the App Store, which seems to be largely "hit driven" it remains to be seen. One thing I might try is making it more attractive to the non-MacGourmet users, maybe by including more sample recipes, etc. At any rate, it has to pay for itself and the effort required (though honestly, it's possible that it's release will also work in reverse, and sell copies of MacGourmet...).
I plan to blog about approaching the app store from this angle, adding another perspective, once MacGourmet Touch is out, so stay tuned...
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