Tag Archives: pricing

Core Intuition 253 and Google

We posted Core Intuition episode 253 this morning. From the show notes:

Manton and Daniel discuss Manton’s experience at the Release Notes conference, talk about the rationale for supporting what might be considered edge-case behaviors in apps, and dig deeper into questions of freemium pricing, reflecting on the Omni Group’s pertinent announcements. Finally they talk briefly about Google’s latest announcements and what their competition means to Apple.

Google must be doing something right with their announcements, because yesterday my son told me he wants to get a Pixel when it’s time to replace his iPhone 5S. And as much as I love our Amazon Echo, I can see Google Home taking off if it’s well-integrated with existing Google services.

A great developer can come from anywhere

It’s March 2009, the height of SXSW in Austin before the conference gets too big for itself. I’m hanging out downtown with tech folks from a blogging startup, having dinner and beers before we head to the party they’re putting on. The CTO, one of the first employees at the company, is talking about Memcache servers and MySQL scaling, and I’m hanging on every word. I love this stuff.

I’m a Mac and iOS developer, but I often take a break from native app development to work on server software. So I’m asking him about MySQL replication and what it’s like to run a schema migration without the database falling over. The conversation sometimes shifts back to Apple platforms, and he says he’s been thinking about going to WWDC. I had been attending WWDC for a while, so I say sure, it’s expensive but you should consider it. If you’re doing more web stuff, though, maybe it’s not as important that you attend.

We walk over to the party venue. It’s bigger and more crowded than he thought it would be. Their company has really taken off, growing well beyond the early days when it was just him and the founder trying to build something new. And it’s at this point that he turns to me and asks a question that brings us back to iOS development:

“So what do you think of my app, Instapaper?”

In answer to Marco Arment, at that time the CTO of Tumblr, I mutter something about liking it, but I haven’t really gotten it into my workflow yet. Hopefully whatever I said was encouraging. In subsequent years, of course, Instapaper would be one of my favorite apps.

Later, replaying these conversations, I realized that I asked the wrong questions and gave the wrong advice. About WWDC, I should have said “Yes, absolutely!” with an exclamation point. Buy a ticket. If you can’t afford it, go anyway because you need to be there.

But I didn’t say that because I wasn’t listening closely enough. I was so busy asking questions about Tumblr, that I wasn’t listening to the excitement in his voice about Instapaper. I was so busy thinking about server scaling and databases and all this other stuff that I could’ve learned from a book, that I didn’t hear what he was really saying.

I should have asked about iOS pricing, free versions, sales, UI design, who did the icon, what does the private API look like. But I didn’t ask those things because I missed the big picture, how dominant the App Store would become for distribution, and so I missed what mattered. I’d like to think that since then I’ve gotten better at listening.

Daniel Jalkut and I had Marco as a special guest on Core Intuition 200 not just because he’s a friend but also because he so well represents the goal that many of us have and our listeners have — to start our own company, to find success not just one time but again and again, and to have as thoughtful an approach as possible in the craft of software development.

This week I’m in Indianapolis for the Release Notes conference. While I will have some stickers for anyone interested in my new microblogging platform, and I’ll probably ramble about it at some length if asked, I’ll also be listening. I’ll be listening because you never know which random developer you just met will end up doing their best work in the years ahead, and you want to be as encouraging as possible, offer the right kind of feedback, and also learn from their perspective.

There’s a great line in the Pixar movie Ratatouille:

“Not everyone can become a great artist. But a great artist can come from anywhere.”

I believe that’s equally true for developers. We often see someone go from nothing to a top app in the App Store. We often see someone start without an audience and then make friends on Twitter and blogs through the quality of their writing alone. And so we welcome new voices all the time if they’re respectful.

There’s been some debate about Overcast 2.0’s patronage model. Some of the discussion is healthy — how does a successful business model for one developer apply to other apps? — and some of the discussion is divisive. Instead of asking the right questions, it’s easy to jump straight to a conclusion with the dismissive statement: “that’s fine for Marco, but his approach would never work for other developers”.

The “that’s fine for Marco” attitude is poison for our community because it takes the opposite approach as that Ratatouille quote above. It implies that some developers have such an advantage that the rest of us shouldn’t even bother, because it’s not a level playing field. It’s true that some developers today have an advantage, whether through good timing or just a long history of shipping apps, but the lesson isn’t to give up; it’s to instead learn from it, and look at our own strengths. What small head start do we have that could grow into a great success tomorrow, too?

Rewind a handful of years, back to that day at SXSW when I could name plenty of developers who had more attention and success in our community than Marco Arment. You can be damn sure that didn’t discourage him from taking Instapaper from an “in my spare time” niche app to the top of the News section on the App Store.

I’ll never accept the implied negativity in the “that’s fine for Marco” argument. I’ll never accept that we should be jealous of another developer’s success instead of inspired by it to do our best work.

Jurewitz on features, pricing

Michael Jurewitz wrote a great post last week on minimum viable products:

“As you look at your products and how you make them remember these key points. You don’t need all the features under the sun. You don’t need technical excellence (assuming you also avoid technical debt). You need to solve a worthwhile problem in a delightful, thoughtful, and simple way.”

What he’s saying is it’s okay to be limited, but make that limited part totally polished. Cutting back features doesn’t mean you also cut back on quality. It reminds me of the quote from 37signals: “build half a product, not a half-ass product”.

This is good advice that I need to take to heart. I don’t have much problem shipping. But my apps often have some rough edges at 1.0.

Also don’t miss Jurewitz’s great 5-part series on App Store pricing. I’m linking to Michael Tsai’s summary here, since it provides nice quotes and links to each part in the series. I saw the talk that these blog posts were based on twice, at Çingleton and NSConference, and this has to be the best translation of a conference session into blog form I’ve ever seen. Not to be missed.

Tweet Library price follow-up

Last month I tried an experiment, lowering the price of Tweet Library for the first time in 2 years. It wasn’t selling well and I wanted to do something to determine if I was just stubbornly pricing it too high or if there was a deeper issue with the quality or marketing of the app. So let’s follow up on whether this was a success or not.

Here’s the graph of revenue for a 2-month period: one month before the price cut and one month after. There was also a new version released about a week after the price cut, but it didn’t appear to have a significant impact on sales.

Tweet Library price cut

Downloads were up 175%. Profit was up 40%. My gut feeling is that I should have dropped the price to $7.99 instead of $4.99, but I’m wary of changing anything again right now. We’ll see what next month looks like.

Tweet Library price cut

At Çingleton last week, Michael Jurewitz talked about app pricing and the arguments for raising your price. He made a convincing case, and it echoed some of the themes that I wrote about before I released Tweet Library 1.0 back in 2010.

In the two years since, I never once changed the price. No intro discount, no gimmicks, never on sale; $10 was essentially set stone. Even as it moved to the iPhone as a universal app, I stuck to my original philosophy about pricing, perhaps stubbornly. There’s value in consistent pricing, so that the user knows what to expect from one month to the next, and to indicate that the developer attaches a specific value to the app.

Last week, before Çingleton and right as version 2.1 of Tweet Library was about to be released, I decided to try an experiment: I cut the price in half to $4.99. Even though it’s a niche app that only doubles as a full Twitter client, this puts it more in line with other Twitter apps on iOS. (And even cheaper than buying both the iPhone and iPad versions of some apps, like Netbot for ADN.)

Meanwhile, Tweetbot for Mac is now out at $20. Daniel Jalkut covers this on his new blog, Bitsplitting:

“Is $20 a reasonable amount to pay for Tweetbot? I think so. But if Tapbots would have preferred to charge even less, has it been fairly priced? Many folks are seizing on the coincidence of Tapbots needing to charge more as an opportunity to exalt ‘fair pricing,’ when this was a result of coercion in two directions.”

Pricing is something I am still very fascinated by, especially this constant pull between how we value our own software and how pragmatic we want to be as a business. I’m going to let Tweet Library sit at $4.99 for a month, and if revenue is not obviously greater than what it would have been, I’ll bump it back to $10 or a middle-ground $7.99.

Subscription change, new features

When I launched Tweet Marker Plus, I documented that it would store “about a month” of tweets. I didn’t want to promise too much before I fully understood the storage requirements. After a few weeks, I officially bumped it up to “at least 2 months”. I also added a full archive of your own tweets, which are never deleted.

The truth is I’ve yet to write the code that actually deletes any tweets from the database and search index. Eventually I’ll have to, but not yet. So I’ll continue to evolve the service in a way that makes it more useful and sustainable.

Recently I increased the $2/month price to $5/month, with the search index expanded to 3 months of tweets. Today I’m officially bumping the storage again, to 6 months of tweets. I’ve also changed to monthly billing instead of once every 3 months. Everyone who already has the $2/month plan will get to keep it. No price increase for you, and you still get the new 6-month storage and new features, as a thank-you for being an early subscriber.

And I’ve added a major new feature. You can now create custom collections of tweets and publish them to share with others. This is a feature from my iOS app Tweet Library, and in fact any published collection from Tweet Library will also show up in Tweet Marker Plus. New in Tweet Marker, you have the option of keeping a collection private or making it linkable, without it showing up when someone browses the list of collections.

The screenshots linked on the account page include an example of how collections work.

As a bonus for Mac users, there’s also a new menubar search app. This little Mac app hides in the menubar and gives quick access to searching your Tweet Marker Plus timeline and archive. Here’s a screenshot of what version 1.0 looks like.

App Store 30% cut

The Mac App Store launched! Like many developers I spent the day taking it out for a spin, thinking about whether this changes everything, and trying to ignore the fact that my app Clipstart isn’t in the store on day 1 even though “I submitted to Apple 7 weeks ago”:http://www.manton.org/misc/clipstart_mas_history.png.

But let’s talk about Apple’s 30% cut, because it’s been on my mind now that I have a real app in the iPad App Store. It’s easy to keep these discussions too vague to be meaningful — 2.9% + $0.30 for PayPal, 8.9% for FastSpring, 30% for Apple, who cares? — so it’s more illustrative to work with real numbers.

The massively-popular Camera+ from Tap Tap Tap “sold 78,000 copies on Christmas day”:http://www.macrumors.com/2010/12/28/camera-reaches-over-78000-sales-on-christmas-day-alone/, but no one else I know sees numbers like that. My own $10 Tweet Library fell a little short of 1000 copies in its first launch month… and unfortunately continued to drop since, but let’s use that to keep the math simple. Selling direct via PayPal would be $590 in fees. To Apple? About $3000.

Apple provides a unique service and it’s their right to charge whatever they want. Developers can choose to pay it or restrict development to more open platforms. I’m inclined to think the 30% is high but not unreasonable for everything Apple hopes to provide.

But here’s where everything breaks down: for $3000 I expect someone at Apple to tell me what the $%!# is going on.

It’s not just review times, or emails that go into the void, unanswered for days or weeks or ever. It’s that Apple isn’t able to communicate about the fundamental issues that will make or break businesses.

• When is the Mac App Store launching? No word from Apple for months, and a press release went to news sites before developers got a heads-up.

• Why has my Mac app been in review for over a month, right up to the very day before the Mac App Store launches? No answer, and nothing to do but wait.

• Where was a beta version of the Mac App Store so that we could understand how it interacted with existing apps before it was too late? Nowhere.

• Why didn’t we receive more “guidance on bundle IDs”:http://openradar.appspot.com/8838369, version numbers, and app naming, obvious questions that only Apple knew the answer to? No clue.

• When will there be promo codes for the Mac App Store to give to the press or help transition customers to the store? No idea, might be never.

A year and a half ago “Craig Hockenberry wrote about paying extra”:http://furbo.org/2009/07/10/year-two/ for fast approvals and a better communication channel. It reflected in words how frustrated everyone was over long app review times. At the time, “I answered”:http://www.manton.org/2009/07/999_hope.html that quality customer service from Apple is something all developers deserve, not just those with cash to burn.

But clearly it’s even worse than that. Apple isn’t currently capable of significantly improving how the App Store works for any price! The App Store does get better, but it does so at Apple’s own pace.

There are many great people at Apple. Individually I know they are passionate about making good products and helping developers succeed, but collectively it seems like no one person is running the show. The developer-facing side of the company needs to have the freedom to become more transparent, to work closely with the iTunes Connect support team when developers need an answer. Apple’s secrecy cripples their ability to have a positive relationship with developers.

So do I think the 30% cut is too much? No, not for a straight answer. That would be priceless.

$10 iPad apps

I’m fascinated with App Store pricing. There’s just so much interesting stuff going on:

  • 99-cent apps and the race to the bottom.

  • Users expecting apps to be cheaper because the device is smaller.

  • The high-end successes like OmniGraffle.

  • Sales and pricing gimmicks.

  • Whether apps can compete outside of the top 100.

So when 37signals launched their first iPad app — Draft, for sketching mockups and quickly uploading them to Campfire — the first thing I wondered was: “how much?” The comments on their “launch blog post”:http://37signals.com/svn/posts/2420-launch-draft-for-ipad are a hilarious and sad mix of the usual cheapskates balanced with 37signals defenders. But the most amusing part is that at only $10, Draft is a bargain compared to Campfire itself, which has an entry-level paid plan of nearly $150/year.

(I’m a big Campfire fan, actually. The best iPhone client for Campfire, Ember, has a permanent spot on “my home screen”:http://www.firstand20.com/homescreens/manton-reece/.)

My first indie iPad app, a 3-4 week project that has stretched to 3-4 months, will also be $10. At that price it will be twice as expensive as its competition. I’m pricing it that way for three main reasons:

  • It’s worth the price of two trips to Starbucks, because it takes the category in a new direction with features no one else is doing.

  • It’s designed for people who are serious about this stuff, not an impulse buy, not for everyone.

  • It’s a standalone app but includes an optional web complement, offered for free, but which will incur “real hosting costs”:http://www.heroku.com/.

Daniel Jalkut and I talked about this a bit on “Core Intuition 28”:http://www.coreint.org/2010/04/episode-28-the-ipad-super-episode/ — that it might be okay to overcharge a little for 1.0 rather than raise the price later, and that it should be possible to build a business on the iPad the same way many developers have on the Mac: not by looking for the big overnight hit but by steadily selling some number of copies every day and letting it spread by word of mouth.

Marco Arment wrote about this as “App Store B”:http://www.marco.org/208454730 in October last year:

“More of their customers notice and demand great design and polish. More sales come from people who have heard of your product first and seek it out by name. Many of these apps are priced above $0.99. These are unlikely to have giant bursts of sales, and hardly any will come close to matching the revenue of the high-profile success stories, but they have a much greater chance of building sustained, long-term income.”

We’re three months into the iPad, just passed 3 million devices sold, and not every app has dropped to near-free. I think $10 iPad apps in particular are going to remain pretty common.

Worthless apps

I like “this article on Mobile Orchard about the relationship between price and ratings”:http://www.mobileorchard.com/app-store-heresies-higher-price-better-ratings-dont-discount-your-app-at-launch/:

“Customers with some skin in the game carry a psychological pressure to feel that they’ve been wise in their purchases; they’ll tend to over emphasize their positive feelings.”

This makes sense to me, and the other side of pricing that’s so important is the message you send. The perceived value of a product is connected to the published price. This is especially true in the App Store, where there’s no way to try the software before purchasing it. The price sets expectations.

So to take the Mobile Orchard analysis a little further: no one feels guilty judging a free app harshly with a 1-star rating because even the developer thinks the app is literally worthless.

Sure, there are good reasons to have a free app. To complement another paid service or desktop app, as a demo for a game or full version, or to “make $125,000/month in ad revenue”:http://fingergaming.com/2009/12/02/paper-toss-developer-earns-125000-in-monthly-ad-revenue/. In fact half the ideas I had for iPhone apps would have been free. But I don’t think any of that changes the truth of what Mobile Orchard said, that free stuff isn’t respected as much as something the customer is personally invested in.

Follow-up on family packs

In October I “blogged about”:http://www.manton.org/2008/10/family_packs.html and then launched a “family pack” purchase option for Wii Transfer. $39 for 5 licenses vs. $19 for 1.

The results are in, and they are unspectacular.

2.6% of orders were family pack purchases. At an extra $20 per order, that essentially comes out to the equivalent of one extra sale for every 40.

To all my customers who were honest enough to choose the more expensive option, thank you. I don’t think most people need the flexibility of running 5 copies of Wii Transfer simultaneously, but I’m glad that it’s helpful for a few of you out there.

Now that I’ve written this down and crunched the numbers, it calls to mind something that “Joel Spolsky”:http://www.joelonsoftware.com/ said in an interview. All the coupons or referral fees or discount prices or other gimmicks they tried are ultimately just a diversion from the best way to increase sales: make the software better.

I’ll leave you with this chart for 2008 sales. August was shiny-new-version month.

Sales 2008

The 99-cent message

Forget the developer perspective for a minute. Even as a user I find the race-to-the-bottom iPhone price drops completely maddening. I’ve bought apps for $5 and $10, and now many of those prices have either been cut in half or lowered to 99 cents. I felt like I got my money’s worth at the higher price, so I’m not complaining that I was ripped off. Instead, I just feel like a fool.

But I’ve learned my lesson. The message from developers could not be more clear. Apparently the way to buy iPhone software is just to wait a month for the price to drop.

I realized this week that I don’t consider myself an iPhone developer. Technically I’ve paid my $99, but I’ve scrapped all my ideas except a prototype I’m working on for “VitalSource”:http://www.vitalsource.com/, and even that I expect someone else to finish and bring to market. If I was an independent iPhone developer I’d be furious at the instability of pricing on the App Store. Even to users it looks like chaos.

Family packs

I rolled out “family pack” pricing for “Wii Transfer”:http://www.riverfold.com/software/wiitransfer/ over the weekend. I had to make changes to my custom PayPal integration scripts to support it, and I also modified the product page to use a simplified checkout (no standalone store page). Pretty straightforward.

I was less sure about pricing. A quick survey of other Mac developers yielded results like these (normal price / family price — all of these are for 5 users):

“Radioshift”:http://www.rogueamoeba.com/: $32 / $59

“Yojimbo”:http://www.barebones.com/: $39 / $69

“Hazel”:http://www.noodlesoft.com/: $21.95 / $39.95

“iLife”:http://www.apple.com/ilife/: $79 / $99

“Bento”:http://www.filemaker.com/products/bento/: $49 / $99

“TextExpander”:http://www.smileonmymac.com/: $29.95 / $44.95

“MoneyWell”:http://nothirst.com/: $39.99 / $69.99

Additionally, some companies don’t have a family pack, but offer discounts for multiple copies:

“Acorn”:http://www.flyingmeat.com/: $49.95 / 2+ (20% off)

“On The Job”:http://www.stuntsoftware.com/: $24.95 / 2+ (20% off)

“BusySync”:http://www.busymac.com/: $25 / 5+ (10% off)

“Transmit”:http://www.panic.com/: $29.95 / 10+ (10% off)

So 5 copies is the standard for family packs. My original idea was 3 copies for $29, so I threw that out. Five copies for only 50% more seemed way too cheap, especially since Wii Transfer is already the least expensive software of any company I found. True, this is “free” money — most customers don’t buy more than 1 copy anyway — but on the other hand they are getting 5 separate serial numbers. Unlike Apple’s iLife (which has no serial numbers), or Radioshift and BusySync (which allow a special serial number to be used on multiple computers), Wii Transfer’s URL bookmarking feature requires each copy of Wii Transfer to have a unique serial number to identify the computer.

I think customers buying a family pack are exceptionally honest. They are going out of their way to do the right thing. But at the same time, it needs to be a fair enough price that I’m not losing anything if a few customers decide to share their “extra” serial numbers with a friend.

In the end I settled on $39 for the 5-copy family pack, essentially double the normal price of $19. The Bento pricing model convinced me that it was doable, even if percentage wise it’s slightly higher than other products. I’ll be watching stats over the next month to see how well it works. “Decisions are temporary”:https://gettingreal.37signals.com/ch06_Done.php. I’m not afraid to change the family price or drop it altogether if it doesn’t meet my expectations.

Wii Transfer 2.5

This morning I finally rolled out “version 2.5 of Wii Transfer”:http://www.riverfold.com/software/wiitransfer/, the most significant release of the product yet. It probably deserved a 3.0 label slapped on it, but I like how all the 2.x releases revolve around the sharing features (sending movies, music, and pictures to the Wii via the Opera browser). Besides, I have a special set of entirely new stuff planned for 3.0.

So what’s new? Movie streaming is the big one. You can now drag and drop movie files to convert to Flash Video format, which Wii Transfer’s web server will happily stream up to your Wii. It works surprisingly well considering the Wii has such limited memory and no hard drive. Last night I even tested with feature-length movies.

Other new features include background music for picture slideshows (both MP3 and AAC) and bookmark sharing, so that you can browse your Safari or Firefox bookmarks on your Wii to easily visit those sites. The “release notes”:http://www.riverfold.com/software/wiitransfer/releasenotes/ page has more of the details.

I’ve also bumped the price up to $19, where I expect it to stay for some time. One way I like to think about the price of Wii Transfer is in relation to another common purchase from Wii owners: games. It’s still less than half the price of a new Wii game.

Special thanks to the beta testers who provided feedback. There are still a number of things about movie sharing that I’d like to polish up, so additional minor updates are likely. I often use the “Wii account on Twitter”:http://twitter.com/wii to post these and other announcements.

Wii Transfer 2.0 featured on Apple Downloads

I finished “Wii Transfer 2.0”:http://www.riverfold.com/software/wiitransfer/ late Thursday night. This version is an interesting milestone for the application because it goes beyond just using the SD card to shuttle data back and forth between your Mac and Wii. There is a small Cocoa web server embedded inside Wii Transfer that can serve up MP3s and JPEGs directly to the Wii using the Internet Channel. I think this could be the basis for some really fun stuff in the future.

One of the things I added at the last minute is to try to simplify how you connect to your Mac from the Wii. IP addresses are difficult to memorize for most people and may change depending on how your home network is setup. To solve this, Wii Transfer will optionally create a permanent URL for you on bookmark.riverfold.com. You can then add that URL as a favorite for your Wii and it will always redirect to your local machine. Wii Transfer will ping the Riverfold server on startup and update the bookmark database with your current IP address. You can think of it as a simplified version of “Dynamic DNS”:http://en.wikipedia.org/wiki/Dynamic_DNS.

I just noticed that Wii Transfer is the featured download and staff pick in the “video section of Apple’s download site”:http://www.apple.com/downloads/macosx/video/. That is a nice surprise. It will be interesting to see what that does to download stats.

One last thing. Starting next month the price will go up to $14 for version 2.0 (free upgrade for all existing users). I usually work on Wii Transfer at night, so the increase will help offset all the sleep I lost. :-) Even at $14 it may be underpriced. Remember the “Brent Simmons rule”:http://www.red-sweater.com/blog/168/the-price-is-wrong: anything less than $20 won’t be taken seriously. In this case though I think it’s just about right. I’m also finding a large percentage of purchases from Europe, despite no localization, probably because the US dollar is so weak now. Enjoy!