What Price?

This originally started as a question on Apple’s support boards:

With the current AppStore model (which seems to be a money machine for developers) I do not understand why anyone would give away their applications. At least charge $0.99 and get something back for your hard work.

So, why do you give away your apps?

With the caveat that I have not actually submitted anything yet…

My motivation in writing an application was entirely for the pleasure of doing it. If I never do anything with it once it’s “finished” my goals have been achieved. So my only objective in pushing it to the AppStore is for other people to get some benefit from using it too. There is little incremental cost in doing so and zero cost means that it gets the widest possible distribution.

There are also disadvantages to charging for it. Firstly, by paying something for software users expect more. They want support and bug fixes and enhancements. Maybe they want those same things with free software but there’s less obligation. Also as a non-US citizen there are complications in getting paid the full amount due.

That’s not to say that I won’t charge for it. At the very least I would like to be able to cover my costs. By which I mean the iPhone Developer Program fee, the $99 they charge you for the privilege of deploying your own software on your own phone.

But there are complications in pricing any iPhone program.

The first obstacle is that pricing has not stabilised yet. Disregarding the loss-leaders such as the NYT reader and the Facebook program, there is still a wide variation in cost. Consider something as trivial as a tip calculator. I only had a quick look, but I found half a dozen and they ranged from free to £1.19 with most at the 59p level. I found significant variations in costs for pretty much every category I looked in.

Now the app that I’m writing is a good deal more sophisticated than a tip calculator. My initial assumption was that people would be loathe to pay for it but if others can sell a tip calculator — something you can do using the built-in calculator program — for £1.19 and still garner good reviews then surely I am undercutting myself?

But it’s also easy to price too high. As Daniel Jalkut said, “We hope to hit ‘pretty much on target’ from the start, to avoid embarrassment and second-guessing. If you price too low, you?ll have a hard time imposing a major increase.”

Another popular option is to have a paid-for version and a more limited, free version. The problem I have with that is you have to decide which features would be worth paying for without making the free version so limited that people just bin straight away. I’m not sure that there is an obvious dividing line with my application. Plus I like the simplicity of having a single version. I think it makes the “message” easier to explain — think the single version Mac OS X versus the half-dozen versions of Windows Vista — and, as an added bonus, is much easier for me to administer. I don’t have an economics background, but Joel Spolsky tells me that this is called segmentation.

There also seem to be a few cases where people are offering advert supported free versions. This is not a solution that I am entertaining. As a user I object to precious screen real-estate being taken up by an advert. As a developer I object to the extra work, uncertain income stream and the likelihood of introducing new bugs in a non-critical area of code.

In summary: the more I think about this, the more I get confused.