Help heal the global app economy
App Pricing Strategy: 'Fans in charge'
June 27th 2013, Groningen, The Netherlands - updated: July 23rd 2013
How it all started
We’re tired of the app economy being sick. Apps are priced too low by developers and are undervalued by consumers. Let us be clear: This is not the fault of the consumer. Consumers quickly got used to low prices after the initial App Store launch. There are a number of reasons why this happened. First of all: Apple was a key player in rushing app prices to the bottom, mainly because of the way the App Store works. Developers undercut each other in order to get their apps in the spotlights and toplists of the App Store. So prices quickly went downhill in the first month of the App Store.
The result of all this is an unhealthy App economy where the majority of app developers have a hard time getting a return on investment or getting their apps noticed. So it’s time to try and change things. Shake things up. Starting today, we will start on a mission to fix the app economy. We might fail. Horribly. But then again. At least we tried. First try: A democratic pricing strategy for apps.
Democratic pricing strategy: ‘Fans in charge’
The new pricing model is radical but extremely simple.
1) An app gets more expensive every day following its launch.
2) When a day goes by with zero sales, the price of the app stops rising.
3) Early adopters & fans get to vote on the final price tag.
Finding the instrinsic value of the app
When nobody buys the app anymore, the price stops rising. Fans & early adopters are then asked to asses the intrinsic value when using the app in their daily lives. They get to vote on the final price tag via social media. The resulting average price is used as the fixed pricetag for the app.
The experiment: SnelTrein
In June we launched a public transport app for the Dutch: SnelTrein. It’s a very cool and smart product that works really well. But that’s not the point. It’s the first app that uses this new pricing strategy. The app started at €0,89 and went up in price every day. We published our daily sales figures from the Dutch App Store publicly for one week. See some early results here. We had zero sales when our app costed €11,99. We then asked our early adopters to assess the instrinsic value. €0,- was also an option in the poll. The resulting pricetag for SnelTrein was €0,89. A bit lower than we hoped for, but remember this is our initial 1.0 release. We expect the underlying value of the app to rise over time when bugs are squashed and new features are added. In a few months we will ask our users to reassess the value of the app and we will set a new price based on those results.
Why this model works for everyone:
1) Early adopters get rewarded by getting the app cheap and will be in charge of the final pricetag.
2) Consumers will pay a price that was democratically set by other users. Also, they might understand the underlying value of the app better. And they won’t have to stare at banners or be constantly seduced by annoying in-app purchases.
3) In the long run, developers might make more money and their apps are priced better.
4) In the long run, online media might make more money by affiliate models etc.
Why we do this:
Apps = software. Software used to cost $30 or more back when it shipped in a box. Software has gotten ten times better in the last few decades, but the price went straight down the toilet. People happily pay over $500 for their hardware (iPhone anyone?) but refuse to pay for their software. A lot of the apps and games they use every day and enhance their lives were downloaded for free. People don’t hesitate one second to pay $7 for a movie ticket, but find apps over $5 to be ‘unreal’. iPad apps are more expensive then iPhone apps because.. the iPad has more pixels?
All of this does not make any sense whatsoever. So we went on a mission to try and change this.
“But.. consumers will hate you if this plan succeeds!” No. They won’t. Maybe at first, but later on, they will start to appreciate their apps more. They might finally understand the value of quality apps and the huge amount of time that went into making them. Eventually it will lead to more thoughtfull purchases instead of the throw-away App economy that we’re in now. We hope this also means less apps with irritating banners and annoying in-app purchases.
To Apple, Microsoft & Google:
Please fix your App stores. Give consumers more ways to discover apps and put less emphasis on top lists. Build a separate feature for consumers to submit complaints about apps so that the review system isn't polluted with bug reports. Build a default SDK for reviewing or starring apps within apps themselves. Find a better balance in displaying content from major publishers and small developers. Punish bad quality apps, praise good quality apps. Offer developers more business models and build proper SDKs to implement them. (Subscriptions, paid updates, 24h trials, etc). Allow consumers to filter apps on business model (ads, in-app purchase, paid, subscription, etc). Give consumers more and easier ways to pay. And educate them about the value of apps. Please guys. It's time for your stores to grow up.
To all consumers & online media:
If you agree with the vision we outlined above and if you believe that the App economy needs to be healed, please support our cause by downloading, using or liking some of our products @ www.innovatio.nl. It will be a protest vote and in the end it might cause a new global mindset towards app pricing. Thanks.
To all developers:
If you have made it this far you will be thinking either: A) Those guys are crazy. B) They are brilliant. Or some odd combination of A & B. If you’re leaning more to option B you might wonder: Can I copy this strategy? Sure you can. Please do. Or develop a new pricing model yourself. It will help us reach our goal and complete our mission. The only thing we ask in return is that you download or try some of our products. Just to show some love. Check them out @ http://www.innovatio.nl.
Now, if you are a good developer and you have a good quality app: Start raising your prices. Now. Slowly. Good luck. But check with your fans first if you qualify.
Follow us in the coming weeks for updates about our experiment & mission. Twitter: @sneltreinapp. Medium: medium.com/@innovatioNL. Facebook SnelTrein app: www.facebook.com/sneltreinapp. Facebook Innovatio: www.facebook.com/innovatio.nl
“The people who are crazy enough to think they can heal the global app economy...”
Al & Team Innovatio