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Pricing Your App (and is WP7 worth it?)

Setting the price of any product can be difficult. You have to balance the costs (development, licensing, maintenance, promotion, etc.) with what is fair to charge for your product, what the market will bear, competition, etc. Apps are no different. Unfortunately, there also isn't a lot of publicly available information on actual sales, historical trends, or successful strategies.  Add to that that apps are a lot harder to compare to each other (in contrast to something like office furniture), and you end up with a lot of guessing, experimentation, and frustration.

One of the interesting things about the above Dilbert comic is that it contradicts the marketing campaigns of Apple, Google and Microsoft that imply anyone with a free weekend, some mild development talent, and a magical idea is practically guaranteed a million dollars. Can you make money developing apps? Absolutely. However, many starting developers and their mothers may be surprised to learn that there is a lot more to it than just making something that works.

I couldn't tell you the number of times people have found out that I am part of an app development company with multiple apps on multiple platforms and been amazed that I'm not making millions of dollars every month with all that sweet app money. After that there's usually a moment of awkwardness where they are trying to figure out how I screwed up something so obviously "easy".

It just isn't that simple. There's a lot that goes into a "successful" app that has nothing to do with traditional development. One of those things, is your app's price. You need great screenshots, marketing, luck, well written descriptions, reviews, more luck, etc., but if a customer isn't willing to pay whatever you're asking then, too bad. It's not my goal to discourage new developers/companies or to provide exact guidance on how to price your individual app. There are plenty of articles out there all about the "right formula" but I've not found them too helpful. What has been helpful are the few articles that give insight into specific experiences. I won't be giving out exact numbers due to licensing restrictions, but I still wanted to talk a little about our experiences with one of our apps, THE DOG.

THE DOG is a breed guide app featuring Artlist's beautiful and unique photographs of dogs and made in conjunction with 4Kids Entertainment. It is currently available for iOS and WP7 and the Android version will be available in the next couple of weeks.

We did some experimentation on the App Store (Apple) by setting our apps at a series of price points and comparing the number of downloads. Our guess was that at the higher prices we would have fewer downloads but higher overall profit. However, we found that the number of downloads was so much higher at $.99 that the profit was greater for that price point than any other.

We feel THE DOG is a quality app and well worth at least $4.99 considering that's a one time fee that includes lifetime updates, no ads, hundreds of photos, tons of information and more. We had some customers that agreed with us and purchased at that price and at the various prices between that and $.99 (Thank you!). However, even at $1.99 the number of downloads was less than half of what they were when we switched to $.99. Then considering that higher numbers of downloads leads to higher rankings within the store and therefore higher numbers of downloads and higher rankings... and so on, and it was a pretty easy choice for us to change the pricing.

I recently read this article, Microsoft Wants Expensive Apps on Windows Phone, and was a little conflicted. As a consumer of apps myself, I really enjoy the amazing low prices of some really cool software. But as a developer, I understand that the push from consumers for higher quality apps with more and more features, lifetime updates, beautiful graphics, and full social media integration all for $.99 or in many cases free - seems unsustainable (or at least unprofitable) using traditional development methodologies.

Overall, I like Microsoft's idea of increasing app prices (along with quality, integration, etc.) and am excited about the new opportunities with the upcoming Mango release, but the App Store has already set the trend that only truly exceptional or niche apps should be priced higher than $.99 if you are to have any sales.  Perhaps while the Marketplace is still relatively small (currently 20,000 apps), higher price points will be possible.  But with an influx of apps (competition) those price points are bound to drop.

Part of the problem for us developers is that none of the app platform companies are totally partnering with us.  They are providing amazing platforms, great tools (for free in nearly every case), ongoing support, community interaction and more. But they are also taking 30% of all sales and $99 a year from developers, effectively making us their customers/employees.

This means they have to balance enabling our success (after all they make the most money when we do) with keeping up an image of huge opportunity for little investment to keep us all coding. This sometimes leads to misleading or generic statistics that can often lead to disappointment for the vast number of developers (even some really good ones). It's hard to know what to include, when to release, and how much to invest - let alone how much to charge.

Going back to THE DOG, we decided to port the app to WP7 to try and get in early while the competition was still low. Android and iOS have many dog apps, and while we are confident that our app is as good and in most cases better than those apps, it can be easy to get lost in a sea of apps that all make similar claims. In addition, C# and the development environment (Visual Studio) for Windows Phone was already very familiar to us and made getting started very quick and easy. Porting the app required a complete rewrite from the iOS version but was still considerably easier than starting from scratch. This made the required investment relatively small and a worthwhile experiment.

We assumed that since the competition was so low, app sales would be as good or better than the iOS version. The iOS version is doing very well, unfortunately, as of right now the WP7 version is not(?). Actually, it's hard to tell if our app is doing well (at least relatively) without base line numbers to compare it to. But from our perspective of the amount of sales needed to justify the costs (let alone show a profit), it isn't cutting it.

I would suspect this has less to do with our app, and more to do with the size of the market. For now, the number of potential customers is just so much smaller for Windows Phone.

There are other things we can do and may try in the next couple of weeks (Trial mode, offer a free version, extensive marketing, etc.), but we are seeing similar results for another ported product - Panda! (iOS, WP7). Panda! is one of our only completely free apps (No charge and no ads) and is released mostly to make me laugh. Although, Panda! is also one of our only apps to not actually serve any useful purpose, people still like to download it. Even though it's free, we are seeing the same reduction in overall downloads as with THE DOG (WP7 downloads are at roughly 5-10% of iOS downloads for the same periods).

This means that there is an even more fundamental question you have to answer besides your price point. Is developing the app even worth it?

We will probably continue to develop some WP7 apps (We love the OS and Mango is too good to ignore), but in some ways it's an act of faith. Faith that the platform will get better (and more popular) eventually leading to more profit and faith that our customers (end users and those contracting us to make the apps) want our products on multiple platforms.

All indications are that our faith is not misplaced. The app market (all platforms) is estimated to grow tremendously leading to more opportunity and (hopefully) more profit. WP7 is predicted to gain more market-share, and our customers have indicated they want us to support multiple platforms. We also love what we do and that certainly doesn't hurt!

But wait - weren't we talking about setting your app's price? Mobile development is a complex business and there is a lot to consider. Setting your app's price is just one part of that complexity and can be a bit (lot) like guesswork. Bottom line is that if you develop a good app and market it well, the price can be fiddled with until you hit the spot that's most profitable. You'll still probably have to adjust it from time to time, but your time is probably better spent trying to guess your way through everything else involved in becoming an overnight millionaire.