As I work on building a small app business, its been great to hear the public commentary on pricing iPhone apps lately. The blog from Marco Arment and TechCrunch both point out clearly that mass market customer acquisition apps have to be free with in app purchases to have any chance of being downloaded.
Marco’s blog is especially interesting because he’s speaking from personal experience and is trying to solve a problem today. As a consumer myself, I’m much more likely to download a free app than a paid one. In fact, I only have one paid app on my iPad and none on my iPad. And.. I dont even use that paid application more that once a month. I have owned an iPhone for 5 years and an iPad for 3 years. 90% of apps on the Apple app store are free and 6% are priced at $0.99 as per Flurry, a market research firm.
There is also a great book by Chris Anderson called “Free” that can help you understand how to make free work for you. Even this book is no longer available for free. You might be able to find an illicit copy but its worth buying on amazon if you really serious.
Personally, I don’t see the point of creating a free app that provides a ton of value to the user. Your free app only helps Apple build a stronger ecosystem around the iPhone. Build something of value and don’t be afraid to charge for it.
I’m looking at building an location based iPhone app to help tourists. I am confident that I don’t want to give this app for free. I want to charge $20. You may think that this is absurd considering what I just wrote before but the fact is that this application is not a mass market app. It is a niche app for a very small and targeted set of customers. And, in talking to these customers, they have indicated that are comfortable paying $20 for this app. I dont think this app will make millions of dollars let alone even $500,000.
To get $500k, I will need to sell this application to 25,000 customers. That will take more than 20 years based on current estimates of users. 🙂
So.. why build it? Because I believe in the usefulness of the idea and the value it provides users. I dont expect to spend a lot of money building it and I already have customers to sell it to.
It is interesting to draw a parallel between what has happened in the music industry and what is now happening in the tech and publishing industries. A new breed of professionals, who are really good at what they do and can “hustle”, are giving established companies are hard time in all these industries.
On a long walk with one of my previous managers in San Francisco last week, we discussed a new generation of coders, who he called “Gentlemen Coders”. He described them as :
- Self employed developers paired up with a good designer
- Via the app stores,they sell directly to customers
- No desire for world domination – just building the best product they can
- Value their time and quality of life over a desire for just money
- Can hustle and get attention to their products
He moaned how he would have loved to be able to do this when he got out of college 25 years ago. He told me of story where he sold his product’s rights to a publisher and then when the publisher went bankrupt, he could not sell his product – period. His product had become a property of the lenders to the bankrupt publisher and its fate had to be decided in bankruptcy court.
I see many interesting products being created by gentlemen coders. See:
And, this way of developing software is significantly faster and cheaper than how established software companies develop products. Gentlemen coders are very closely tied to their customers and have complete control of the pace and direction of development. Thus, they seem to respond faster to customer demands and update when they are ready not when “everyone in the company” is ready.
So, is it game over for large software companies or publishing houses? I dont think so. But, this new way to develop software should attract a lot of talented, fresh out of college graduates towards starting their own companies. Working for a large innovative software company is so 2007. 🙂
Its much easier to build out a product idea that excites you and then take it to market via the app stores today than it ever was. These stores are hyper-competitive though and knowing how to hustle will be the differentiator between success and failure.
||App Stores (apple and android)
- Free give a aways
- Creative Commons Attribution-Noncommercial license
- Sending free copies to reviewer
- Building the first 1000 fans
- Social Media
- Posting to the forums
- Experimenting with App pricing