Devs on Apps: Charge Us More, Users Less

iphone_money_bin_appstore.jpg

Craig Hockenberry, the widely acclaimed Mac developer of Twitterific, has had extensive experience developing for jailbroken iPhones and iPod Touches. So, when he weighs in on the iPhone SDK, it's definitely worth a read.

From the 70/30 split to the $99 publishing fee, the lack of information about distributing 3rd party apps to beta testers, the possibility of try-before-you-buy demos, and the mechanism for paid upgrades, Hockenberry pulls no punches:

One thing that disappoints me about the iPhone SDK sign-up is that the entry fee of $99 is too low. I look at the entry fee as a way to filter out developers that aren’t fully committed to the platform. [...] A higher entry fee would lessen the chance of this becoming a bottleneck for getting my product into the system. Please charge me $499 and let move to the front of the line.

Wait... Charge developers MORE? And what, pass the costs on to the consumer?

Not according to former Apple programmer (and writer of Apple's GeekGameBoard sample code), Jens Alfke. He thinks $0.99 - $1.99 might just set off the perfect high-volume price storm:

So assume you spent some evenings and weekends writing a cool little utility or game. You submit it to the App Store and set the price at $1.43. You get $1 of pure, unadulterated profit from every user of the app. [...] Steve promises us there will be ten million iPhones in the world. If a tenth of a percent of them impulse-purchase your $1.43 app, that’s $100,000.

Alfke also covers the interesting possibility of Xbox-style game expansion packs as revenue streams, and takes a not-to-subtle swipe at carrier gouging and consumer gluttony via the ringtone market.

Hmm, serious developers charging no-brainer prices for "next great platform" apps? I'm in! What about you?

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, The TV Show, Vector, ZEN & TECH, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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There are 6 comments. Add yours.

surur says:

People with get rich quick schemes for the iPhone software store seem to be missing a proper commercial view of reality. If the barrier to entry is low, and the profits good, some-one will come up with a better product at a lower price to undercut you.
Thats simple competition.
Surur

chadman says:

These are some good points. Many of them may even come to pass with the the final beta expiring and I am sure "full" SDK becoming available in June.

archie says:

People with get rich quick schemes for the iPhone software store seem to be missing a proper commercial view of reality. If the barrier to entry is low, and the profits good, some-one will come up with a better product at a lower price to undercut you.
Thats simple competition.
Surur
Your statement is made in such manner as to "project" that you have a rational view about what is a good business move. That is to say that... you think you know what the best thing is to do and it is NOT what Apple has done.
What you are forgetting is that the platform with the most developers wins. Look at the success MS Windows had throughout the nineties.
Apple's strategy is seen/reflected in Steve's "Their IS one more thing" announcement that you seem to have ignored. The fact that they are funding developers seems to pass right through you. Their is obviously no shortage of interest. You should be asking yourself, "Why would they do this? Why did they take the time to make the venture capitalist the big finale?"
There is another reason that your statement does not apply to Apple. Development for the iPhone is done solely on the Mac OS platform. Their strategy is a trojan horse that you apparently do not see.

surur says:

Your statement is made in such manner as to "project" that you have a rational view about what is a good business move. That is to say that... you think you know what the best thing is to do and it is NOT what Apple has done.
What you are forgetting is that the platform with the most developers wins. Look at the success MS Windows had throughout the nineties.
Apple's strategy is seen/reflected in Steve's "Their IS one more thing" announcement that you seem to have ignored. The fact that they are funding developers seems to pass right through you. Their is obviously no shortage of interest. You should be asking yourself, "Why would they do this? Why did they take the time to make the venture capitalist the big finale?"
There is another reason that your statement does not apply to Apple. Development for the iPhone is done solely on the Mac OS platform. Their strategy is a trojan horse that you apparently do not see.
Archie, welcome back.
I was not referring to Apple's strategy, which as usual seems quite smart. I was referring to the numerous post I have seen from complete amateurs who think they will be able to code a small and simple app, sell it to 14% of 10 million users for $1 and make a million.
Their ambition seems unrealistic, as some-one more qualified would make a better app or sell the same kind of app for cheaper and undercut them.
There seems to be new frontier mentality going on, but big development houses are already out there, ready to suck up those millions of customers and there dollars too.

archie says:

I was not referring to Apple's strategy, which as usual seems quite smart. I was referring to the numerous post I have seen from complete amateurs who think they will be able to code a small and simple app, sell it to 14% of 10 million users for $1 and make a million.
Their ambition seems unrealistic, as some-one more qualified would make a better app or sell the same kind of app for cheaper and undercut them.
There seems to be new frontier mentality going on, but big development houses are already out there, ready to suck up those millions of customers and there dollars too.
I could site more than one hundred examples of you saying that Apple's strategy is NOT smart. But anyway...
I was forced to believe that you were speaking of the Apple App Store in general because I could not believe that you would actually think this was NOT an incredible deal for developers... to have an investment firm float you money, to have Apple enable as many developers as possible by only asking for a $99 dollar listing fee, by providing powerful developing tools that a "complete amateur" CAN use. The best ideas don't always come from the big corporations. Quite often it is the opposite and if anyone can recognize this fact, it is Steve Jobs the complete amateur that brought to market what we are here talking about today.
But you having responded in the above manner clears things up. You are once again here as a troll to spread negativity among those here with an interest in the iPhone.
Do you really think developers will *gasp*... slice another 5, 10, 15, 20 or (OMG) 25¢ cents off the $1 application. OMG! OMG! OMG! There goes the great opportunity!
What does it matter when you are talking about this pricing level anyway? You don't understand the model very well do you.
Oh, but wait, I see! You say those "big development houses are already out there" to suck up the big bucks from millions of customers.
Which is it?
Do you know what a venture capital firm is for?
Go back to your perch at Windows "Experts".
IT doesn't just SEEM to be a new frontier mentality, there IS a new frontier mentality going on... and rightly so. This is a wonderful opportunity – and not just in making money, but also to be a part of this new platform that will carry us into the next decade and beyond. The fact that you continue to lambast the iPhone doesn't mean it isn't any good and everything else is better. It just means that you are stubborn or ignorant or really enjoy crying about how wrong you think I am... or all three.

cmaier says:

Archie,
Surur said nothing (in this case) negative about Apple or anything negative regarding its SDK strategy (including the VC thing [which, by the way, is a fairly small fund that will end up funding maybe 20-40 companies]).
Surur also makes a good point; there is a certain amount of a democratization of software development going on here, not because the development model is particularly different than that used by MS or Palm, but because the software and infrastructure provided by Apple makes this all so simple. I've programmed for windows mobile, palm, and now I am playing around with the iphone sdk, and the iphone sdk itself, and xcode, are far more powerful than the other two. Add the ability to publish my software on itunes with a couple clicks, and the low barrier to entry ($99), and there is going to be a TON of us that go and upload our stuff for sale for a few bucks.
And none of us is going to make significant money. Well, maybe a few, but most of us will make a few thousand bucks a year if we are lucky.
I, for one, am fine with that. I write software for my own needs, and if I can make a few bucks on the deal, maybe pay for the cost of a new computer every 18 months, I'm happy.
Surur refers only to the simple laws of economics. For example, I've already written one app (it's functional, and now I'm adding some features and making it all more pretty). Let's say I upload it to itunes and charge $5.99. Someone smart like you, Archie, sees it and says "i like that, but I can make it a little bit better, and I bet I can still make a lot of profit if I sell it for $5.95!" So you write it, and start selling it. My market goes away. I reduce my price to $4.99. I'm making a lot less money than before. You reduce your price to beat me. I now either have to spend some effort improving the value proposition of my software (new features?) or I lose interest in it and move on to something else.
Now multiply this by thousands of developers, all of whom will compete. It will be very tough to make money this way. Unless you have an IP advantage (patents, etc.), tie-in to some other software where you have an advantage (web, desktop), or have a name-brand advantage, you aren't going to get rich this way.
A few people with great ideas who are first to market and who protect their ideas with appropriate patents or other methods of excluding competition will get rich - the next big software company may very well emerge from the legions of people who are going to be programming for these devices - but the vast majority of us (me included) are not going to magically make millions simply because we know how to xcode.
And, Archie, people would take you more seriously if you'd quit it with the namecalling.