Hockenberry: An Open Letter to Steve Jobs on App Store Pricing

Not content to simply produce great (and great looking) software, Craig Hockenberry continues to knock it out of the park on his furbo.org blog as well, this time with an open letter to Apple CEO Steve Jobs on App Store Pricing:

As an iPhone developer who’s been in the App Store since its launch, I’m starting to see a trend that concerns me: developers are lowering prices to the lowest possible level in order to get favorable placement in iTunes. This proliferation of 99¢ “ringtone apps” is affecting our product development.

This is something we've been following on TiPb, and something that both interests and concerns us greatly. The App Store is quite literally a killer app on the iPhone, but competition of revving up from all sides, including Android Market and the BlackBerry series of offerings.

Check out Hockenberry's complete article, and let us know what you think Apple could do to properly incentivize developers to make the next Excel, the next Quark, the next killer app?

Or should they? Do you prefer your $0.99 apps, and don't really care if we ever see anything more?

Have something to say about this story? Leave a comment! Need help with something else? Ask in our forums!

Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Hockenberry: An Open Letter to Steve Jobs on App Store Pricing


quite frankly, I like my apps to be inexpensive. Raise the prices? No thanks. The app store drives in more traffic, so I think its a wash in the long run.

If these devolpers have such great "killer app" ideas, perhaps they should approach Apple to develop them. The developer gets rich, Apple gets rich, and we the customers don't end up with some puke-looking app that won't run in the background.

Actually, the developers should just come with their great apps and price the apps as they thinks it's worth, because if it is a real "killer app" costumers will buy it if it's worth it. so it's really a matter of choice.

As the original napster illustrated, if you can get something for free, why pay for it?
Let's say someone made a great to-do application, and it costs 20 bucks. Then someone else makes one that's 'just as good' and put it in the app store for free.
Who's going to pay for it when they can get the same thing for free?
Now... that above question depends on whether someone would/could make something 'as good as' a paid item, but offer it for free. That's up for discussion.
(I had someone call me on the phone once and ask why he should pay for one of my company's products when he could get a supposedly equivalent one for free. I told him that he could call me and ask about it, but good luck calling the free product's developer to get tech support.)

by the way, referencing napster was meant to invoke the idea that tons of people will get something for free because they can, instead of paying for it. It's not meant to talk about copyright infringement.

Frankly one of the things I hated the most when I had my BB Curve was the price of the apps, most were crazy high in my opinion.

Developers should work on the next killer app and it should be only 99 cents or free, which will make it the next killer app. How much does google charge for a search? Imagine if they charged 10 dollars for user of their services and everyone else was free...yea the other search engines would take over.

Oh no those poor poor developers, that relentless price competition in the app store ruines every incentive to create good apps at reasonable prices... if apple doesn't do something about the pricing soon, we should have the government step in and regulate prices, so that developers can still put food on their families and have an actual incentive to create killer apps...sigh

Also, $200 an hr? Looks like all the doctors and lawyers out there are missing their calling.

@Paul: Well, Google receives advertising revenue, so that's apples and oranges. Advertisers pay billions to Google so you can search for them for free... and I don't think any of us want advertisements on our apps.
But these developers don't face anything unlike any other businesses who face great risks, without expecting "safety nets" from others. if you believe in your "killer" product or service, then you take the risks. But if you're afraid of (or concerned with) those risks, than perhaps you're not confident that it's "killer" enough in the first place.

App pricing has too look at the market. To respond to Kevinmonster, is a "to do app" ever worth $20? Even if it did everything you wanted, and it was the only app in the app store that did, would you still spend $20 on a to do app?
I wouldn't.
App price isn't just based on design, quality, appearance, and interface. It also have to take into account the apps functions. A "to do app" is a simple thing - you can have varying levels of complexity, but regardless of how nice it looks, how well it syncs, or any other features, IMO a to do app is not fundamentally a $20 app. $1, $2, maybe $3, but not $20.
On the other hand, a solid turn by turn GPS program with built in maps could very easilly be a $20 app...maybe even $30 or $40. Same thing for an microsoft office program...or a really really good game. The problem with these is that they require a lot of time to develop, and if they don't sell, there is a lot of lost money. But I would spend $20 to $40 on a really "killer" app that isn't simply an embelishment of the so-called "ringtone apps".
I think what most consumers complain about in expensive apps is when there is a good app that sells for much more than another comparable app. If you have a really good to do app, and you price it at $5, you are going to hear complaints, because there are really good to do apps priced at $1, or even free.
But look at BeeJive. It is $15 - everyone I know who has bought it has said it was worth the money. It offers a huge feature set, and really expands upon all other IM programs. It is more expensive - but it delivers a lot more. That is the model to look at - if you have an app that delivers signifantly more than similar apps, you can have a higher price. But you need to deliver the goods.

This is crazy, "Help Mr. Jobs, business is hard. Oh, who am I kidding he'll never understand my plee. He's never faced a situation that one developer makes a GREAT product and charges more than the competition. If only he had first hand experience...oh wait.."
The situation is where it needs to be. This is what fuels innovation. Just like Apple has had to stay on top of their game to compete with the PC at a higher price, the developers will need to support the app with innovation and upgradable features. As well as charging for major upgrades. Welcome to the business world my friend, only Banks and Car manufactures get bail outs.

I've got mixed feelings about app prices. Sometimes, you can get really great app for 99c or even free and the apps that are $10+ often do the same thing or are not worth the money. Then again, you get what you pay for - most of the better games I've got are the more expensive ones. Unfortunately, there's often no way of telling what's going to last and what's going to lose its shinyness after a couple of days.
The thing that can be really frustrating, is when an app comes out at $5-10 and, often within weeks, the price drops. Now that I'm aware of this practice, I tend to wait to see if the price drops. It also gives me the chance to read reviews by early adopters. I'm not a serial retail therapist junkie, but I'm sure this massive price drop isn't "normal" practice (although I'd love it if all retailers suddenly dropped their prices to next to nothing as I'd save a fortune on my shopping bill!)

@thekevinmonster where is the incentive to create an app and simply give it away? If someone wants to charge $20 for a killer app then they should, the supply and demand curves will determine if that developer is maximizing profits.
Personally I like my apps to be priced at the exact amount I value them, those are the apps I buy. I've purchased apps ranging from $1 to $20. The $20 app I have is high quality and has seen frequent updates and feature additions. I can't say that about most of the apps I bought for < $5.
Frankly I think the question is flawed. I don't prefer my apps to cost $1 because most $1 apps are only worth $1. I want move out of my apps. Show me an app worth $50 that costs $1 and I'll show you a developer who failed Econ 101.

I would gladly pay for apps that enhance what I use the iPhone for as well as increased productivity and useability. Trust me, I will not be complaining when Docs To Go is released for the iPhone. I hope to see the app store keep what it has but alo give me the opportunity to do more than play $.99 games and doodles. I bought this phone for its potential. I don't want to see it top out at a guitar tuner or dots game.

I've just read the full article posted by Hockenberry. I felt it was a little less whiney than others posting here. He's really asking Apple to showcase good quality apps in more than just the Top 10 or Hot apps lists.
He states : "I’m not going to give you suggestions on what to do about this: you and your team are perfectly capable of dealing with it on your own terms."
So, he's not telling Apple to advertise his app, make a special list for him only, etc. He's leaving it to them. However, at the end of the article, he makes a subtle suggestion that many of you hear would welcome. He notes that having to pay for an app based on a few screenshots is a tough decision. Basically, he's suggesting that Apple get off their butts and create some sort of demo option.
Then, we'd all be less hesitant about paying $4.99 or $10.99 for that potential "killer app". We'd try more and buy more, thus allowing him to justify the risk of the development.

@AppBeacon a "demo" system has to come IMHO. Even with the new community created content on Xbox Live there's ALWAYS a free demo. If not mandatory then there should at least be the option for developers to submit a demo version.
It's the only way to foster the development of more expensive apps. Sure I'm willing to drop $3 or less on an app and if I don't like it it's not a big deal. But if I'm looking at spending > $20 on something, I better be able to try it first.

Some developers should finally realize that they have to find also other ways how to advertise their products, other than using just App store. Market is usually not limited only to the shop, where the goods are sold.

@AnteL0pe demos are actually known to decrease overall sales. Ask game developers about that. You can also see that for yourself how many demoversions are released recently. No, increased costs are not the main reason.
Be careful for what you wish for.

I'm really just speaking form my own experience I guess. When I look at expensive software I like to try it first. If I try it and it sucks then I could see why a demo could be detrimental, but only to that sale. I'd certainly be more pissed if I bought an expensive app and only then did I find out it sucked.

@J Doss:
Car manufacturers don't get bailouts... they BEG for "loans" that they pay back with interest, while Banks (who caused the mess with their corruption) get THEIR free money with no questions asked. If forgetful anti-Americans didn't buy cars from those animals who bombed us 60 years ago, they wouldn't NEED a f**king loan!
— Steve (from f**king Detroit)
Sorry everyone.... back to the topic (someone had to say something).

I think the same way apple let's you see screen shots of apps they should let developers post demo videos on their apps page so buyers can see what we are getting into