Avoiding the Race to the Bottom - 360iDev 2012

929140ab388de5849c0221b86242aa12?s=47 Joe Cieplinski
September 10, 2012

Avoiding the Race to the Bottom - 360iDev 2012

We all know that the going rate for iPhone apps is 99-cents. And the 'freemium' model is even more the rage nowadays. But not all apps fit neatly into this business model.
Apple sells millions of iPads and iPhones to new customers every year. And some of those customers are perfectly willing to spend more on an app than they did on this morning's latte. Many apps appeal to a smaller audience, but can command a much higher price.
Companies have found a great deal of success in the premium app market. Take a look at the top grossing lists on the App Store, and you'll find many iPad apps priced $9.99 and up. The OmniGroup, to give one excellent example, sells OmniFocus for $39.99. And no one who pays for it ever complains. This app is consistently in the top-ten selling productivity apps.
At Bombing Brain Interactive, we've managed to stay in the top 50 grossing Productivity apps for over a year now, at a price of $14.99 for our iPad version of Teleprompt+. When we raised the price from $9.99, our sales INCREASED. The app may not be making Angry Birds money, but it does a heck of a lot better than the average app.
Some of the benefits to selling premium priced apps we'll cover in this session:
* More money per customer - obvious, but worth pointing out
* Fewer overall customers, which leads to fewer support requests
* Fewer one-star reviews - You avoid the people who download your app for free and then complain about it not having the one feature they wanted.
* A smaller audience that's easier to target for ads and other marketing efforts
* Fewer competitors - Usually, you'll have three or four, as opposed to thousands if you're building a game, or hundreds if you're building yet another Twitter client. And it's often beneficial to charge MORE than your competitors, not less, as that will make your app appear more serious. (As long as it is actually better than the competition.)
* A loyal audience who is far more likely to tell their friends and professional collegues about your app.
* An app that you can grow and build over time - rather than building an app, putting it out there, then abandoning it for the next idea because you can't afford to keep it up, you get to continue supporting and adding great new features, building a community of users over time
* An opportunity to build ""complementary"" apps. Make other premium apps that appeal to the same audience, and you have a built-in customer base of loyal fans who you know are willing to pay for your next creation.
Obviously, not all apps should command a higher price, and this model is not necessarily right for your app. But if you have an idea for an app you want to build, consider who the target audience is and what sort of price that audience will pay before assuming you have to go to $1 or free. And don't be discouraged because your idea is only appealing to a small audience. If it's something you want to use yourself, chances are there are others who would want it, too.
Of course, if you're going to get into the premium business, there are some things to consider about making higher-priced apps. In this session we'll talk about:
* The premium app experience - design, stability, features; these apps have to sweat the details even more than the average app. Word of mouth works both ways.
* World-class support - people who pay more won't write 1-star reviews, but they will write to your support page. And they will expect fast responses.
* Documentation - offering customers professsional support documents, a users manual, etc. The more you look like a professional organization, the more respect you'll get
* An organized branding effort - you'll want to invest in a web site that is more robust than a single page with a link to the App Store. Promo videos, instructional videos, detailed explanations of the app's features that go way beyond what you can fit in the App Store description area. People will want to inspect every nook and cranny of your app before coughing up a high price for it.
It takes more to produce and maintain a premium app, but if you are willing to work at it, the rewards are great.


Joe Cieplinski

September 10, 2012