Note: This blog post is now over 2 months old. The App Store is still rapidly evolving so though some of my comments and statistics still stand, others are already out of date.
I’ve had an iPhone app peak at #13 priced at $7.99, dropped the price to $0.99 four months later, and seen it rise to #2. I’ve also had an iPhone app that has not yet come close to paying me for the work I put into it.
But since the App Store launched in July 2008, I have been carefully watching the top 100, the free vs paid difference, the lite version influence, everything that seems to affect sales.
So I’d like to share my thoughts on pricing strategy in this crazy App Store sandbox.
Many apps have dropped to $0.99 permanently, and my own DuckDuckDuck also dropped to $0.99.
I regret it.
One of the problems with hitting this price point is in the long term income. A month after the price drop, 6 months, 2 years… People who like an app, and then recommend it, are the best form of advertising. These wonderful, loyal customers perhaps unknowingly convince their friends to pay well for the recommendation. But not just yet. The tail of 1000 sales today lasts a hell of a long time. When their friends do happen to buy an iPhone, and then try out the App Store, and then buy an app or two, your app might be it. Hopefully it’s not $0.99.
But the biggest problem with setting an app price at the lowest possible value is that there is no room to move. Dropping the price may seem a good revenue increase initially, but sales will tail off. Then what can you do? Nothing. You’re selling two copies a day at 99c.
If you’re thinking beyond the end of this month, don’t permanently drop the price of your app.
The general public will buy anything at low prices
Every developer has seen the apps that appealed to the $0.99 market. Maybe based on bodily functions, seemingly simple ideas, shiny objects…
And they do well… for a short while.
At $0.99 you’re aiming for everyone. EVERYONE who has an iPhone/iPod Touch. At the absolute lowest price that actually makes money, all of the people who wouldn’t normally buy your app are invited to give your app a one star review.
And a $0.99 app will get MANY one star reviews, even after increasing the price. Two months later reviews like this will still show up:
“…i vot it for 99cents and now its a wopping 5bucks woow…”
Of course it might get positive reviews too, but ranking seems to go down as you price too low. DuckDuckDuck went from ~4 stars to ~2 stars after the two week $0.99 -> free offer.
If you price your app too low, you will get bad reviews.
Free for a while can help… sometimes
That sale on DuckDuckDuck was when it was doing really poorly at a couple of sales a day at $0.99. At that point I could do whatever I wanted as $2 a day is worth a piss in the wind. So I made it free over xmas and got a bit of press. DuckDuckDuck is now selling at $0.99 again, and has averaged about 20 sales a day since the increase. While free it was downloaded around 5000 times a day.
So my stats indicate that iPhone owners are about 250 times more likely to download a free app than a 99c app. So people are way way way more keen to download whatever the crap they can get for free than anything half decent that costs a dollar.
If your iPhone app is selling poorly but might be appealing to some niche market, make it free for a while….. and most iPhone owners are freetards.
It’s completely unintuitive, but if you’re high in the charts you can get higher with a lower price. However, if you’re out of the charts you can earn more at a higher price.
If you’re anywhere near the top 100, a lower price will increase your rank. Once you get there, and in particular once you get into the top 25, if you have any kind of momentum, you have a chance at the top 10. The #1 app in the paid top 100 is usually getting more than 10,000 sales a day. And at a good time, or with a good app, you might get 50,000 sales for a day or two. At #15 you’re looking at about 1,500 sales a day, #50 roughly 500 sales, #100 roughly 300 sales. (all early 2009… Hi future people!, bad search!)
There is an interesting curve here for statisticians, but right now if you get to the top 10 it doesn’t matter what your app is priced at, you are making a shit load of money.
On the flip-side, if your app isn’t high on any charts, then you have a market that is almost normal. You can experiment to see where your greatest revenue lies, you can put your app on sale, or make it free for a while… you don’t really have anything to lose. Try it.
If you manage to get featured by Apple, it’s even more interesting. You can just ride it out at your current price, and get a nice bump in revenue, or you can drop your price immediately and try to ride the charts for a week…. or more if you have something shiny.
In general though, if you are close to the top 100, over a couple of weeks, low price will give better revenue, until you get high, then high price will give better revenue… until you get low… But change your price too often and you’ll die…
… and then there are the apps that sit happily in the top 25 at 99c for months… You cannot get there. 1 in a million now, they’re all old flash games and shit. Glider could do it, where is Glider?
If the rank drops, increase price, if it sores, decrease price. Yeah, it’s backwards.
Chopper went from obscurity to #2 top paid in about 2 weeks. The cause of this was a price drop: $4.99->$0.99. At $0.99 It quickly rose for a couple of weeks, then quickly fell for a couple of weeks. It also went from 4 and a half stars to 3 and a half stars. When it got below #25 I put the price back to $4.99, and have mostly been getting higher revenue than #25 at 99c.
The App Store tail is getting fatter. 6 months ago if you weren’t featured, you made nothing. 4 months ago, if you weren’t in the top 100 you made nothing. Now… it’s getting better… I think it will get better still… #500 at >$2.99 is probably making a living. The App Store is still attractive, it’s just getting harder to get noticed. At Roughly # 300, at $4.99, Chopper is making $500US+ a day right now. Thats OK in my book.
It’s OK. make some apps… you probably have a better chance on the iPhone than anywhere else.