Hacker News Reader

Comment by latch | Hacker News Reader

Wow..Amazon gets to set the price on your app. Developers only get to recommend. Certainly original. If this takes off it could have a significant impact on application pricing for more than just Android devices.

iTunes put it in people's heads that a song is worth $1. Amazon is working hard at saying that a book is worth $10. This is the same model - by setting the price for individual apps, Amazon is going to be setting the price for the entire industry. I'd assume Amazon would almost always price an app lower than developers would (and I doubt you'll be able to game the system by suggestion for 2x what you would have otherwise), meaning an overall downward pressure in app prices.

Would benefit users...seems impossible to tell whether it'll benefit developers (or whether other aspects of the store will compensate them, such as with increased sales).

View on HN

The nice thing is that Amazon can basically continuously and automatically A/B test different price points for each app. Drop the price by a penny, is revenue better than projected over an hour? Ok, drop it by another penny, etc.

Ten years ago Amazon was burned by price testing. This seems an appropriate time to try again.

http://www.computerworld.com/s/article/51392/Amazon_apologiz...

Burned? It doesn't appear to have actually hurt them, and they ended up with better policies because of it. Doesn't sound like a burn to me.

And that article even states that they will continue to have price a/b testing, just a more fair sort. They aren't 'trying again', they are continuing.

They still price test and have added nearly $80B in market cap since they were "burned", so I don't think they were burned too badly.

It might have been bad PR but you can bet they've never stopped testing.

"Amazon gets to set the price on your app. Developers only get to recommend. Certainly original."

This is how the vast majority of retail products work. The manufacturer suggests a retail price, but it is up to the retailer to determine what the consumer ultimately pays. Software was sold this way for several decades.

So it strikes me as more "retro" than "original". Not that it's a bad thing -- I love the idea of Amazon split-testing my pricing, because it lets me focus more on the app itself.

The manufacturer suggests a retail price, but it is up to the retailer to determine what the consumer ultimately pays.

This is quite different because in retail the wholesale cost is negotiated between the manufacturer and retailer. Therefore, the price that the retailer chooses to sell the product at to consumers does not change how much the manufacturer makes (except indirectly, by affecting quantity sold and therefore bought from the manufacturer). Coca Cola gets the same amount of money per can if Walmart sells the cans for 20 cents each or $2 each.

In this case, Amazon essentially gets to choose not only the retail price, but the wholesale price, except that the prices are at a fixed ratio to one another and there is a price floor on the wholesale price based on the suggested retail price you gave.

Wal-mart is a bad example to use here. They actually tell companies what they are willing to pay; and everyone falls in line. Thats why some products you buy at WalMart aren't as good a quality as they are at other places. Companies make cheaper products to meet the demands of walmart.

In retail, the manufacturer also sets the wholesale price, which is often around 60% of list. In Amazon's store, Amazon can decide to pay the developer anywhere between 20% and 70% of list price.

I have a feeling Amazon is better at pricing my app than I am.

Well, maybe, but most of us suffer from under-pricing our apps. Amazon's deal only allows them to further discount from your stated 'list price'. I don't see how they can improve things in this common case. I suspect (am utterly sure) they will price things to maximize Amazon's income, not mine. Which may mean deeply discounting my app as part of some campaign to boost their total sales - which won't benefit me one iota.

So make your list price higher than your current price and let Amazon figure out what's best. Unless I'm missing something, Amazon's getting a percentage, so their income is maximized when your income is maximized.

You can't set the list price any higher than anywhere else.

i. List Price. The “List Price” for an App is an amount that does not exceed, at any time, the lowest list price or suggested retail price for such App (including any similar edition, version or release) available or previously available on any Similar Service or the lowest actual price at which you make or made such App available for sale through any Similar Service. You will update the List Price for each App as necessary to ensure that it meets the requirements of this section 5i.

You could just differentiate your product by releasing the Amazon super version that includes some trivial feature not available in the Android market version. Clearly such a feature is worth doubling the list price.

That's naieve. They have many products. They may use yours as a 'loss leader', they may experiment with your price, they may decide your product is worse than another one and position it as the low-tier offering and choose a price to enhance the sales of the higher-tier product (not yours).

they will price things to maximize Amazon's income, not mine

But, I assume, Amazon and the developer split the sale price? If so, then the more money amazon make, the more money you make, right?

http://en.wikipedia.org/wiki/Loss_leader

Reminds me of the success Steam has had fiddling with their pricing structure. Can't find references now, but reports say that they've been ridiculously successful with it.

Though I assume that Valve consults with the publishers before putting an item on sale. I guess Amazon figures it would be inefficient to have to do that will the multitude of apps they are expecting.

It'd be nice if, when developers give their 10 days notice (which is what is required to remove the app from the store), Amazon locks the price.

I could see some pretty angry developers pulling their app, and having amazon's "automated" pricing engine heavily reduce the app's price at the same time.

It says you are guaranteed 20% of the list price, even if Amazon give it away for free.

Amazon is constantly changing prices on its books anyway. If you leave a bunch of books in your shopping cart for several weeks, then every time you go to your shopping cart they'll popup a notice showing what items have changed price, from X to Y.

Yes, they do. Our site tracks pricing on Amazon products and recommends when is the best time to buy.

Amazon pricing on a large range of products pretty much change daily; for example Books:

http://www.happybuy.com/search//all/books/by-savings

Great site. I was just thinking it would be nice to have some notification when books drop in price significantly. Most price changes are a few cents or a dollar or so, but sometimes they can change by $10, $20, and I've seen in the $50 range once or twice.

Thanks for the comments. Yes, we'll automatically email you whenever a price drops for any product you sign-up to via the site.

In the next week we'll also be adding optional price tracking for any item you already have in a public Amazon Wishlist.

Careful making overly sweeping conclusions though.

What works to grow and establish a market may not be best later. Right now app stores and e-books are still up and coming, it's more important to get them accepted and popular than to maximize efficiency or revenue. Once they are more mature, things may change.

Reply on news.ycombinator.com