7 Reasons our app costs $99.99 | Hacker News Reader

7 Reasons our app costs $99.99

blog.httpwatch.com

114 pointsryanmcdonough114 comments

I appreciate the developers' honesty, but if the goal is to justify the price to customers, they shouldn't blame external costs and delivery challenges (e.g. Apple's take from App Store sales).

Think of it this way: while asking your boss for a raise, you wouldn't mention the cost of rent or your other bills — even if those are prime motivators. You would instead focus on how you bring value to the company.

Several of the article's points focus on the value that this app brings to customers. The post would be stronger if all of the points had that tone.

I've known a number of people who have successfully gotten raises by talking about their personal expenses. It's not a rational appeal, it's an emotional appeal, but emotional appeals can and do work.

Rationally your labor has a market value. How you negotiate your way into getting paid that (or a little over that) is up to you.

> I've known a number of people who have successfully gotten raises by talking about their personal expenses.

Like that photographer dude on HN a while ago who defined the cost of one photograph by the equipment cost, and the plane ticket required to go there?

With this kind of logic, you should bill your customers your years of education, from the time you started to read, and effectively charge them millions of dollars per product. This is so ridiculous I don't even know if there's a name for this kind of fallacy.

Fallacy, or just an application of supply and demand? In general, requiring many years of education reduces the supply of a given profession, which raises salaries (though demand still helps explain why doctors make more than philosophy professors).

What matters is not the supply of a given profession, it's its market value or utility value (for the said market - you define it as demand). The market has not much use for philosophy professors, that's precisely why they don't make much money. Rarity is never a single factor for value definition. If it were that simple, you could just tell your kids "study what nobody else is studying and you'll do just fine".

Hence supply and demand. But what you're describing ignores supply, and that's wrong. If you doubled the supply of doctors (or concretely made things that doctors do be doable by nurses), you would get lower prices, as they competed for business.

Sometimes the restrictions on supply are artificial, sometimes they are natural. Medicine are a good example of both effects. Being a doctor is hard, and requires a lot of education. But there are also limitations on how nurses and other medical practicioners can work (dental hygienists can't clean your teeth unless they are supervised by a dentist).

>> With this kind of logic, you should bill your customers your years of education, from the time you started to read, and effectively charge them millions of dollars per product. This is so ridiculous I don't even know if there's a name for this kind of fallacy.

I think the fallacy here is that you extrapolate the things you mention to 'millions of dollars per product'. I don't think its ridiculous logic to attach a premium to your 'market value' based on how much (time, money) you invested in your education or side projects, and I also don't think it's ridiculous at all to account for equipment cost and travel expenses to determine the cost of (for instance) a photograph. In fact, I think it's perfectly normal, and I assume the similar logic was used in determining the price of about every product or service I buy. Usually costs like these are amortized over a large range of products ('photos', to stay with your example) and/or a large number of sales, so the numbers don't add up to 'millions of dollars per product'.

> I also don't think it's ridiculous at all to account for equipment cost and travel expenses to determine the cost of (for instance) a photograph

It is ridiculous, because your equipment is not disposable, and is going to serve for multiple pictures (possibly hundred of thousands before it dies out) and your trip was not just for that particular picture, but for other purposes as well (relaxing, tourism, etc...). It seems very far fetched to justify the price of a single photograph this way.

I don't believe anyone is suggesting that you charge the full price of the camera for every photo, but rather that it's a factor in determining the correct price for a single photo.

Also, if someone wanted me to fly somewhere to do a project for them, I am absolutely going to charge them for the plane tickets. Travel is difficult and costly, there's not only the cost of the ticket itself but the opportunity cost of all the things you could be doing instead of dealing with flying somewhere.

> Also, if someone wanted me to fly somewhere to do a project for them

I'm not sure if you have read the post I am referring to, but that was not the case. The guy was not asked to go and fly somewhere to take a picture. He just said his picture was worth x thousands dollars because he took it with x,y equipment and travelled to that place to take it by himself.

I'm just saying that's not how pricing usually works. You don't charge for your costs, your charge at the price you can sell, and whether that's above your fixed costs is only a matter of whether your work is valuable or not. If I were a complete noob with expensive equipment, my market value would still be zero.

Why do you think university degrees get paid better than learning at home kind of thing?

Of course the investment in certain skills needs to be paid.

It is easier to understand why software is "expensive" when one factors in all monthly costs involved in paying bills, office personal, developers, sales and marketing to produce the said software.

> Investment in certain skills

I think you get it wrong. You are not being paid for the years of studies you did. If you learn about petrol extraction in a country that has no oil and if you are not willing to move, your market value is exactly zero. The market defines your value, not your education. That's precisely what tons of students don't understand and get severely pissed off when they don't get the job and the salary they expected.

>I think you get it wrong. You are not being paid for the years of studies you did.

Not only you do, but in a lot of countries it is mandatory too.

People with university degrees earn X more than people without, by law. This for example happens with civil servants in lots of countries (different, published pay scales if you have a university degree). In some places it's also encoded in the minimum wage a profession commands.

(I worked at the salary department of a major ministry in my country, and I know of similar laws elsewhere too).

> Not only you do, but in a lot of countries it is mandatory too.

Great, you just defined one of the root causes of unemployment. Artificially fixed value. The same thing occurs when you artificially define minimum wages: home owners stop renting their properties because it does not make sense for them anymore.

I don't believe in some magic "market equillibrium mechanism" that always reaches some optimum and doesn't need intervention.

If people and especially employees, can screw other people, they will. Laws against slave and child labor, and women inequality in pay, are also some ways in which we introduced protections against those abubses. For some people those protections were "artificially defined" too (e.g "why take the children out of the labour pool and artificially inflate the value of adult labor").

>The same thing occurs when you artificially define minimum wages: home owners stop renting their properties because it does not make sense for them anymore.

The correlation doesn't make much sense. As long as there are people willing to rent their properties, they'd rent them. If anything, with people getting some guaranteed minimum wage, instead of being paid less, there even be more people that can afford to rent.

Or is the idea here that people would not be employed because of the strict miminum wage? In actual life I haven't seen that. It's more like employees are paying people less just because they can, than paying them less because they cannot afford to pay them more. Minimum wage at least puts a cap to that.

> The correlation doesn't make much sense. As long as there are people willing to rent their properties, they'd rent them. If anything, with people getting some guaranteed minimum wage, instead of being paid less, there even be more people that can afford to rent.

Wrong word used up there, it was not "wages" I was refering to, it was "rent prices".

Picasso did this once : one day he was relaxing at a park, a woman recognized him at asked him to draw her portrait. Picasso quickly scribbled something and before giving back the drawing, told the woman :

"It will be 300$, madam."

"That's way too much", the woman replied, "it took you only 10 minutes to do it !"

"That's where you are wrong madam, it took me all my life."

>With this kind of logic, you should bill your customers your years of education, from the time you started to read, and effectively charge them millions of dollars per product. This is so ridiculous I don't even know if there's a name for this kind of fallacy.

Of course you should factor in your education et al into the price you charge for your product.

Fallacy? That's what every professional I know does. He factors in his qualifications (education etc), into the prices he charges.

> I've known a number of people who have successfully gotten raises by talking about their personal expenses.

That can in some cases be a winning strategy for negotiating a raise. If your living expenses are too high relative to your salary and you're worth more than your current pay, your boss might give you a raise out of fear you'll leave. That logic doesn't carry over to app pricing though.

> It's not a rational appeal, it's an emotional appeal, but emotional appeals can and do work.

This isn't as much an emotional appeal ("please sir, can I have some more? Look as the way I'll have to live if I can't.") but more of an illustration of why more is desired and therefore why you might be considering looking elsewhere (which if you word it right won't be taken as a threat by a reasonable boss and/or HR person, rather as an honest explanation of your needs and thought process).

For an emotional appeal to be successful, there needs to be a strong relationship (business, private, social) between the partys involved. Otherwise it will often be considered whining or begging. Having no relationship with a particular app developer, I'm not interested in his cost structure or the time it took to develop the app but only in the value the app has for me. (That's not to say an app couldn't be worth 100 bucks or even much more.)

> For an emotional appeal to be successful, there needs to be a strong relationship (business, private, social) between the partys involved.

An "emotional appeal" is also known as an appeal to empathy, and humans empathize for many reasons other than personal relationships. When you hear about starving children in some far away place, you empathize, not because you know the suffering children, but because we're hard wired to protect our young. Other times, we empathize because we can identify with another person's experience.

HttpWatch is a tool for developers, made by developers. Their hope with this message is that other developers will identify with their challenges. Every developer who sells their software in the app store has struggled with the pricing question. The addition of empirical evidence to support their pricing was a nice touch.

There's always a skeptical subset of people who will not respond to any appeal. In my experience, that group is overrepresented here on HN, so I'm not surprised at the responses, but my hunch is that this message will have some positive effect for HttpWatch.

Actually I think cost of living increases and inflation are fine to bring up when asking for a raise. If you don't get a raise to match inflation they are effectively paying you less than last year, which only makes sense if your job performance is worse as well.

If you have numbers to back up your COL increase or inflation, then this could work. But if you don't have reliable numbers (or if your boss just doesn't trust them), this technique will probably fail.

This works out when discussed in the context of "competitive compensation" in your market. While your manager may not care that you want to live in a USD5,000/mo apartment, she may care that companies x, y, and z are paying programmer analyst IIIs USD5k/mo more than she's paying you.

I almost never give COLA raises, but I will raise based on performance and desire to remove money as a reason to look for another job. It's the easiest way to overcome inside recruiting and it doesn't take much thought, so I can spend my time with other retention techniques.

Would you give money back when the cost of fuel or food goes down?

Most companies with different geographic locations adjust their pay scales based on the local cost of living. Consider a company with offices with New York, NY and Charolette, NC (e.g. Bank of America) -- the cost of living in those locations is radically different. If they attempted to pay Charolette, NC wages in the NYC literally no one would work for them. Another example, the US government [1] has a base pay scale with a cost of living adjustment.

I think they make some very strong points (30% to Apple, no upgrade prices, etc) for their price, and I genuinely surprised that we don't see more $100+ apps in the Apple App Store.

[1]: http://www.opm.gov/policy-data-oversight/pay-leave/salaries-...

I agree that the Apple fee is a cost of doing business, just like website design or credit card processing. And it's a known quantity for anyone who decides to make an iOS app.

$100! That expense should be fairly easy to justify (to a business/boss that is profitable).

"Boss, you pay me $50 an hour, it would take me 8 hours to get the functionality this app provides (that we need) and that's not including future changes and improvements. So, what should we spend? $100 for this app or $400+ for an internal pet project that's likely to turn into a time and money sink?"

If you wanted, you could also step away from costs of $50/hr and talk about the value of a developer hour (say $100/hr).

Sorry but I disagree, the fact that Apple is taking 30% off the table is completely relevant to the price charged. They are saying, in effect, we need to get $70 from this App to cover our costs, since Apple is going to take 30% we have to set the price at $100 to get $70.

As a "boss" I do get employees who point out that their cost of commuting is significant. There is a distance vs location vs salary metric that people are constantly min-maxing to improve their net take home pay. If I hire a web developer that can work 5 minutes from home by bike, or an hour from home by car at my place, that it going to figure into the salary that they require to take the job.

When I was in grad school in the '80s living on my $430/month stipend I bought TeXtures, an implementation of TeX for the (new) Macintosh, for $400 so I could use it to write my thesis (in plain TeX) on my Mac Plus ($1400 with a steep educational discount). Reading the comment of a company that thinks $99 is too much to pay for a tool that they would like to use in their work is pretty funny. I can understand balking at software because the source is not available, but $99 for something to be used as as a professional tool is trivial.

I suspect they wouldn't need to if that same "app" was sold on the PC, Mac, or similar. The problem is that app-store apps have a price pinned to around the $.99-9.99 mark, so anything more than that is seem as abnormal and needs to be "explained."

I suspect people are used to buying app-store apps at those prices because it requires no commitment. You could spend 99c on an app, use it just once, and not really regret it because it was "just" 99c. However if it is more than $10 then you have to actually consider the app's relative value and people aren't used to that kind of value proposition on the app store.

>> I suspect people are used to buying app-store apps at those prices because it requires no commitment.

"No commitment" on the buyer's side, that is. There's still a high expectation of long term support on the seller's side regardless of whether the app has a very low price. Remember how many people freaked out over the sale of Sparrow? IIRC, that app only cost a few bucks.

It's that race to the bottom they mention. As they mention, they're in a relatively expensive labor market (although, as I sit here in the Bay Area, they have me thinking about a recruiting run to the UK).

They're paying for the market validation that can be eaten up by a company in a less expensive market to produce a knock-off version (or, more likely, ten knockoff versions) for that USD9.99 and enjoy boatloads of sales.

This pattern sets an expectation that, because it can run on your phone, it should cost significantly less than desktop software, even if it is more useful than a desktop version.

I'm a big fan of leverage and my father taught me the ROI model of tool selection from an early age, for everything from shoes to calculators. Unless it's completely unaffordable, the cost of a tool is irrelevant outside the context of its ability to amplify your thought and your output.

It's a shame that a company even need to write an article like this. The venture backed economy in most technology companies really warps pricing models and allows companies with huge funding to disregard the actual 'making money' part

I remember my first start-up, where the software we were selling was what was paying for my ability to eat food and have a place to live. And a guy on the phone wondering why the software cost a thousand bucks and not $39.95 like the stuff he saw at Babbage's.[1] I said I probably wasn't the right person to ask about that.

[1] TIL Babbage's had already had a name change before the time period in question.

Agreed- all the more reason to not apply mass market, VC-backed product economics to your niche technical application. We are working on a niche desktop OSX app that we will price +200 USD. It's for business users with a budget and has a demonstrable ROI for exactly that kind of buyer, why cater to the $.99 or free crowd?

Part of the problem is the App store itself. It's primarily a consumer store, and price expectations are set accordingly. Sadly, Apple hasn't really done much to prevent the race-to-the-bottom pricing.

If the app was a sideloaded app only, the OP would be able avoid the questioning from the more frugal app store audience completely (and could conceivably cut his price by 30%).

The "even my company won't pay" comment was a bit shocking but also reminds me of Kalzumeus' experience with teachers and the already low price of bingo card creator.

Yeah companies able to continue to lose millions offering their below cost product makes it hard to compete in many markets.

When an app is so expensive, and is targeted to niche/technical users anyway, I wonder why they (or other companies) don't also sell it outside of the app store (and avoid Apple's cut)?

Users would get a $99 developer license, download the binaries and a little installer script, and the script would install the app via XCode on the device. For one app alone it would not make sense for the user financially, but I could imagine that some power users or people wanting to use censored stuff already have the license. Any reason why this wouldn't work (I'm only superficially familiar with IOS development)?

Because people want things to be easy as possible.

I believe that's a violation of Apple's developer license. There was a company using a similar trick to bypass the app store, and they got in hot water for it a while back. (I remember it being reported here but can't find the posting.)

Yup, it is. If you're remembering what I was remembering, there was a developer who created a adhoc profiles and would distribute their app 100 at a time, then remove the device and start over. This was before Apple's rolling hundred devices was implemented.

But if I understand it right, in that case the developer was distributing the app, signed with his own developer's account, abusing the 100 devices you have for testing.

What I meant was to let the users be the developers, and sign and deploy it themselves.

If you didn't care about selling it, you could just dump the source somewhere with a little installation script. I can imagine many IOS users who would like to use emulators or other banned apps would happily pay $99 and compile their own stuff.

There was the other example, and then The Omni Group distributed a "Key Gen" for their own software that would enable Pro or unlock their free apps for people who had already purchased the app outside the ecosystem. Apple shut that down too.

Because that would violate the Apple rules (and also be practically infeasible for technical reasons).

You can officially (as a matter of policy and enforced by iOS) distribute apps in 3 ways:

1. Through the App Store

2. As an enterprise developer distributing apps to employees of the same company through an enterprise App Store to an enterprise enrolled iOS device

3. As a developer to a test device where the test device is 1 out of 100 registered devices in your Apple developer account

The only other alternative I'm aware of is to jailbreak the device and distribute via Cydia.

Regarding your (2.) - just to clarify this for others: With an enterprise provisioning profile, you can deploy your app to an arbitrary number of devices. These devices do not need to be known before via UDID (as with normal OTA provisioning). You can just upload the app to a server and ask people to download. So the devices do not technically have to belong to the same organization (even if this is perhaps Apple's intent). E.g., a friend of mine uses an enterprise account which they aquired for their university to deploy an app for a study (for data gathering). The subjects who install the app and enter their data are not all part of the university. Apple was informed about this use case and they did not have anything against it.

But, AFAIK Apple centrally checks the validity of the profile with each download and thus they are certainly able to detect if you use your enterprise profile to circumvent the appstore.

OK, but in all those cases the primary developer compiles and signs the app with their developer's key, which is restricted by Apple.

What I was thinking about was (simplified):

- The primary developer distributes a non-runnable version of the app. Say they just dump the source somewhere and declare it public domain.

- A user registers as a developer with Apple, downloads Xcode and the app's source, and then builds and signs it themself and places it on their iOS device.

The user pretends to be debugging the app he just compiled. No compiled or signed code is distributed, nothing is placed in the app store, etc.

Is the rule still that if you allow in-app purchase or subscription then it must be sold through the App Store? You could circumvent this by distributing the software via the app store and then must authenticate before any of the functionality is usable. Amazon Instant Video and Netflix apps do this I think presumably so they don't have to pay 30% of their subscriber fees to Apple.

The problem with mobile apps priced at $99 is price anchoring. If every other app on the app store is $1 - $10, then putting yours at $99 is going to make you seem really expensive.

Its like here in the UK, Marks and Spencer Food (a premium food supermarket) doesn't compete on price with ASDA, Tesco, Sainsbury's etc, because they'd lose, instead their ads are Dine in, for two, £10 [1], which is meant to make you compare it to a restaurant, because then it feels like a very good deal. Its all about context.

Search for Rory Sutherland on YouTube [2], absolute genius, he talks about this kind of thing as well as other absolutely brilliant ways to apply behavioral economics to advertising and business.

[1] http://www.voucherexpress.co.uk/volatile/ProductBannerImage/... [2] https://www.youtube.com/results?search_query=rory+sutherland

> Its like here in the UK, Marks and Spencer Food (a premium food supermarket) doesn't compete on price with ASDA, Tesco, Sainsbury's etc, because they'd lose, instead their ads are Dine in, for two, £10 [1], which is meant to make you compare it to a restaurant, because then it feels like a very good deal. Its all about context.

It "works", but I've never found those adverts convincing. People don't eat at a restaurant every day, and the food from a restaurant will be better than whatever M&S is offering.

It's best not to try and trick your customers into spending more money for an inferior product. It tends to backfire over the long term.

$100 for a professional app that helps you in your day-to-day work is a completely reasonable price.

Assuming their (rather low compared to North America) rate of $40/hour for a developer, if this app saves you in aggregate more than 2.5 hours of work, you've already made your money back.

The average iOS dev in the UK is not $40/hour that works out to be £187 a day! From what we see the going rate is around £300-500

For a freelancer or a consultant via a full-service agency, sure, but you're paying for other things there. For a conventionally employed professional I rather doubt you'd pay 300/day (and if you are, tell me more!)

That is your average contractor contract rate. The actual cost will be 10-20% more than that to cover agency costs (so £350-£600) a day.

Permanent employees will probably cost less than that. Say £50k a year or approx. £250 a day...

Regarding this, I've found you need the case to be far more clear cut before people buy an app to save money. My ballpark is more like x10, i.e. they need to feel appropriately 25+ hours worth of work will be saved before purchasing.

Remember, also, the fully loaded cost of an employee is at least x2 their salary.

True as long as you are an indie developer.

What is missing from the article: why you should pay for the app at all. What features does it offer in addition to what you get for free when using Firefox/Chromium and built-in tools or plugins?

As it stands the article didn't even convince me that the app would be worth $0.99, not $99.99. Or maybe I'm just not the target audience.

What are the dev tools for Firefox and Chromium like on the iPhone?

Valid response however he's right.

They should have shown what makes this app worth its price.

IE, Firefox and Chromium all have great debug/developer menus, Chrome even has specific developer menus for mobile device tethering/debug.

Why would I need extra performance optimisation data on iOS that those wouldn't already show me, for zero cost?

<cough>Fiddler</cough>

I'd argue that the charts in Section 4 are the reason to price high. Your overall revenues are higher.

Joel Spolsky has his article on market segmentation

http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...

that provides a more thorough treatment of why increasing the price to "near absurd" levels is actually beneficial from a revenue standpoint. Unfortunately, Apple's app store as a channel makes it difficult (impossible?) to provide differentiated pricing (unless you do the classic free / paid with two apps).

When the app is forced to coexist with cheap/freemium applications in the App Store, it can be easy for consumers to make an apples-to-oranges comparison. That is, Angry Birds offers a lot of value at $0.99; does this app offer 100x the value? Is the value comparable? The user comments presented in the article seem to indicate unreasonable expectations set by the App Store market as to the value of software.

Perhaps they need to focus more on operating within the constraints of the market rather than fighting against them. There are several business models that work, and it doesn't need to be advertising based. They could offer tiers of functionality that that are priced accordingly. They could make it a subscription service. They could make make the functionality modular and offer a la carte in-app upgrades. In addition to all of these, they could offer a lifetime "platinum" version at $99.

I don't see why they should bend themselves backwards to fit a consumer-focused store. The fact that users expect apps to cost less than $5 despite whatever functionality is offered is outrageous to any company trying to provide a decent tool.

IMHO, Apple/Microsoft/Google should provide a "Enterprise" marketplace to things like this (if that doesn't already exists). Then people won't be comparing great tools against Angry Birds.

> Perhaps they need to focus more on operating within the constraints of the market rather than fighting against them.

It's also amusing to look at the number of Chrome Extensions that do the same exact thing as this app that exist on the Extension Webstore. Granted, making a native iOS app can be arguably more expensive than a Chrome plugin, but it also shows where the market is pointing for this particular niche. Not many people I know of would willingly purchase this app to solve a mobile http connection issue they normally would solve with a free plugin for their desktop browser, especially when it's going to be a rarely used utility.

I think a tiered approach would be a fantastic way to ease consumers into the product. Not only would these developers get a much larger install base, but it would also help the entire app store economy grow more accustomed to more expensive apps, countering the "race to the bottom" effect the author cites as a reason they charge the amount they do.

There's also the fact that iOS locks out 3rd party browsers... only permitting 3rd party 'skins' with UI over the hobbled mobile safari with JIT disabled. So, you can't even write a full extension that'll work properly on an iOS browser like it would on an Android browser.

The most interesting thing is that even though people complain about the high price, the wallet test shows that real customers recognize the value and are content to pay $99.

The App Store has conditioned people to ASK for a low price, but that doesn't mean developers have to offer one. Any advice that says you should give people the price they ask for is bad -- the optimum price for any product is almost certainly higher than most people would pay. Even 99c apps shift far fewer units than freemium ones.

However I suspect HttpWatch would make even more money with a true freemium model where you pay for the volume of use.

Let's not forget reduced support costs as well; vastly fewer customers means vastly fewer tickets.

I'd also bet that a $0.99 price attracts a lot of unreasonable customers, and those paying $99.99 would be an awful lot more reasonable.

This has been my experience with SaaS and consulting: higher prices mean noticeably more pleasant customers.

Refreshingly honest, happy to see more developers sticking to their guns. If you are creating software that truly provides long lasting value, you should get paid for it. I wrote a post with some similar reasons why I charge for my mobile app ($2.99 though as opposed to $99): http://netkow.com/post/89053877550/why-i-charge-for-my-mobil...

What is very interesting is the number of people who get angry over apps charging essentially anything. I can see disappointment, sure, if you really think you can't afford a particular app, but anger?

Where does the anger come from? What must this user expect out of the app store that asking for remuneration leads to flaming comments in the reviews?

The only things I can figure is that there must be some sort of default assumption of freeness. Does the user believe the apps to be coming from Apple/Google/ATT/Verizon/etc, and feels jilted that they are paying for their service and an "incomplete" device [1]? Or does the user believe the apps to be coming from other users, that apps are no more complex to develop than images are to share on Pinterest? Even that feels like a stretch.

I don't know. Have there been any studies on this? Any insights from experienced app publishers here? I think this is a really important question to answer, because otherwise I don't think we're ever going to properly monetize apps, if there is such a fundamental disconnect between developers and users on how the app ecosystem is viewed.

[1] default builds are pretty underwhelming.

Very well said. Completely agree on the "angry" part - I've experienced that with my own app ($2.99). The hateful things that people write are mind boggling! It costs less than a Starbucks coffee yet they feel like I've robbed them blind. My theory is that the "race to the bottom" that occurred years ago when the app stores began are to blame - as developers/companies we had a chance to establish appropriate expectations but blew it. From here, it's an uphill battle but I think sticking to our guns (charging for apps) and educating friends/family about the true costs/work effort behind apps is a great first step.

Is that enough to account for anger, though? What is going through these folk's heads to skip right past dismissal and go straight to hate? Hate and anger are usually reactions out of insecurity.

And unfortunately, I think "sticking to your guns" on this subject just puts you in a sort of prisoner's dilemma with the other app developers.

This is a quite bad blog post from marketing point of view.

"Tell me the ROI not that you need to make money, I don't care about you. Tell me why your application will make my life easier and why it's better than other cheaper alternative solutions"

Classical case of someone is taking user feedback personally.

It's a really useful post for software developers, but I agree his customers don't give a hoot.

Well I guess that's for the typical selfish user however if you respect your customers and you expect them to respect you back and understand that you need to survive in order to keep pushing updates to the app this seems like a valid response.

I certainly value it more.

Their target market is developers don't forget.

If their target market is made up of software developers and this sort of list appeals to under-appreciated software developers, then it's likely to help more than hinder their efforts. It made it on to HN after all and I don't know that the other approach would have.

Fair point, I don't know whether they guessed the HN or not but certainly results are quite good :)

The constraints of the app store lead me to believe there has to be a better solution for developers of professional apps. However that cut Apple takes really needs to have limits, its almost begging for someone to step in but I doubt its even possible with Apple's ability to lock it down

Through experimentation I think we've come to believe that a free app with upgrade features available for a recurring monthly subscription, and an in-app trial of those features, will generate the most revenue.

That's because people have more chances to make a decision, and you can influence that decision with the free trial (try before you buy). Otherwise they are deciding based purely on a picture and description, and maybe some social proof (a blog article that brought them there, the reviews, etc.) With the above scheme, you get all that + the actual visceral experience of the trial, and a low monthly payment.

What do you y'all think? Have you tried this scheme?

The charts are interesting, but I wonder how meaningful they are. For example, does the sales volume at $9.99 reflect what long-term sales would be, or is the number artificially high because people saw the price drop and thought they should buy immediately in case the price went back up. Since the $19.99 price followed the $9.99 price, is that number artificially low because the $9.99 price already drained potential customers from the market? Of course, none of that argues against the conclusion that $99 gives them more revenue than $9.99.

I find it difficult to believe that dropping the price by 80%, from $100 to $20, resulted in no increase in demand. Another post mentioned some possible confounding factors related to the sequence of price changes ($100 -> $10 -> $20) that might explain it.

Although a very different market, I'm still amused that online gaming portals like GOG and Steam consistently get me to buy games I would not otherwise buy by running sales more-or-less continuously. I wonder if HttpWatch could capture the lower end of the market in a similar fashion.

One idea is to develop the full-featured app for the desktop (you know, that productivity machine we've been using for a while and that we know works) and make a skinny/thin app for tablets/smartphones that you can charge $5 and users will be happy to "have that added functionality for just $5, awesome!" while paying the full price for the desktop version (like they always do with business apps, which much complaining).

I think one of the best advantages of pricing high is that you have fewer customers and they're all 'useful' to you. Their feedback is far more valuable and you can spend the time to interact with them individually and tailor service towards them. 'Cheap' users spend more a lot of time complaining and demanding support that you can't afford to give them.

If the product is good, people will pay.

I agree absolutely!

Such software are working tools that save hundreds or thousands of dollars.

It is like the old discussion about the price of Microsoft Windows, or an Apple Mac, or Adobes Photoshop - oh my good, i call them all in one sentence ;-)

Yes they are expensive, but from the viewpoint of productivity, you make money with them and much more than they cost you.

I hope more developer have the courage and sell their work at reasonable prices.

9.99$ would make me happier as a customer, if it was good and worked like is wanted i would recommend it, if it was buggy and bad i would just ignore it.

99$ it it was good i would recommend it. If it was buggy and bad i would do screaming rants and blog posts about it.

My initial thought on the subject when trying not to only think about final revenue.

Great post, especially the graphs comparing sales and revenue. In regards to this comment

> 5. There’s no Upgrade or Maintenance Pricing on the App Store

You can use in app purchases to add features feature upgrades to the app. Games do exactly that. The only challenge is that you have more maintenance in code and in iTunes connect.

It would be purely performance art on their part, but they should release a "free" version crammed so full of ads they start leaking out the sides of the screen.

This fear of paying for software is exactly why the Google/Facebook model of selling all your private data to advertisers is so popular.

Why don't they sell a locked demo version which hides most of its functionality and ask for a key to be obtained by opening a paid account on their website. They can make a subscription model then.

Do Apple make that illegal too?

Absolutely they do. As is bypassing IAP, if you're going that route.

Thanks for the insights. I wonder if a feature by feature in-app purchase on the app would have fared better.

The price limit in the App Store is $999. I wonder why they chose $99, and not something higher.

Because crossing over to 3-digits would make even more people look for alternatives.

On the Australian app store it is $129.99. The Australian market is small enough that it's unlikely to be worth optimising for but I though I'd mention it all the same.

(For the curious AU $129.99 is about US $121 at the moment.)

Australia has been one of our best markets for the app. Perhaps a 3 digit price is better :)

Does the Australia app store include VAT (or equivalent) that can be claimed back by businesses?

Yes, the price to Australians will always include 10% GST (VAT equivalent)

Yes it includes GST (10%) and that can be claimed back.

Also it's not uncommon to soft-launch apps in Australia before the US and the rest of the world as a large scale public test. (The market is considered by some to be very similar to the US.) So it might makes sense to roll a different line just for Australia. Maybe. Just throwing the idea out there :)

Really good article just for the sales vs income graph alone.

“Because if we could reasonably charge more, we would”

#6 shouldn't be #1 or #2 instead?

Has anyone on HN actually bought this application? It seems to have no reviews or ratings for any version, which is somewhat strange for something costing so much (that price motivating feedback). Even the basic version has no ratings or reviews (sorry the US basic version has 9 ratings, but no reviews).

It even includes a rating shortcut in the app itself.

I actually flagged this story when it first appeared because it seemed to be spam, and what I suspected was a fictional narrative to pitch it. e.g. a nice chart isn't necessarily backed by non-fictional numbers, but can as easily be manufactured numbers to fit the narrative.

I appreciate that I am being horribly cynical, but such is the nature of promotion today -- the story that gets you some attention often needs to be propped by a fiction about attention. I have no idea if that is the case here, but some of the signs are there.

The app store is optimized for mass appeal apps. It only shows reviews for the latest version in your country's app store. The HttpWatch app has had a reasonable number of reviews but it is a relatively niche app.

Getting app reviews is very hard unless you have hundreds of thousands of downloads. This post suggests that only 10% of all apps have one or more reviews:

http://blog.appfigures.com/a-deep-dive-into-app-store-review...

These may be reasons why you cannot sell lower than $99 but they are not reasons why someone should pay so much. The stated plan to keep updating the app reveals a fear that they are not creating enough value despite the cost to develop. The plan to update is also a shitty thing to say as this is no guarantee and light on specifics about what the updates will feature. $100 for an opaque primise that more is to come is a shit sandwhich usually served with a nice heap of disappointment. xscope 4's price of $50 is another one of these niche narrow doodads that while clearly provide value do so at questionable prices and the user has no idea when they will have to pay for a new version. Apple's lack of an upgrade price sucks but that's not the users fault but they are the ones that get the shit end of the deal with limited time price reductions that you have to know about.

If using this app saves you an hour or two it was already worth its money even if you never receive an update.

They most definitely have the right reasons for why someone should pay what they're asking. The reason #1, "we need to make a profit", is the biggest reason for the price. In reason #4 they clarify that reason by having tested that out of $10, $20 and $100 prices they made the biggest profit with the highest price.

The flimflam about updating the app just means that they don't wish to fire everyone now that they have a selling app, but instead will keep developing it with the hopes that it would sell even better.

> right reasons

Maybe the right reasons for stakeholders.

Not the right reasons for customers.

The right customers -- professional developers -- would want the tool to stick around for a while, but of course there is a free-loader problem.

Paying $100 a year, let alone $100 once off, for something that improves productivity ought to be below the level of even caring to do the cost-benefit analysis.

If your employer won't let you spend $100 on a productivity tool, he's very foolish. (NB: Most employers are foolish. I've always got hemming and hawing about spending that money; can't we just do without?)

They're still reasons that the business should sell the app at that price, not reasons a consumer should buy it at that price.

I get what you're saying, and even kind of agree with you, but I think you're slowly disappearing for delivery. The blog post is the rationale behind why they chose to charge what they did - all of which is fine, and totally their prerogative. What they didn't do, and what i think you're trying to say, is that they failed to convince me on why it's worth it to me to spend the money. I've not heard of their app before, so maybe I'm not the target market, but I don't need to spend $100 to see an HTTP load visualizer on my iPhone. But even if I did, I don't know why I'd pay for this one over any other ones, if there are any.

I have no objections to the price, it may be well worth it if I did iOS development, but this feels like a big marketing fail.

#7 is a great topic to explore in its own blog post. Unfortunately, its power is undermined by obviousness of certain other points.

#5 and #6, combined, would make a great FAQ item (which would also increase the awareness among customers), and perhaps a blog post, too.

#1-#4 are the worst—they seem applicable to just about any product, including the infamous I Am Rich app.

This post, listing every justification of app's pricing, makes me wonder if the developers themselves doubt their decision.

"7 reasons our app is overpriced" should be the right title for this post. I love the last point :

> A good programmer in the UK costs about $ 40 an hour. If an app sells for $ 10 that only pays for about ten minutes of a programmer’s time. Therefore, spending more than ten minutes interacting with a customer who bought a $ 10 app effectively results in a loss on that app sale.

So you define the price based on how much time you interact with a single customer? It just doesn't make any sense at all. And that kind of logic does not scale if you have thousands of paying customers, since your time with each of them drops to zero.

While I somewhat agree with your post I guess they answer this with number 3. Windows is a mass market app, this is not, you can't really compare the pricing of the two.

In the online world you never know if you product is a niche unless you sell very few numbers of it. It's not clear in their post how many sales they are making, so the definition of "niche" is not very clear here. Is it 10 ? 100 ? 1000 ? More ? Every of these numbers would give a very different picture of the situation.

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