Every day, there is more and more evidence that all types of people feel entitled to receive a lot of app value for $0.99. And there is more and more evidence that developers dislike this. A lot. From a NYT article stating that “it’s ok as long as it costs $0.99″ to a developer raising the price to $39.99 to protest customers arguing the $2.99 original price tag, to celebrities not liking the Tweetie Update path, to smart and clever little games like Canabalt losing momentum because of not leaving their $2.99 path.
One approach I found working for me, trying to understand the phenomenon, was to embrace the idea of: “App Snacking”
I don’t remember where I heard the term first, I just think it beautifully describes how people purchase apps these days. No matter if you look at the current Top Paid Charts or study sales numbers from those developers who publish theirs, or read through related blog entries like Appy Entertainments wonderful Hummingbird Manifesto, the comparison with snacking is very imminent.
What are some of the signature items marking a “snack”?
- Spontanous decision to buy
- Satisfying, short enjoyable burst
- Everybody does it, but it comes with some degrees of guilt
- Low price
The first one is clearly enabled by Apple’s Appstore, allowing for the first time such spontanous buying decisions on a device. Neither would I be writing this nor would you be reading this without Apple compacting every bit of experience of the frontrunners of digital purchases, like Amazon, into their itunes flow and their little devices.
Buying a great app is certainly a satisfying, joyful experience, esp. those providing you with a really small learning curve and instant gratification.
On the guilt part, we need to realize: video games just break out some more of their classic, limited zone. Continuing an effort that Nintendo began in the eighties, taking games from smoky bars into our living rooms. Plus, spending money makes you feel guilty these days, no matter what you spend.
And that is the point I am trying to make. All of this would not have been possible without the $0.99 price tag. There is no chicken and egg here. First there was the low price. Then people started to buy like nobody would have ever guessed in their wildest dreams. And they never looked back and they continue buying!
As developers, we have to understand and embrace this behavior. For my own pricing strategy, it seems clear that there is the broad market of $0.99 purchasing users. Those who snack. Those who buy a lot of apps. When I go up to 1.99, I am already starting to leave this segment. Everything starting with 2.99 requires a real (and quite different) purchase decision process for most users.
Check for yourself: When you really just want to buy a new, quick and nice app for some evening entertainment, did you ever find yourself going into “Featured” and then quickly going down the list of potential candidates by narrowing to the $0.99 games first? I think that is when you share the mindset of your typical customer! Those are the apps you can buy without any perceived guilt.
I also think we have to learn to do the reverse math. The fact that people are buying so many apps (I think we avg 18 per month), even with $0.99, adds up to a quite significant number every month. 2.99 already starts to stick out there. 4.99 is the monthly (quarterly?) exception. And just as a sidenote, I will never understand how anyone can price their apps at 5.99, it violates the most basic experience any industry has made with psychological pricing.
Now don’t get me wrong, I am NOT saying everybody should price at $0.99. I have a clear roadmap for some of my apps that will lead to a higher price tag. But I am planning this consciously, providing a certain value to a certain user base, where I am pretty sure that base will be willing to spend a higher amount. And different than what I perceive communicating with other devs, I am well aware I am aiming at a niche.
And this is what I am trying to do and invite you to do the same: Understand that yes, with a $0.99 app you will hit a tough crowd of merciless reviewers expecting an incredible, flatout unfair value for that price. But you will also hit a crowd that is buying a LOT of apps every day. And that’s because of the $0.99 tag.
Disclaimer: I am neither saying I like the price race to the bottom nor am I suggesting a specific pricing strategy. I do like the purchase behavior I am seeing though. And I am trying some early analysis on what we are seeing every day and everybody has to make their own conclusions on what that means for pricing. We need to try to understand the dynamics of the marketplace. Don’t fight a newly crystallizing consumer behavior, try to use it to your advantage. Don’t fight Windmills (couldn’t resist on that one 
.
Kindly check out my new upcoming game, will announce any day now (@Markusn on Twitter). It will be just $0.99, so even if you buy a lot of apps… you know what I mean.
As a buyer the lack of useful reviews or ability to see the thing work or use it before I buy focuses me on the less costly items in the store.
I’m going to feel bad if I buy game X for $5 and don’t like it as much as game Y that I bought for $1. So I buy the $1 things that look good first, and as I never seem to run out the $5 things never seem to get my cash.
I do buy more expensive games, for example ones that have a lite version that I like, or that are cheap to buy, and then have in-game purchases of more levels. I have also bought games on recommendations of friends and/or after playing them on their iPad/iPhone.
I find the same true of other software on the platform as well, I wanted a truck GPS, so I bought 3 GPS apps that had a truck mode, starting with the least costly and moving on until I ran out (none really do a good enough job, but they make great car GPSes).
So if you want to charge more then $1 for your iPhone game, make a lite version to hook me