The Pocket Cyclone

I never practiced Aikido, but was always fascinated by the idea behind it. Wikipedia says:

Aikido is performed by blending with the motion of the attacker and redirecting the force of the attack rather than opposing it head-on

This describes precisely the strategy I use for pricing apps, especially when maintaining a successful app through it’s lifecycle.

War!

Today, when reading blogs, Twitter or some online satire, app business feels like a raging war. Consumers complain about paid updates, IAP or ads, even in $0.99 apps, developers draw desperate parallels to the price of other real-life goods like coffee and hope the MIB will pick up all those aliens who are writing whiny iTunes reviews.

I really dislike this scenario and I rather live and breathe the classic “the customer is always right” idea.

But, if the customer is always right, including all the demands for a lower price, that means that you automatically are the loser, doesn’t it?

Not at all!

Fight back

The key to Aikido really is to understand the force that is directed against you. You can not redirect a force you don’t understand. So it is essential to find out what really drives your customer. As Deep Thought would say, sure, they say your app is too expensive, but what does it MEAN?

The next step is to redirect the force. For your customers, that means that you not only acknowledge what they want, but you ultimately give them what they want. In a way that makes them win AND you win. And most preferably in a way that the biggest whiners don’t realize for a while why they suddenly lie on their backs, barely blinking.

Examples

1. “Your app is too expensive!“

Understand: First of all: Congratulations! You are in a great spot. The complaint is not about the quality of your app, it is about the price point. What I read between the lines with this one, many times, is that the app does not provide enough value (read: content) for it’s price.

The typical reaction would be to either lower the price or add content/value*

Aikido moves: Split the app into two apps. And give your customers both a price decrease and more value! Make a Pro or Premium version and lower the price for the current version while adding features to both in a regular life-cycle.

Some die-hard fans will pay twice, more customers will buy the basic version, some will pay for the premium version. I have one kids game that is currently priced at $1.99 and I get the complaint at times that this is too high for the value it provides. Which is correct, if I compare it to other apps in the market place (even I would argue that my app has such solid content that it does justify the price). So at one point I will create a premium version for $2.99 or even $4.99,  including a great feature that 10-20% of my customer will love. And I will add a few features for the $1.99 as well (I don’t like 0.99 for kids games, so that’s not an option). So not only do I answer the complaint, I answer it in a very strong way and use that momentum to introduce the “premium” version. And I’ll place any bet this strategy will pay off for me.

*mind we are discussing how to REACT. Many times, for many reasons, “do nothing” is of course a very valid strategy.

2. “I hate IAP”

This is from an interesting Twitter exchange with @mrfungfung, creator of the epic Mini-Squadron, who got beaten up so badly in the TouchArcade forums on his latest app, that even the moderators tweeted their amazement/disgust.

Understand: When reading carefully, IMHO it is not so much shelling out another $0.99, it is more that IAP feel like an “endless drain of their money”, as one of the TA posters phrased it. I can absolutely find myself in that statement.

Aikido move: Publish a premium version that includes all current and future IAP’s as free Updates. Nothing is wrong with a $4.99 or even $7.99 price point there. The price should be slightly lower than the combined price for all IAP’s.

I really like this idea. You are responding to a valid fear of your customers. You are offering them a way out. You are making it accessible for them with the lower price. You will get the one or the other bad reaction, but if you do it right, you will gain happy customers AND you will make good money from this combo approach.

Waging back and forth

This is not about winning. This is about fighting a graceful fight. This is about looking good, about having answers which help mitigate discussions. Making life easier. This is about making a value statement AND making money.

Every move you do will cause more reactions. And you need to continue reacting to those.

In my first startup, I kept being responsible for portfolio and pricing and I learned to get creative very quickly. In software, no matter what you do with your price, it is always an issue. So we created bundles, company licenses, upgrade contracts, the whole enchilada. Some of those sold really well, some didn’t. But every time we did that, we had a talking point with our customers. And you know what, that was sometimes the most important thing. Having a $5,000 company wide license of a $799 software as a potential option helped us tremendously to justify that $799 price point, even if we never in fact sold the $5,000 license.

Ultimately, no matter how you get there, your customer feeling good about his purchase is very important for ongoing success.

Don’t be deceived about the low price points in this business. It is easy to dismiss any reasonable discussion because the whole price point seems unreasonable. And yet this is what a lot of people make a living with and I strongly suggest to embrace that discussion not despite, but BECAUSE of the $0.99 low-point. Those who work with their customers instead of fighting them will have a competitive edge.

Clearly, each app deserves it’s own pricing strategy. I want to make a point here that pricing and product line is something you can and should use to your advantage and it can be both fun and rewarding to be creative in that area. And to respect your customers, no matter what.