Microsoft Thinks Apps Worth More Than 99¢

[Ed Hansberry]

<div class='os_post_top_link'><a href='http://www.engadget.com/2009/08/20/microsoft-tells-winmo-devs-theyre-beautiful-worth-more-than-99/' target='_blank'>http://www.engadget.com/2009/08/20/...h-more-than-99/</a><br /><br /></div><p><em>"For many (if not most) iPhone developers, the App Store's overheated competition and bloated inventory have led to scorched-earth pricing that makes it virtually impossible to parlay mobile development into a valid for-profit business model without turning to subscriptions or in-app advertising.... "I know, 99 cents is interesting -- yes, consumers like to pay 99 cents for applications," admits Microsoft's Loke Uei, "but 99 cents, come on, I think your app is worth more than that."</em></p><p>The Apple iPhone App store has been one of the things that has radically changed the mobile phone market, but as it grew to 50,000 apps or so, it was pretty obvious that there is just some crap in there. Sometimes less is more and a well maintained library is better and more useful than one that just has everything you can possibly throw in it. Microsoft apparently feels the same way and is going to try and keep the menu respectable and manageable.</p><p>Do you think 99 cents is ok for the majority of apps, or should Microsoft encourage more reasonable price structures that would allow developers to make some money and make it worth their time to spend more energy on improving their apps.</p>

[Craig Horlacher]

I'm not sure that matters. It doesn't seem to me like Microsoft is in a position to price high. They need to sell WinMo devices. If the developers are willing to sell their apps at .99 I think it's foolish of Microsoft to fight that. Inexpensive apps will help sell devices. People love being able to buy apps cheap on the iphone and selling a million at .99 will be better than 1000 at 4.99.

I just think Microsoft needs to do as much as possible as soon as possible before everyone switches to an iPhone, BlackBerry, Pre, or Android device.

Do they even have an app store that's easily accessible on WinMo devices? If so, then why can't I install it from "Windows Update" on my WinMo 6.1 phone? I just checked and it couldn't even connect to an update server this time. Whatever it is, they need to make it a simple and slick app like on the iphone. It won't be good enough if it's a web site.

[efjay]

Is MS actually dictating the price, or just encouraging devs to create quality applications and price accordingly? It seems everywhere this story has been reported on people are bashing MS, if I remember correctly the Marketplace allows developers to set their own price so ultimately its down to them how they value their work.

[Fritzly]

An application, any application, is worth what buyers are willing to pay for it.
Trying to lure developers with this kind of statements seems naive to say the least.
MS should offer a platform that excite users, demand for apps would follow...

[efjay]

Exactly, if an application is priced too high by the developer and doesnt sell they can reduce the price. I dont see why MS encouraging profit for developers is being seen as bad, seems people now are so unwilling to pay for anything and want everything for free.

[whydidnt]

The price per app should be irrelevant to the developer. What should be relevant is the total revenue it can generate. The developer doesn't have to work any harder (in the development & distribution cycles) to sell a million apps than he does to sell one - the beauty of digital goods. Many iPhone devs have made plenty of money selling at $.99, since that removes cost as a barrier for the customer. In truth app pricing is a key selling point that platform has. Seriously, I have bought several more apps for my iPhone than I ever have for WM because they are almost all less than $5.00, and it's like stopping to buy a cup of coffee, I don't even think about the cost.

When I drool over some of the new WM hardware coming out, I start to think about the cool apps I have on the iPhone that don't exist or are $20+ on WM, and stop myself. The total cost of ownership has tilted way in favor of Apple, and for Microsoft to encourage developers to charge more for their applications is not only wrong, it's moronic!:mad:

[Fritzly]

Exactly, if an application is priced too high by the developer and doesnt sell they can reduce the price. I dont see why MS encouraging profit for developers is being seen as bad, seems people now are so unwilling to pay for anything and want everything for free.

Actually come out with a price and then lower it because buyers are not attracted is not a good business strategy in general.
I do not see anybody in this thread suggesting that everything should be free and a company profits are not generated solely by the markup on the single unit for sale; actually it is a little bit more complicated.

[frankenbike]

So, here we are with Microsoft in hand to hand combat with Apple over the smartphone market, and MS stupidly slashes their own wrists. Again.

"I can get an iPhone and there are thousands of apps I can get for 99 cents, or I can get a WinMo phone and spend $25 for a similar app".

There is only one reason Microsoft doesn't want to have software priced at 99 cents. Because their cut of the sale is measured in $0.xx, and they can't conceive of a way to turn that into a profit center. But people buy most apps on iPhones on impulse, not as long term "investments in productivity".

The people at Microsoft are completely unable to imagine that non-enterprise users don't like to spend money in large quantities. They do like to buy large quantities of stuff for very little money. They need to get with the program, or get out.

Microsoft's insistence that smartphones were simply a means of further marketing Microsoft Office, was what left the consumer market for mobile information devices wide open for Apple to come in with a consumer based touch screen device that is blowing them out of the market. Microsoft's crap mobile email, mobile web, mobile music, mobile media and mobile interface were only tolerable through pricey third party apps and free apps created by frustrated users.

I'm a getting-less-dedicated-every-day WinMo user who is really starting to root for Android getting its act together so it can blow WinMo out of the water (by the time I buy my next phone). Microsoft's feeble catch up attempts in the mobile market need to be euthanized to end its terminal cranial/rectal inversion disease.

The only things that stop me from buying an iPhone are AT&T's horrible 3G coverage in Southern California (CDMA rules here), and Apple's even more-fascist-than-Microsoft's business/tech philosophy.

[donmcdougall]

Let's say an app was $5 would you care? No one is saying $25 bucks come on! There are PLEANTY of apps for WMobile - Apple is stuck they cannot raise the prices. (Also the difference between Sprint all you can use plan and AT&T is $70 a month - or $840 a year - or $1,640 on a two year contract) GOT TO LOVE THAT iPONE you got!!! Way way to expensive for me!

[Russ Smith]

Some apps currently on my phone:
SPB Mobile Shell $29.95
SoftMaker Office $79.95 (!!)
Copilot Live 8 $34.95

Obviously I think there are apps that are worth a lot more than $0.99 :)
These apps are well written, well supported, and extremely useful; well worth the money I've invested in them. If the standard were $0.99, I doubt they'd exist at all or, as suggested earlier, they'd be saddled with a _major_ "subscription" fee.

I prefer the basic capitalism approach: If people think the price is too high, they won't buy it.

[heliod]

I know that Apple has some 50,000 applications in there, but let's face it, 40,000 of them aren't worth 99 cents.

On the other hand, from the nearly 20,000 WM applications that I have seen, around 75% of them are worth the 15-30 dollars that the developers request for them.

My conclusions: although users that buy phones for playing with it like the idea of buying apps for $1 and throwing them away after 1 use, the quality of a smartphone is measured by the quality of the apps available for it. And this is one of the reasons why I don't even consider moving to another platform at this time, I just can't find there the same useful apps that I have in my WM phone.

As someone that has developped apps in my past (for computers, not for phones), if you want good, professional apps, you need to let the developer make a living out of it. The iTunes store is all about canibalizing the developers. Considering the apps cost 99 cents and 30% of it stays for Apple, this means that if a developer has 100,000 downloads (and everyone here understands how difficult this may be) in 2 years he has made 35K per year, not enough to pay simple bills in the US.

From the side of the average user, maybe he doesn't notice, but he is spending more money than I am, since I download trial versions and only purchase the applications that I really expect to use. So in the same time that I purchase one application for 30 dollars, an iPHONE user has probably purchased 50 applications for 1-2$ each and has thrown all of them away.

So I believe the current model is much more fit to my needs, and surely, to the developer's needs.

I don't believe MS should limit the minimum price like RIM did, but surely encourage the developers to get the right value for their work.

My two cents.

Helio

[whydidnt]

Let's say an app was $5 would you care? No one is saying $25 bucks come on! There are PLEANTY of apps for WMobile - Apple is stuck they cannot raise the prices. (Also the difference between Sprint all you can use plan and AT&T is $70 a month - or $840 a year - or $1,640 on a two year contract) GOT TO LOVE THAT iPONE you got!!! Way way to expensive for me!
Many of us don't need an all you can use plan. For my family plan with unlimited text and data on the iPhone and 3 other feature phones, with 700 monthly shared minutes on AT&T is within a few dollars of the same plan on Sprint. Have you looked at Windows Mobile applications? The majority are priced above $10.00 and many are $20+. Nobody is telling Apple developers they can't raise prices. Developers are deciding for themselves how much to charge.

[whydidnt]

I know that Apple has some 50,000 applications in there, but let's face it, 40,000 of them aren't worth 99 cents.
I would guess from this comment that you really haven't looked at the applications available for the iPhone. There are a lot of very high quality applications available for a $.99, or $2.99 or $4.99. Just because you may not have interest in an entertainment application for $.99 doesn't mean it's crap.

On the other hand, from the nearly 20,000 WM applications that I have seen, around 75% of them are worth the 15-30 dollars that the developers request for them.
Please, 75%??? You've seen 15,000 quality WM applications that are worth more than $15.00? I'll take your word for it, but I've been using WM for a decade, and I doubt I've seen even 200 applications that I would spend more than $15.00 for.


As someone that has developped apps in my past (for computers, not for phones), if you want good, professional apps, you need to let the developer make a living out of it. The iTunes store is all about canibalizing the developers. Considering the apps cost 99 cents and 30% of it stays for Apple, this means that if a developer has 100,000 downloads (and everyone here understands how difficult this may be) in 2 years he has made 35K per year, not enough to pay simple bills in the US.
So, a developer that spent a few months writing an application needs to make more than 35K per year off of that one application for it be viable? I don't agree, if this is full time work, the developer will create additional applications that will also earn 35K per year and be able to make a decent living. These are applications, not works of art that the developers should be able to live off of for the rest of their lives. Your argument is only relevant if you can prove the developer makes more selling a WM application at $20 in lower volume. So far the market has proven you wrong as developers are flocking to the iPhone and abandoning Windows Mobile.

So I believe the current model is much more fit to my needs, and surely, to the developer's needs. Except developers don't agree with you, they are preferring to develop for the platform that is attracting users, not losing them. I still maintain one of the reasons for the iPhone's success is the wide availability of GOOD, cheap applications.

There are many, many quality applications for the iPhone. From a gaming standpoint WM is not even in the same league as far as professionally developed applications, and almost all of the iPhone apps are less than $10.00. Is EA losing money each time someone buys the Sims, or Madden for the iPhone? Why have we seen official iPhone releases of Doom, Duke Nuke'em , etc, when those developers have ignored WM for years? Why does Ilium charge $9.95 for the iPhone application, but $29.95 for the WM application? They are both high quality applications, but Ilium knows that they will make up the difference in volume on the iPhone. Otherwise, if it wasn't worth their time they wouldn't bother.

This is why I think it's foolish for Microsoft to try an artificially inflate the price of applications for their platform. As you say the applications make the platform, and right now, the applications available for the iPhone are driving people to that platform. Other than PIM related applications, I challenge you to name non-custom applications that you use on WM that are either unavailable on the iPhone , or if available, offer poorer functionality. Apple has messed up the PIM stuff by not allowing developers access to the built in databases, I will grant you that. Other than things like Pocket Informant, I have yet to come across any other apps that I miss moving from WM to the iPhone.

[griph]

I would guess from this comment that you really haven't looked at the applications available for the iPhone. There are a lot of very high quality applications available for a $.99, or $2.99 or $4.99. Just because you may not have interest in an entertainment application for $.99 doesn't mean it's crap ...

This is why I think it's foolish for Microsoft to try an artificially inflate the price of applications for their platform. As you say the applications make the platform, and right now, the applications available for the iPhone are driving people to that platform. Other than PIM related applications, I challenge you to name non-custom applications that you use on WM that are either unavailable on the iPhone , or if available, offer poorer functionality. Apple has messed up the PIM stuff by not allowing developers access to the built in databases, I will grant you that. Other than things like Pocket Informant, I have yet to come across any other apps that I miss moving from WM to the iPhone.

Have to say that I agree 100% with all you say there! Its the sort of blinkered approach MS and guys like Heliod have that have resulted in the decline of WM - and the App store is exactly what MS need - and not all apps are $0.99 either. TomTom W Europe was £79.99! People will pay what they think the app is worth!

[frankenbike]

How many WM apps exist because Microsoft completely dropped the ball on updating the OS and interface (which hasn't changed noticeably since 2003 when I started using "Pocket PCs")?

And aren't those some of the ones people think are the most valuable? Like SPB Shell?

I will have to recant that I make it sound like no app is worth more than $1. That's not really what I think. But I think there are a ton of apps out there that are free right now that with a tiny bit of polish should sell for $1, and Microsoft's App store should have them. And the store should be able to sort for "Price low to high" and let you browse the "impulse buy" bargain bin. Even if it means that they have tens of thousands of apps available.

Individuals should be allowed, even encouraged, to make these apps available. They could make more than they make now. This is what I'm criticizing Microsoft for: appearing to discourage it.

As for iPhone apps, they do have some that are pricey. The TomTom gps app (with car kit I assume) goes for $99. So it's BS that ALL iPhone apps are $0.99.

[Djblois]

Actually come out with a price and then lower it because buyers are not attracted is not a good business strategy in general.
I do not see anybody in this thread suggesting that everything should be free and a company profits are not generated solely by the markup on the single unit for sale; actually it is a little bit more complicated.

Fritzly,

I guess you never took business classes or economics classes because that is every businesses strategy. How do you think a free market works? You release something believing the demand will be this high but it is a lot lower, so you lower your prices. And vice versa, if the demand is higher you raise your prices. You sell your product at the equilibrium where what consumers are willing to buy is equal to what you are willing to sell. It happens everyday and does not hurt the business in any way.

[Fritzly]

Fritzly,

I guess you never took business classes or economics classes because that is every businesses strategy. How do you think a free market works? You release something believing the demand will be this high but it is a lot lower, so you lower your prices. And vice versa, if the demand is higher you raise your prices. You sell your product at the equilibrium where what consumers are willing to buy is equal to what you are willing to sell. It happens everyday and does not hurt the business in any way.

Besides the fact that I have a Master in International Economics a strategy like the one you describes is the one that an inept management, unable to correctly estimate the highest selling point for product, would ended up dealing with.
The ability to determine the highest price potential clients are willing to pay for your product is not an empiric task or the results of some kind of guess; it is an extensive and complicate tasks that involves the analysis of many factors like general economic trends, comparative marketing etc. etc.
This is, among other similar tasks, what I do and considering what the shareholders pay me it seems I do it very well.

[aristoBrat]

As someone that has developped apps in my past (for computers, not for phones), if you want good, professional apps, you need to let the developer make a living out of it. The iTunes store is all about canibalizing the developers. Considering the apps cost 99 cents and 30% of it stays for Apple
A quick look at today's top 25 most popular paid business apps (below) shows price-points between $.99 and $12.99. One of the top 25 medical apps is $29.99. Today's "featured" apps have TomTom at $99.99, MobileNavigator at $69.99, and Starmap Pro at $18.99.

Developers are free to price (and re-price) their apps as they see fit. There are definitely some things Apple can do to make the App Store better for developers, but I don't think you're going to find the consensus being that "[The App Store] is all about cannibalizing the developers".

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[Djblois]

Besides the fact that I have a Master in International Economics a strategy like the one you describes is the one that an inept management, unable to correctly estimate the highest selling point for product, would ended up dealing with.
The ability to determine the highest price potential clients are willing to pay for your product is not an empiric task or the results of some kind of guess; it is an extensive and complicate tasks that involves the analysis of many factors like general economic trends, comparative marketing etc. etc.
This is, among other similar tasks, what I do and considering what the shareholders pay me it seems I do it very well.

So let me get this straight Companies use sophisticated models using marketing data, economic data, etc.. to figure out what price they should sell at (I totally agree - this is how it is done)! But next you are telling me that either they get it right most of the time, or only the succesful businesses get it right most of the time, or you are a genius and only you get it right most of the time.

I find any of them hard to believe since no matter how much data you look at there is still a huge margin for error. I read a report a few years back about how Weather forecasting is the most accurate of any type of forecasting and they only have about a 60% accuracy rating. I mean you know what you do is forecasting demand and price levels. Please tell me that you found a new way of doing it - where is your research to prove this amazing feat that no one else can accomplish? Please tell me??? Just because you get paid a lot for doing it does not mean you have a high chance of being right - all it means is that you have a higher chance of being right then if they didn't do any research. Second, Stock analysts who have a very low percentage of accuracy still get paid a lot. How do you explain that?

[Fritzly]

[QUOTE=Djblois;711601]So let me get this straight Companies use sophisticated models using marketing data, economic data, etc.. to figure out what price they should sell at (I totally agree - this is how it is done)! But next you are telling me that either they get it right most of the time, or only the succesful businesses get it right most of the time, or you are a genius and only you get it right most of the time.
QUOTE]

You answered your question by yourself: succesfull companies figured it out most of the time, this is the reason why they are succesfull.
A perfect example of a company that did not figure it right is Sony with the PS3; in spite of the fact they now are lowering the price of the console the failure of pricing right in the first instance severely affected their financial results.

[Djblois]

[QUOTE=Djblois;711601]So let me get this straight Companies use sophisticated models using marketing data, economic data, etc.. to figure out what price they should sell at (I totally agree - this is how it is done)! But next you are telling me that either they get it right most of the time, or only the succesful businesses get it right most of the time, or you are a genius and only you get it right most of the time.
QUOTE]

You answered your question by yourself: succesfull companies figured it out most of the time, this is the reason why they are succesfull.
A perfect example of a company that did not figure it right is Sony with the PS3; in spite of the fact they now are lowering the price of the console the failure of pricing right in the first instance severely affected their financial results.

On the contrary, successful companies do not figure it out most of the time. Read the rest of my post. Of course it would be more financially sound to figure it out most of the time. And you answered your own question Sony which is a VERY successful company did not get it right with the PS3 like most companies do not get it right the first time. I mean if a company like Sony who has millions of dollars to figure this out can't get it right all the time, then how do you expect little companies who will write software for WM to get it right "most" of the time?

You are also not taking Product life cycles into account. Products normally start off higher when first created and then products get cheaper in their life cycle. Software companies do it a little differently. They create a newer version to keep the Product price higher. However, if the demand is not high enough to warrant any updates or it is a simple application that you really can't add much to it - then the price will generally fall as the life cycle moves on.

[Mastersoft]

$0.99 simply isn't viable on Windows Mobile whereas it is on the iPhone.

[jeisner]

Its all down to demos.. Apple don't make demos an easy option so people can price their apps at 99c and people will pay that just to try the application. On winmo we are used to having demos, so I don't think the 99c approach will generate anywhere near the sales it does on the iphone even (and especially) with an equally sized user base..

So I think either prices stay a little higher with demos.. OR .. We stop demos on the platform and sell apps for 99c and sell far more as people have to pay just to try the application..

[Djblois]

Its all down to demos.. Apple don't make demos an easy option so people can price their apps at 99c and people will pay that just to try the application. On winmo we are used to having demos, so I don't think the 99c approach will generate anywhere near the sales it does on the iphone even (and especially) with an equally sized user base..

So I think either prices stay a little higher with demos.. OR .. We stop demos on the platform and sell apps for 99c and sell far more as people have to pay just to try the application..


I agree completely with keeping demos. I would much rather try 100 applications and buy the ten that I want then buy 20 applications and only use 2. If you do not allow demos, so people have to buy your product at 99 cents in order to try it - what incentive is there to make it better? people are buying it. Yes in order to get good reviews they will make a better product but how much money can someone make till the reviews catch up to them.

[jdmichal]

The AppStore itself seems to create pricing pressure outside of the normal supply-demand and competition pressures. That is to say, "App X" must not only respond to demand and its competition, but also to other applications that it's not directly in competition with. If the vast majority of programs are $.99, than anything that's NOT $.99 becomes an exception, even if the application itself warrants that pricing. And then you get people saying, "$10 for an app?! NO WAI!"

Obviously there's those that will buck this; it's not a be-all-end-all factor. But it does play into the pricing equation I think. If you can't offer more than what people are conditioned to expect for $.99, then your program will not sell well unless you price it there.

[aristoBrat]

On winmo we are used to having demos
What? Quite a few of the non-99c apps in the App Store have free demo versions.

Some developers are having great success with a paid version of their app, and then a free, fully functioning version of the same app that generates the developer income via a small strip in the screen that shows an ad.

[whydidnt]

Sorry to dredge up an old thread, but the ilium software blog has an interesting post from a developers perspective on mobile applications that is quite relevant to the conversation. The Apple Difference Ilium Software Blog (http://blog.iliumsoft.com/2009/09/21/the-apple-difference/) Seems they think the Apple model of low cost/high volume is here to stay, primarily because Apple has finally gotten the word out that you CAN install applications on your mobile device thru their app-store advertising.