Raising the App Store’s Base Price to $4.99 Would Be a Good Thing

by James R. Stoup Dec 31, 2008

I find it ironic in the extreme that Apple, a company whose foundation is built on the idea of selling high quality products, would create a store whose very design kills high quality products.

Since the end of Summer I've read more negative things about the App Store than I would have ever dreamed possible. And while many of these complaints center around the review process, some missing feature or other random quibble, the vast majority seem to believe that App Store is broken in a deeply fundamental way. Specifically, many developers complain that the nature of the store prevents high quality, high priced Applications from thriving.

This seems to me to be a very serious issue because you never want your top developers to start complaining that they can't run a business making awesome products. Especially not when you have a competitor like Google who is smart enough to seize any opportunity their opponent might give them.

For those of you who haven't been paying attention, the problem can be boiled down to this: It is really hard to sell high priced* applications on the App Store. This is a big problem because not everyone can afford to develop applications if their selling price is artificially capped at such a low price. This forces everyone to live via volume instead of quality and that is a really hard business model to succeed at.

So what can be done?

My suggestion would be to raise the lowest price from $.99 to $4.99 while still allowing free products. Before you say it, yes, I know this would initially create havoc on multiple levels, but I think it would work. Allow me to explain.

The immeadiate effect of raising the base price would be to drive most of the uber-cheap apps out of business. After all, if you make an app whose only feature is to simulate various bodily secretions, you would probably be hard pressed to convince a large number of people to buy it at $4.99. And while you could release it for free, you won't make any money. So yes, those people would go out of business, but I contend that that is a good thing.

Next we have those developers who were selling Apps in the $1.99-$4.99 range. Most of these developers would face the realization that their app probably isn't as marketable as they would have otherwise hoped. After all, how many to-do lists apps can their possibly be? So what will happen is that this group will get compressed. Not all of the apps will die, just the bottom %80. The top apps will get refined and repackaged at a higher price. So right off the bat users will suddenly get an enourmous boost in the quality of offerings. The cheap crud that was clogging up everything will be cleared out, and the gems that were hiding will suddenly get polished and rise to the top of the pack. But wait, there is still one more group left, the over $4.99 crowd.

This group will benefit the most of this kind of change because suddenly their products will look like a much better deal. For instance, if a Tetris app is worth $4.99 then a game from a major studio (or insert your favorite $9.99 app here) should easily be worth 10 bucks.

Now, I realize that this kind of move would greatly reduce the quantity of applications in the App Store. Furthermore, I also realize that this would put a lot of the crappier developers out of business. However, the net result is that the consumer would see a much greater number of high quality apps and that your average iPhone developer can now afford to actually make a business out of this.

If something like this doesn't happen soon, I have no idea how Apple is going to save its top developers. I would hate to see the App Store become filled excclusively with cheap crud.

*sadly, by "high priced" I mean anything more than $.99


  • Very, very well said, James.

    It’s something that’s bugged me too, and especially since Pull My Finger was allowed. As Chris S wrote on iPhone Matters, within a week of Pull My finger, there were 14 fart based apps. And most were simply profiteering. There apps were written for no other reason than to get money out of stupid suckers. Which they did amazingly well.

    Some guy from id software a few months ago said the iPhone was more powerful than the DS and PSP combined. So where are the games to prove it? Very,  very thin on the ground. Driven away by the low prices. If a game sells for $40 on the DS platform, it’ll never come *in full* to the iPhone because the bar has been set at $9.99.

    So, sadly, it’s those dodgy lowend apps, just there to capitalize on a good thing, that are slowly becoming synonymous with the iPhone.

    The iPhone actually needs high quality, full blown, must have apps, including games, in the $30 to $60 range, otherwise, it’ll always struggle for integrity asa a development platform.

    Chris Howard had this to say on Dec 31, 2008 Posts: 1209
  • Basically what’s being said here is that App Store consumers are too stupid to figure out what’s good for them.  I don’t necessarily disagree, that might actually be true. 

    I’ve always believed that the U.S. consumer is too willing to buy Pure Crap and that’s partly why U.S. manufacturing keeps getting killed by cheap throw-away stuff that comes mainly from China.  I don’t know if this is due to extreme shortsightedness (they don’t realize that buying the same crappy thing over and over again because it breaks easily is more expensive than buying a pricier alternative that lasts for life) or because government policy makes throwing away stuff too easy and inexpensive.

    Whatever it is this knee-jerk mentality of going for the cheapest without even reflecting at all if that is really the wise thing to do is so ingrained and it’s killing the country’s manufacturing base.  I’m not saying it’s the only reason but I think it is a significant contributor.

    tundraboy had this to say on Dec 31, 2008 Posts: 132
  • It’s a real problem, but your approach is wrong. It’s like the owner of an expensive restaurant saying, “Cheaper restaurants are killing my business, so let’s pass a law that every restaurant must charge at least $30 for a meal.”

    More expensive apps will sell if 1) they are worth the money, and 2) they receive sufficient advertising that the public is aware of them.

    But are developers spending thousands of dollars for web & print ads to advertise their iPhone apps, like they do for their regular applications? Nope. Instead they are grumbling they their apps don’t get free advertising via the “Top Apps” lists. 

    Perhaps Apple could start a separate list of “Top Apps over $5” or something similar, to help more expensive apps get more public exposure. If not, developers may just have to spend some bucks to create their own ad campaigns, as they do for their regular applications.

    james99 had this to say on Dec 31, 2008 Posts: 2
  • But what about the consumers? I know that I wouldn’t buy as many apps as I already have, were the base price increased to $4.99. By pricing to drive sub-par developers out of the App Store, consumers who can’t afford the base price (or just don’t want to pay that much) will be driven away as well.

    moleskinegurl had this to say on Dec 31, 2008 Posts: 1
  • I’ve bought a bunch of iPod touch apps — far more than for my Mac. The low selling price hooked me. For example, I bought Scrabble for the touch, but haven’t for the Mac ... and won’t at $19.95.

    Neil Anderson had this to say on Jan 01, 2009 Posts: 23
  • James99, I don’t know that the developers can afford expensive advertising when the return is so much smaller on iPhone apps than say, DS apps.

    But it is interesting. Developers are also somewhat neutered by only having the App Store as an outlet. Like, you see in the junk mail a new game and all the platforms are listed, but you’ll never see the iPhone in that list since the retailer can’t sell the app.

    So if EA say release FIFA Soccer 09 for all platforms, inlcuding the iPhone, 1) they will have to charge much less on the iPhone to compete, 2) they don’t get the piggyback saturation advertising from retailers.

    So in the end EA says why bother making the iPhone version a full version?

    Chris Howard had this to say on Jan 01, 2009 Posts: 1209
  • Chris, I know that folks who develop apps in their spare time probably can’t afford to advertise, but the article was talking about “top developers” who want to create “high quality, high priced” apps. It’s not a hobby for them, it’s a business, and as the old saying goes you’ve got to spend money to make money.

    These “top developers” need to aggressively market their apps if they want them to sell well, the same way that virtually every other business in the world needs to market their product or service.

    I agree that a lot of the low-priced apps we see now are crap. But there are also some excellent low-priced apps. I wouldn’t want to see the baby thrown out with the bath water.

    james99 had this to say on Jan 01, 2009 Posts: 2
  • Umm… would you also say that Apple should make every song $4.99 because otherwise the good artists don’t make enough money?

    Surely we should also factor in that a good app sells many more copies?

    I guess it’s a choice of economic model. Would a developer rather sell 1/5 as many copies but earn 5 times as much per copy? etc smile

    Greg Alexander had this to say on Jan 02, 2009 Posts: 228
  • This is probably the most backward idea I’ve ever heard.  “Lets inflate our profits by artificially inflating the bottom price!”  What a developer circle jerk that is…

    You know what is wrong with the App Store.  Crappy Apps.  I’ve not played a SINGLE 9.99 title that was worth the price I paid.  My biggest issue?  They are all too short.  i shouldn’t be able to beat a game in a day or less.  I’ve stopped even buying anything over 4.99 because I’ve been burned by too many 9.99 apps. 

    If you want to charge over 9.99 make a App WORTH it.  Trying to artificially inflate the price by lowering the bottom is not only uncompetitive it is just lazy.  Business is risk.  If you don’t want to take a risk start making fart apps to sell for .99.  If you want to make an impact develop something worth more than the paltry examples sitting at 9.99. 

    In this economy you need to create value…not try and jury rig the system.

    fearcake had this to say on Jan 02, 2009 Posts: 2
  • In my opinion, james99 is right on the money. Spending more money on advertising is the most logical way to remedy the situation. As unfortunate as it may be, there is clearly a strong market for fart-based apps, and while that may not exactly be classy, who can say they have never in their life, laughed at a fart joke?

    I think that a properly advertised (television, magazine, internet) iPhone application will sell well if it is truly a high-quality, full-featured video game. After all, who here wouldn’t spend $20.00, $30.00, or even $40.00 on a full version of Mario Kart that would always be in your pocket? It’s high time we saw the full potential of the iPhone as a gaming platform come to fruition.

    Mr. Locke had this to say on Jan 03, 2009 Posts: 1
  • This is the dumbest thing I have read all week. It’s like saying there are too many bad movies, so let’s raise ticket prices. Or, there is too much crap on YouTube, so let’s charge to post. I buy app’s in much the same way I buy music, to support the artist. If I want to toss a buck to the developers of Koi Pond, Sneezies, or RotaryDialer, I can’t think of a better (and easier) way to do so. Should Mobile Fotos have to double their price or give it away, to stay in the app store? No! The 99 cent bar may allow fart app developers to make a few dollars, but cheap app’s also keep iPhones from being jailbroken. Reading your post got me to thinking, I hope you had to pay $5 to post this. If free market isn’t free, then why should free speech be free. But that’s just my 2 cents worth (or by your math, ten cents.)

    lonnie247 had this to say on Jan 06, 2009 Posts: 1
  • Like any business, the key to making money on an app store is both creating a quality app that there is a demand for, and setting the right price for that app.-Any Lab Test Now

    Ana had this to say on Sep 26, 2011 Posts: 76
  • People are thinking of more and more ways of making money online. If Apple doesn’t start turning things around fast, well, their competitors will crush them. And I’m not talking only about Google. There are a lot of companies there which want a share of the market.

    IBMdude had this to say on Oct 01, 2011 Posts: 50
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