

What Happens When Apple Features Your iPhone App - PStamatiou
http://blog.return7.com/what-happens-when-apple-features-your-app

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patio11
As an aside: developers often cite ongoing costs as a reason to charge in an
ongoing fashion for services like, e.g., push notifications or web
applications.

It doesn't particularly matter to me how you explain your business model to
your users (although "Boo hoo we have costs and have to feed our children" has
always struck me as less persuasive in prying money out of people than "Look
at how much value we give you!"). However, as long as we're just developers
here, I'd just like to point out that marginal users are too cheap to meter
and as long as you're continuing to sell the service there is no reason you
can't fund the server costs entirely out of present sales.

Example from my app so you can see I'm not blowing smoke: my VPS costs $85 a
month. My users pay $30, once. Suppose, for the sake of argument, that I can
tolerate 10,000 users in one day (which is absurdly low given typical peak
concurrency for my application, but we're just playing napkin-math).

This means that $85 buys me 300,000 user-days a month. Trial users typically
go up-or-out within 3 user-days. Paid users consume less than 5 user-days per
month. ( _Far_ less in my case but hey, napkin math.)

Assuming I like keeping half of my safe allocation available for trial users
(150k user-days or, as seen above, enough to support 50k new trials per month,
which is more than 1.5k per day, which is more than 10 times my best day
ever), this means that I can support up to 30k paying users on one $85 / month
box.

Now, hypothetically, if I were getting 1.5k trials per day, I'd be getting
somewhere on the order of 30 sales per day. 3 sales _per month_ would pay for
the server. It is clearly sustainable without having to use a subscription
model.

I mention this mostly because some users groups are extraordinarily resistant
to subscription models and I don't want anyone to feel they absolutely must,
must, must price on a subscription if they offer a service.

I'm not intimately familiar with push notifications to iTunes apps but I
suspect they require something on the order of one HTTP request. If so, on a
per user basis, they're too cheap to meter. I'd (personally) offer them to
everybody just to increase the amount of sales I got from the daily gravy
train. (Well, to the extent that iPhone sales are driven by features, which I
think is pretty darn limited.)

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amdev
IMO, this breaks down due to the App Store's volatility. To compete, one
generally (there are exceptions) has to lower prices to silly levels. That's
fine and dandy when you're selling a couple hundred copies a day, but as soon
as you fall off the chart in your category, you fall into the pit of selling
0-5 copies a day. At that point, not having a subscription model becomes
unsustainable. There are 75k+ (and growing) apps on the store and a very small
percentage of them actually get noticed. When they do, they often fall back
into obscurity quickly. Very few apps maintain a solid rank for a year. You
can't bank on getting sustained sales forever because you take the risk of
having to foot the bill for the server yourself when the sales stop, VPS or
not. Anyway, the feature is optional and the app works great without it. Apple
recently added a listing that shows apps pulling in the most revenue. I think
their hope is it will help alleviate this "race to the bottom" pricing. Time
and market will tell.

As for push, there are two bits: client<\-->server interaction and opening a
socket connection to shoot data to APNS to send the notifications themselves.
It was pretty fun to get together and really the hardest parts dealt more with
business rules than integrating with Apple's service. I would personally have
preferred APIs to hook into the phone's calendar app, but push is useful for
IM apps and the like, in lieu of background processes.

~~~
amdev
I should mention the cost of our app is $0.99. It would cap out at about
$2.99. I don't think asking for a dollar a year is unreasonable given the cost
of the app.

~~~
netsp
I don't think there has ever in the history of the world been a consumer
market where unit prices are so low.

BTW: Personally, regular payments (especially small ones), do put me off. But
I wouldn't mind a prepaid model so much. IE, I pay for a month or six upfront
and then pay again to renew. I know this kind of opt-in/out is rarely
beneficial to vendors, but in some cases it might work.

~~~
whatusername
low relative to what?

There's still an awful lot of the worlds population who earn less than $1 /
day.

~~~
patio11
Most of them, presumably, do not walk around with $600 cell phones.

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timdorr
I'd be most interested to see what happens a week and a month from now. That
graph is obviously going to go back down, but I'm curious at what level it
reaches an equilibrium and is that going to be a higher number than the prior
sales date.

~~~
amdev
We'll definitely do a follow up post with that info :)

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jvdh
Your site goes down?

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amdev
Yea, apparently. Working on it. Sorry. :D

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RyanMcGreal
Title should be, "What Happens When Hacker News Features Apple Featuring Your
iPhone App".

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amdev
You find that it's a great time to have your server in the cloud and be able
to upgrade easily :D

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amdev
Up now, sorry for the downtime

