
App Store Pricing: Worth Less than a Cup of Coffee - floriankugler
http://floriankugler.com/blog/2013/9/30/worth-less-than-a-cup-of-coffee
======
crazygringo
The whole problem comes from Apple not allowing trial apps.

I would easily pay $20 for Dark Sky, or Moves, or FitnessFast, InstaPaper,
even ExitStrategy -- but I would _never_ pay $20 upfront. It takes a couple
weeks using an app to see if it turns into an invaluable daily tool, or if you
just delete it. (Which is why free software trials for desktop apps have
existed for decades.)

I refuse to pay $1 or $2 for apps just to try them out, not because of the
money, but because of the moral issue -- I don't want to be rewarding crappy
spammy developers with their $1 or $2 just as much as the truly good app
developers out there, because that's just contributing to the problem.

Marco Ament took down the Instapaper Free version. But I never would have
downloaded the paid version if I hadn't been able to try the free version
first.

~~~
wisty
Here's my logic - when customers have very limited information, and side-by-
side pricing, they'll always minimise risk by getting the cheapest app. The
cheapest app is free. And eyeballing statistics on sales, $1 apps don't do any
better than $2 ones (depending on the platform and app - iPhone buyers can be
very elastic). Many customers aren't so stingy they'll balk at paying an extra
dollar, they simply flock to free apps because you can't beat free. Especially
for an app which has lots of substitutes (todos, games).

If customers have good information (they are already using the app), and only
one price (your IAP), or pricing you control (your IAP, with dummy prices -
feature by feature unlocks, and maybe a premium feature or two), they'll spend
be more likely to spend money.

The big money is in exploitive IAP. Skinner box games which use psychological
tricks to goad big-spending "whales" (addicts) into spending more. But the
small money is probably in IAP too - unlocking the demo.

There's no money (IMO) in $1 apps - they are too expensive (compared to free
apps), and they sell themselves short.

~~~
davidedicillo
True but not always true. Our application
([http://syncpadapp.com](http://syncpadapp.com)) is free to download and to
use up to 3 simultaneous users. If you need more we offer a "pro" plan at $5
for up to 30 simultaneous people. You'd be surprised by how many people are
asking me for a discount rate on a $5/mo plan for an app that they use
daily...

~~~
sneak
If someone is paying you, that means they have 4 or more users. That's gotta
be worth $15-30/month. Have you tested your conversion rate with other
pricing?

------
terhechte
The problem is that the difference between $2 and $1 is not the same as the
difference between $1 and $0 (i.e. free). Humans are not rational in this way,
and the abundance of free apps kills it for everybody else in the market. If
one company would start giving away really awful-quality chocolate (or any
product) for free in every supermarket, the chocolate prices & industry would
crash.

Dan Arielly did a couple of interesting experiments on this. He had people
paying for products in a cashier line (i.e. people who had their wallet out
anyway) choose between two really good offers: Hershey chocolate for $0.10 and
Lind chocolate for $0.20 (or something like that, I forgot the detailed
numbers, it may have been $1/$2 or $0.5/$1). In that case, most people choose
the more expensive Lind chocolate as it was clearly the superior product (i.e.
higher quality). When he repeated the experiment with $0.10 for the Lind and
$0.0 (i.e. Free) for the Hershey's, the game changed. Everybody took the
Hersheys. Even though the pricing didn't really change, they only both became
cheaper, by the same amount.

The verdict, really, is that if there's something free around, we go nuts and
quality doesn't matter much anymore, because it is free. If free apps, on the
app store, would be at least $0.50, or even $0.10, I think it would totally
change the game. (I.e. if Apple would change the Free Tier).

But as it is right now, I think the downward spiral will continue. The only
way out is to create a high quality superior product (many features, etc) with
a high price tag and hope that you get enough customers to survive. That also
should lead to less support load.

~~~
simonh
Oh boy are you looking at this wrong. Only someone from a western country with
a middle class wage could so utterly fail to distinguish between a choice
between two costs in resources to a choice between a cost of resources and one
of no resources.

Think of this another way. How many chocolates can you afford at a cost of
$0.20 each? How many can you afford at a cost of $0.10 each? Now, how many can
you afford at a cost of $0.00 each? The experiment artificially avoids this by
manufacturing a situation in which purchasers only had a one-time choice, but
the purchasers didn't necessarily know it was a on-time deal. For all they
know, they may be faced with the same choice every time they go back to that
store, even if it was advertised as a one-time deal. We get on-time offers
pushed at us all the time these days.

So, is a marginal decrease in cost of $0.10 equivalent in both circumstances?
Of course not. A cost in resources is always a cost. A cost of no resources is
not a cost at all. Comparing two different costs is completely different to
comparing a cost with no cost at all. To understand this, instead of adding
costs together over a few transactions, try multiplying them by many decisions
instead and you'll see that multiplying by zero has some very special
advantages when it comes to resource preservation.

What I think is happening is that analyses like the above are considering only
individual translations, but App store users download many apps. Multiplying
costs over many purchases, even small costs balloon while free is always free
no matter how outrageously you indulge your App store downloading habit.

That's without taking into account that not everybody considers buying a cup
of coffee in Starbucks something that requires no thought or consideration. I
certainly don't think that way for a start.

~~~
r0h1n
Sorry, but I found the parent's comment much more insightful, lucid and
relevant to the point being discussed (why a large majority always seems to
prefer free apps over paid ones) than yours.

And the utterly pointless ad hominem attack right at the beginning didn't help
either.

You also seem to have mixed up "price" with "cost" at places. For instance I
don't quite know what these lines mean:

> a choice between two costs in resources to a choice between a cost of
> resources and one of no resources (what do you mean by _resources_? Whose
> resources?)

> a marginal decrease in cost of $0.10 (the _cost_ of the chocolate is borne
> by its manufacturer while a consumer pays the _price_ )

I'm sure you have a valid counterpoint in there somewhere, but it's not clear
what it is.

~~~
digitalengineer
>App store users download many apps. Multiplying costs over many purchases,
even small costs balloon while free is always free

I had not thought about this one. But it is correct and explains the resoning
of consumers.

~~~
droidist2
To me it's about the stress of decision-making. I like simply saying "hey, let
me check out _____ type of app" then doing a search and downloading up to a
half dozen different ones just to try out.

On the other hand if I had to pay a few bucks for an app I'd probably spend a
while reading the descriptions, reviews, weighing options, etc. It would turn
into work.

------
NateDad
If your paid app can't compete against a free app... that's hardly the fault
of the user or the app store. It's the fault of the app maker. What you're
basically saying is "my app is so easy to make, that someone could make it
without even caring to get paid for it".

It's competition. Yes, if someone can recreate your application for free, then
your application wasn't as valuable as you think it was, by definition. Make a
better app, or turn it into a service that generates revenue past app
deployment.

I think many app developers have gotten spoiled by tales of people getting
rich off of P.O.S. apps, and expecting that to happen to them. That happened
back in the day because there was a scarcity of applications and app
developers. That scarcity no longer exists. Most of the easy stuff has been
done, and a lot of free versions have been made because, let's face it, most
apps really aren't terribly complex.

So, make something big and hard to duplicate. Make it part of a service you
provide with recurring charges and give away your app. It's a better model,
anyway.

~~~
hemancuso
Couldn't agree more. It's not the users or Apple who are racing the app market
to the bottom. It is the developers and the competition amongst them. And it's
because creating an app is not that hard. Perhaps designing a great one one
and creating and and building a market for it is quite hard. But cloning that
exact app [even if it is inferior] and providing it for free or supported with
IAP or ads is really not terrifically difficult or time consuming once the
idea is proven. It is basically impossible to build a competitive moat.

Games are a bit different given how much art and content is often associated
with the production, but users are looking for a fun distraction. Perhaps one
should try to build a $2 game with a $50,000 art budget rather than a $500,000
art budget. The users don't really care. It sounds more profitable. Tiny Wings
FTW.

~~~
k-mcgrady
>> "creating an app is not that hard"

How is this true at all? It depends on the programmer, what they are building
and the tools they are using to build it. Apps are no different to building
desktop or web software. In fact the constraints arguably make it more
difficult.

~~~
Kurtz79
I would say at least that it's much easier now than it was a few years ago.

XCode and iOs have improved tremendously in terms of usability and
functionality, compared to the first releases, and I expect that the Android
SDK has gone through a similar evolution.

In addition, you'll probably find a tutorial or a Stack Overflow answer for
every problem or question you could possibly have, while at first it was
largely undiscovered territory.

In short, barriers of entry have lowered tremendously.

~~~
matwood
For the raw coding part you are describing that is true, but the bar for what
people consider a worthwhile app has also risen substantially in the same
amount of time. I can build a native iOS app in a day, but I wouldn't consider
it releasable to the app store without a good bit more work.

------
borplk
> The economic reality is that most apps offer next to no value to people.

I'm not an app developer and I disagree that most apps provide next to no
value (some apps, like everything else sure, but many of them do provide more
value than their price).

For example there are many games priced $0.99 or $1.99 that people might play
for hours and hours. Shouldn't that cost more?

The reason that the prices are low is not because people are not prepared to
pay for them. It's because Google and Apple want it that way and also because
developers are slashing prices to the extreme to compete.

Imagine if App store and Play store didn't exist and you'd have to
individually find developers and buy/download their apps. That would certainly
result in higher prices.

The bottom line is app developers have no one to blame but themselves for
creating this perception about their apps and allowing this expectation of
$0.99 apps to grow.

People also have no freaking clue how hard it is to make apps. For example
most people think mobile apps are a lot easier to make than software/web apps,
perhaps because mobile devices are 'small' so they tend to think of mobile
apps as 'tiny' little widgets that someone pushes 20 buttons and it magically
gets created.

If a large enough group of people start raising awareness and refusing to
release their work for peanuts we'll see a shift in the market price towards
more realistic numbers.

~~~
masklinn
> It's because Google and Apple want it that way

I fail to see where they have had any influence. Apple at least has
historically priced a number of their applications pretty high (not all of
them though, basically "core feature" applications such as ibooks or podcasts
were free, but iwork applications are $10 each, and garageband and imovie are
$5)

> also because developers are slashing prices to the extreme to compete.

Mostly that one, from very early on there's been an insane tendency to price-
dump and race to the bottom.

> That would certainly result in higher prices.

It would also result in extremely low sales, as known by anyone who developed
for S60 or Blackberry back in the bad old days.

> If a large enough group of people start raising awareness and refusing to
> release their work for peanuts we'll see a shift in the market price towards
> more realistic numbers.

That's completely unrealistic. It would require a buy-in from every single
developer.

~~~
hrabago
> Apple at least has historically priced a number of their applications pretty
> high

This is incorrect. Apple has historically priced their software very low, and
their hardware very high. Their office suite is very inexpensive compared to
MS Office, for instance. Their OS is also very inexpensive compare to Windows.

On the mobile side, their $5 and $10 price points make it hard for others to
justify charging that much for less complex software (a point corresation has
also made).

Their software pricing agrees with the points Spolsky made on
[http://www.joelonsoftware.com/articles/StrategyLetterV.html](http://www.joelonsoftware.com/articles/StrategyLetterV.html)
.

Now of course they are giving away their mobile software, which I think helps
both themselves and 3rd party developers, so I think it's one of the few steps
they've taken to help 3rd party developers charge more. (Last time around it
was the creation of a "premium" category.)

~~~
judk
Final Cut Pro? Aperture?

Apple's consumer apps were cheap, not business apps.

------
borplk
What I find particularly messed up is the huge relative difference in the
price of the mobile device and the apps that people install on it.

When it comes to buying the device, thousands of people line up outside Apple
stores and pay - I don't know - $600 for their device.

Android devices are the same, many people easily spend ~$400-$600 on their
device that they may only use for one year.

So a good chunk of mobile users are people with good income, living in rich
countries and are well capable of paying $5-$10 for their apps that they run
on their expensive/high-end devices.

Yet when it comes to paying for apps they struggle as if their monthly income
is $10.

There are many factors involved but I think the most significant one is by far
the psychological perception of the value of apps that has been created due to
App store and Play store pricing.

There are also many people who are willing to release free and good-enough
quality apps because it's their hobby or maybe they want to create a portfolio
for themselves.

This reduces the perceived value of these apps.

In contrast people can't find other professional services/tools for free. I
mean, say, lawyers, doctors, accountants, electrical engineers, etc... don't
produce and provide their services/work for free where you can download a free
health checkup from a doctor whose hobby is being a doctor.

So the perceived value remains high.

Software engineers are unique in this regard because they 'discount' their
work constantly and justify it by saying 'i love doing this'.

~~~
Kurtz79
Just as well: there are people spending thousands of dollars in cutting edge
PCs or Home Theatre systems, and then playing only pirated games.

And in the Appstores case the free alternative is even legal!

~~~
reddit_clone
One minor reason could be lack of physical media. In old days people received
a bunch of disks or a dvd with nice cover art which they can put on a
bookshelf.

Now it is all 1's and 0's coming over the wire(less). There is no sense of
ownership. People are reluctant to pay for something that they don't touch or
own.

~~~
daemin
One reason could be that consumers aren't technically owning anything, but
merely being sold a license to use an application/movie/music for some random
amount of time.

~~~
SEMW
FWIW, how true that is does depend where you are.

Here in the EU, the CJEU rejected the 'it's only a licence' argument and
characterised software downloads (that aren't explicitly limited to a fixed
length of time) as normal sales, in _Oracle v Usedsoft_ \-- in particular,
they're sales for the purposes of the First Sale Doctrine. So I could buy your
app, use it, then extract the apk and sell it on to someone else, and you
couldn't sue me for copyright infringement (as long as I remove the apk from
my own phone, of course). (IANAL).

I'm not familiar with US law but my impression is that, on the whole, most
states' legal systems are a whole lot less consumer-friendly than the EU, so
presumably the same is not true over there.

------
andrewljohnson
This idea that Apple does not allow trials is a total misconception.

I just released a subscription boating app that has a basic free version, and
then a button to let you "Test Drive" the complete app. You can trial the paid
version over and over.

Previously, I have released a product that had limited functionality, and
prompted you to upgrade or buy the paid app.

People interpret the App Store guidelines very literally: Rule 2.9: "Apps that
are "beta", "demo", "trial", or "test" versions will be rejected"
[https://developer.apple.com/appstore/resources/approval/guid...](https://developer.apple.com/appstore/resources/approval/guidelines.html)

This doesn't mean you can't set up an app to have a trial, it just means you
can't submit garbage. You're best understanding that there is a certain
twisted humanity to the app review process.

~~~
robterrell
Some of us interpret the guidelines literally because we've been burned
before. A couple of years ago, I spent months working on an app, including
paying a designer, and I was really proud of the final product. After it got
reviewed, Apple added a new rule to the guidelines and rejected the app. That
was a seriously expensive lesson. Now I recommend interpreting the guidelines
as strictly as possible... even if you know of other apps that squeak past the
rule, it doesn't mean you won't get burned.

> Apps that are "beta", "demo", "trial", or "test" versions will be rejected

It sure sounds like your app breaks this rule. I'd ask what your app is, but I
don't want Apple to see this and reject you.

------
rythie
This is distorted based on the idea that most people pay more than $0.99 for a
cup of coffee - which is not true.

I think the price of a "Cup of Coffee" needs to be defined here. Coffee can be
made for $0.07/cup [ [http://thekrazycouponlady.com/finance/a-wake-up-call-a-
price...](http://thekrazycouponlady.com/finance/a-wake-up-call-a-price-
comparison-of-popular-coffee-options/) ].

People who buy coffee at Starbucks are buying a luxury version of a luxury
item + they are buying time in a public venue. Does Starbucks actually outsell
(in numbers) coffee made at home? seems very unlikely to me. In fact most
people buy coffee in a supermarket, which is seems almost free when you
actually make a cup (you don't pay everytime you make one).

~~~
AznHisoka
A cup of coffee is like temporary marijuana to drown out the dreary feeling of
going to work. To me, the value is much much greater than most apps, no
question. Coffee to me is like having a shower. Sure, a shower is basically
just splashing water to your body.. but it's also one of the few places where
you can think to yourself with no distractions.

------
kemiller
I have a somewhat different perspective on this. Apps cost people something
much more valuable than the small amounts of money in question: attention.
Most people find learning new software to be a chore. So every app they
download has a cost in attention, in learning how to use it, however simple
that might be, and some of them have a cost in money as well. If the app is
free, they know they can abandon it instantly if it doesn't give them value
right away, and lose almost nothing. If it costs money, they will feel obliged
to get more value out of it, but that means committing to spend even more
attention. When you buy a cup of coffee, you're getting attention _back_
because someone else is taking on the slightly fiddly business of making
coffee, and once you have it, there is nothing to learn, you can just enjoy
it.

Viewing software transactions as paying attention, rather than money, for
value, makes a lot of these markets make more sense. Because if you offer
something that will reduce the net amount of attention they have to pay,
they'll often gladly give you money for it.

~~~
aestra
This is a great point. There is a useful free app that I use which has a 5
star rating. I looked at one of the 1 star reviews to see what they said out
of curiosity. It said something along the lines of "I had to customize the
settings and the user interface isn't standard."

------
tsunamifury
Do the smaller developers realize that the hardware manufactures pay
development houses to do this? I've been paid by pretty much every AppStore
provider to develop apps, which subsidizes me to undercut competition.

I feel like most app developers have a severe lack of business intelligence
and the allure of easy money has kept them from thinking rationally about how
to succeed in the market.

Provide a high quality cheap product at scale, while reducing risk of
investment in every way possible. Companies like S2BB can replicate your cute
app in days and provide it for free using carrier, oem, or AppStore provider
subsidy.

I don't think smaller app devs even realize the uphill battle they are about
to be playing.

~~~
bilbo0s
A couple of reasons...

One, the casual developer. A lot of these apps are being developed by
programmers sitting in their underwear watching ESPN Gameday on Saturday
morning. Or teenagers with nothing better to do. If they make money... well,
that'd be great... but they really have other motivations.

That alone would flood the App Stores with product.

The second point, is economics.

ie - it doesn't matter.

If you live in an agrarian society... most likely, you have to be a farmer.
It's largely irrelevant how many other farmers there are... it's probably the
only thing you can do.

I think there is a similar dynamic in the app world. There are an AWFUL lot of
unemployed programmers... chances are... they are going to ... well ...
program. What else are they going to do with their time? It's actually a
pretty smart thing for them to do as well. Keeping the skills sharp and all
that.

So... I think that's, most likely, where a lot of the apps are coming from.
And those two groups will only grow in the future.

------
clarky07
>The economic reality is that most apps offer next to no value to people. They
might say otherwise when asked about, but their actions speak pretty clearly:
A cup of coffee is worth more than almost every app on the store.

Two things.

1\. That's probably true for a lot of apps, but I don't think it's fair to say
"most." Perhaps "many". There are a lot of apps out there that provide huge
amounts of value. Of course, I don't think a cup of coffee is worth anywhere
close to the price of a cup of coffee and I make my living selling apps. I
might be biased.

2\. Starbucks made 7.5 billion last year. Apple alone paid out 5 billion to
devs for apps. If you include advertising revenue and Android revenue, I'd
guess that people actually spent a similar amount on apps as they did coffee.

------
czr80
Why is it emotionally easier to spend $5 on a coffee vs spending $5 on an app?

I have a theory on this - I think we price experiences differently from
objects, and have a much higher bar for buying an object vs buying an
experience. And I think the reason for that is ultimately loss aversion - if
we buy a bad coffee it's gone and we can forget about it, whereas if we buy an
object we're stuck with it, a constant reminder of how we made a bad choice
and lost money.

~~~
ProblemFactory
A $5 coffee also buys you a place to sit down and use WiFi, and a bit of
social interaction or "lifestyle". Nobody pays $5 per cup of coffee at a
supermarket.

No app developers include "installed by a human" and the permission to go sit
on a couch at their office for half an hour in the price!

~~~
aestra
My supermarket has a Starbucks inside, without seats or WiFi. It stays there
because presumably people are buying $5 coffee from there.

------
arbuge
>>That's a hard pill to swallow, but we should let it sink in. We pour all our
creativity, time, and passion into creating basically worthless products.

Obviously not. A cup of coffee is worth $2, period. An app only worth $0.50 to
a million people is worth $500k.

~~~
swang
Author is saying a cup of coffee is worth $2 to the customer, but an app is
not worth even the $0.50 to that same customer.

In this example, you seem to switch out this comparison where instead you
compare the cup of coffee the customer buys, to the amount you could possibly
make for a $0.50 app bought by a million people.

~~~
arbuge
Agreed, but the point is that the "total worth" of an app is the total utility
that it creates in the world across all its customer base.

Of course you're right that to each individual customer the worth remains less
than a cup of coffee; if this affects the app writer psychologically,
hopefully the size of his/her bank account will be a consolation.

------
shizzy0
Here's a potential solution to this mess. We treat app store placement like
it's a free resource right now since it doesn't take up any physical space.
However, it does increase its users cognitive load. All apps that have ever
been produced sit on the app store unless their creators explicitly choose to
take them down. That's like a department store that houses every invention
ever made no matter how antiquated or outdated. Apple could introduce a
"property tax". If you want to take up shelf space, you've got to pay a yearly
tax or make way for other apps that will more productively use that space.

~~~
commentzorro
This is an interesting thought, but history has already shown the outcome.
Shelf space dominated by the big players and defacto price fixing.

A better approach would be for a few very high quality niche apps to get
together an open their own app store. They sell only though their store and
price the apps appropriately. Thus starting boutique markets. Could happen now
with Android but currently not Apple.

~~~
derefr
Without needing to support sideloading, Apple could let users group apps on
the store into their own collections, which other users could browse. They
could even let the users theme them, somewhat like Apple's own decorated
collections -- and give the "curator" a user ends up purchasing from a small
cut (5-10%) of the sale price.

In other words, replicate the well-trodden player-vendor system from MMOs.

~~~
commentzorro
No ... a couple quick examples. Kids don't go to Walmart looking for the
Abercrombie & Fitch department. They want the fantasy built around the brand
and that means their own stores. Stihl when the dealer route because they
wanted to differentiate their higher quality and provide a more personal
customer relationship than Walmart would allow.

Gotta get Apple out of that lock-in in order to support true boutique shops.

~~~
derefr
I guess that depends on whether you see the App Store as a single shop, a
department store, or a mall. There might not be Abercrombie & Fitch
departments in Walmart, but there are certainly Apple-store-themed electronics
sub-departments within Best Buy.

~~~
commentzorro
You got it. I think the sub-departments is exactly the wrong model. Completely
separate stores with completely separate and unique identities. Apps not also
sold in the app store. Boutique shops selling and supporting a very narrow
vertical.

------
Kurtz79
I guess that, given the chioce, most people would opt for a free cup of coffee
over a paid one, if quality was similar.

~~~
masklinn
> most people would opt for a free cup of coffee over a paid one, if quality
> was similar.

Quality does not enter the equation. Most people will opt for a free cup of
coffee over a paid one if the paid cup is the best coffee in the world and the
free one is barely a step over ground-up dried shit.

~~~
highace
Ground-up dried shit is some of the most expensive coffee!

(Of course I'm talking about Kopi Luwak)

------
skc
I'm just here to smirk at the old narrative - that the iOS customer doesn't
balk at paying for stuff - being slowly whittled away as the march towards
smartphone commoditization continues at pace.

~~~
derefr
The "iOS customer" of five years ago (the wealthy early adopter) didn't mind
paying for stuff. Those customers are still there, and still buying iPhones
(probably gold 5Ses now), and apps for them. But now there are way more, more
price-sensitive consumers (the people buying those 5Cs, the people who still
have an iPhone 4, etc.) and they have much the same buying behavior as
(commodity) Android consumers.

In other words, there's still money in the market -- but it's a fixed supply
of money (there are a fixed number of wealthy early adopters) vs. an ever-
growing number of developers grabbing at it. The only way to get back to where
we were would be to make a new app store that required new apps to be designed
from scratch for the wealthy users to early-adopt all over again. (...and
that's fairly clearly what iOS7 is trying to do, isn't it?)

------
hawkharris
"A cup of coffee is worth more than almost every app on the store."

That is a "hard pill to swallow," but it's true and poignant. The problem is
not only systemic (i.e. Apple's fault). It's that many developers jump into
creating apps withour conducting market research to prove that their products
will have a long-lasting utility from a consumer's point of view.

I don't mean to be cynical or overgeneralize. To be fair, not all apps are
created equal. But in my experience, the vast majority seek to provide a
fleeting sense of entertainment (as opposed to utility). And the more
practical apps are simply unimaginative iterations of existing solutions (e.g.
fitness trackers and to-do lists).

We need to think differently about the purpose and expect more from them in
the way of tangible impact on consumers. For instance, the Robert Wood Johnson
foundation is using apps as part of nationwide campaigns to inprove childhood
nutrition.

------
paul_f
"The economic reality is that most apps offer next to no value to people."

This is completely wrong. The author of this article confuses price with
value. Apps have tremendous value. But because of market dynamics, human
nature, free alternatives, etc, they cannot sustain a high price. Price and
value are different things altogether.

~~~
icebraining
I agree. The problem to paid app sellers is that the _extra_ value they
provide - the difference between the free app and theirs - is low, not the
absolute value.

Even if your app solved half of my life problems, it'd still not be worth a
lot if the free competitor solved 49% of them.

------
svantana
>That's a hard pill to swallow, but we should let it sink in. We pour all our
creativity, time, and passion into creating basically worthless products.

What a weird conclusion. For me, the take-home is rather "why don't I stop
doing this and try to figure out something that is actually worth something to
someone?"

~~~
easytiger
I don't see those as incompatible end points.

~~~
Ntrails
The question becomes whether the meaning is that all smartphone apps are
worthless, or that you should work on one that isn't

~~~
easytiger
My goodness. What are we all doing. None of this is real :(

------
lnanek2
A cup of coffee can only be consumed by a person, or maybe another splitting
it. A digital offering can be copied for almost no cost.

This is why Bill Gates is rich. You pay to write the software, then you sell
it over and over and over again with little cost to you. You can't do that
with coffee.

So I see the low price of apps to be more indicative of this advantage being
shared with the buyers rather than it indicating the app is worth less to a
person than a cup of coffee.

You can have a successful app business selling at very low prices because if
it becomes a hit you will still make a lot. And being cheap helps you become a
hit. So everyone does it and you have to compete with those people doing it.

~~~
judk
Howard Schultz did pretty well selling coffee.

------
satyrnein
Reading some of the comments here reminds me of the Adam Smith quote:

"People of the same trade seldom meet together, even for merriment and
diversion, but the conversation ends in a conspiracy against the public, or in
some contrivance to raise prices."

------
ricardobeat
> the business of creating products which offer very little value to people

my view is it's not that most apps offer little value, but the consumers'
perception of value is skewed. You can buy tools today for <$5 that would have
cost $50, $100 or more a few years ago, and are miles better than their old
counterparts. Also, in a way, Apple is forcing the _trial + buy_ model to
become _free + in app purchase_ , so paid upfront becomes a huge negative.

------
zxcvvcxz
Here's my perspective as both a user and developer.

Most paid apps there are the equivalent of small side projects. They're simple
things that should exist, and after enough time, someone will make them for
free. The ones that are not free tend to have better visual design. Big whoop.
I'll take my coffee please.

Here's an example of something that's worth more than a coffee: Shazam. It
identifies music around you by doing some crazy audio processing and database
magic. Aaaand I'm still using their free app (haven't had the need to upgrade
yet). So if someone offering _that_ much value _still_ can't convert me to a
paying customer, how will you?

I'm a developer as well. It's hard to create something worthwhile, I get it (I
still haven't really). My theory is that if it's not technically defensible in
some way, or doesn't get a network-growth lock-in effect quickly, then it's
easily replicated as a free app.

Would love to hear counter-arguments to any of this. Frankly all I see is
people complaining about everything except the intrinsic value of the apps,
which is exactly what the article mentioned would happen. We live in an era of
increasingly less low-hanging fruit.

------
jhh
The author's argument is faulty. The value from being able to take notes /
manage to-dos properly on a multitouch device may be rather great to many
people.

However, the price is not determined by this. The price is the result of an
equilibrium. There is a process of underbidding going on which lowers the
price for the app very close to cost of producing it, until it is unattractive
for new competitors to enter the market.

The magic thing about this is that it delivers these products to the world in
great number at close-to-zero pricing and that's pretty nice for the world as
a whole.

Think about it this way: It was worth buying mainframe computers at many
million dollars a piece and with embarissingly low computing power back in the
70s to some people.

Obviously, when these people buy a computer with a million times the
performance at 1/1000th of the price they get a great deal. So it's fair to
say that the value of commodity computers is to some people much much higher
than the market price. That does not change the fact that producing commodity
computers is a cut-throat business with ultra slim margins.

So what I am trying to say is that this emotional / ethical notion of value
needs to be seen as distinct from market pricing.

~~~
XorNot
If you're making a todo/notetaking app, you're entering a really crowded
marketplace. And from my experience, you're probably also doing it wrong.

I mean first things first: does your app sync with _anything_ standard or are
you promising me your webservice? Because a quick glance through the non-
existent featurelist from the app's website, and the only thing I see is "sync
with iCloud".

So you know, worthless. To me and anyone else who has IMAP/WebDAV/Exchange
accounts/CalDAV calendaring/Google calendars. Your apps are worthless because
they're not that useful to start with.

------
jennyjitters
While I agree with the people here saying that many apps are "worthless" due
to the sheer number of free apps available, I can't help but compare this
issue to starting a business (likely because that's what many app developers
are trying to do). Most startups fail. That's just the way it goes. Starting
and running a successful business requires success in a lot of areas: product
dev, design, marketing, customer service, etc. I think the claim that apps are
worth less than a cup of coffee is a bit narrow-minded. If you look at the
(huge) number businesses that have incorporated over the last several years,
and then compare that to the number of those same businesses that are
currently "successful", those numbers will likely look a lot like the number
of "successful" apps vs total apps. It's hard to create something that people
love, whether that be a physical product or an app. I think there's still a
market for well-designed, useful, paid apps. Just like it's still possible for
a startup to be successful. It's just really damned difficult.

------
twilightfog
Nothing like another example of a todo list app to illustrate the downward
spiral of app store pricing. Creativity can still get a high price in app
store. Find a niche, and develop a great app, and customer will pay. Case in
point: Cubasis
[https://itunes.apple.com/us/app/cubasis/id583976519](https://itunes.apple.com/us/app/cubasis/id583976519)

~~~
gurkendoktor
Absolutely agree. My coworker built a business app that sold very well for
$120, until the company that provides the API crushed it with their own $10
app (bummer).

------
cognivore
>> We pour all our creativity, time, and passion into creating basically
worthless products... we're in the business of making products that provide
very little value to people. <<

If you take nothing away from the article but that you've gained some insight.

If you take a way someone's smart phone with a handful of paid apps on it and
give them a dumb phone they'll get by just fine. They will lose no significant
advantage for either work or personal life.

To drive up the price of something with little value you introduce artificial
scarcity. Nintendo does this well. If the Nintendo game platforms were open
games would be priced like apps. But Nintendo gives their Seal of Approval to
everything that goes on their platforms, and there is a high barrier to entry.

I doubt that the software development community would like that model, either.
I'm not even sure it's more profitable. But it does seem to create more
valuable software. Nothing on smart phones comes close to the quality and
polish of a good Nintendo game.

------
threeseed
As someone who bought Clear I fully disagree with the premise of this post.
All they had to do was recompile the app and potentially fix a few small bugs.
You can't sit there and act like it was some monumental change that warranted
screwing over your existing users. If they are unhappy with how much money
they are making then they simply need to raise their prices.

~~~
milen
I am the engineer behind both Clear for iPhone and Clear+. Your statement
could not be further from the truth - it has taken a lot of effort to make the
iPad component.

I'll give you a taste of some of the work that needed doing (completely
describing everything would take ages). Here's a few examples:

\- With iOS7, we switched to using TextKit so that we can vary the text sizes
(both internally and via Dynamic Text). This involved a significant
refactoring as in the previous codebase, we had to hardcode offsets. Why was
it all hardcoded? Anyone who's had to deal with the problem of editable inline
text would know that there were no APIs to match the drawing of text and
editing via UITextView (which was previously based on UIWebKit; while you
could the drawing either via the convenience NSString methods or via CoreText;
if you used CT, you'd end up with mismatched visuals when editing /
displaying). Did you also notice that when completing items on iOS6, the
strikethroughs extended beyond the text on items with more than 1 line? Not
anymore, due to the new internals.

\- The architecture on the iPad is completely different vs the iPhone - on the
iPhone, you have a single "list view" (custom implementation to be able to
provide all the advanced gestures). On the iPad, you now have two view
controllers that need to stay in sync, animate in sync, etc. It also meant
that I had to do significant refactoring to abstract away all the controller
logic as it had to be embedded in different controller hierarchies - you
really don't want to duplicate all that logic.

\- List peeking on the iPad. This required adding support to both the list
view and to the item views, again - something many people might not even use
but it's extremely handy when you need it.

\- Drag and drop on the iPad. iOS does not provide a standard API to drag
between views, so I had to implement my own which is fully animated and
interactive. Try to dragging tasks to lists on the iPad - the feedback is
immediate and you will see the 3D animations when items drop. These are all
little details but they take a lot of effort to get right.

\- If you run the iPad app, you will see that it has a completely interactive
tutorial. We spend significant amount of time on that, to make it feel super
nice and provide the best way to acquaint users with the interface. Again,
anyone who cares about details will tell you that the final 10% take a
considerable amount of the total time.

\- You're also not seeing a significant amount of research and testing. We had
experimental interactions that never made it to production. We've made many
prototypes throughout the life of the app, none of them publicly available. We
learn a lot from these but that's all invisible to our users.

The above points just scratch the surface on the work that was needed to bring
Clear to the iPad. I hope it illustrates the point that it's not a simple job
of just recompiling.

~~~
Philadelphia
The majority of those changes aren't visible to users. As a corporate
developer, I can tell you that it's extremely hard to get funding to make even
the most necessary technical changes to an existing piece of software.
Normally, the best you can do is sneak it in with a big redesign that has
features worth paying for.

------
sanjkris
Note to all my iphone app users: -Yes. I just tripled the price of my app. Why
you may ask. Read on -You whined about missing features; I added them. You
whined about in-app purchases. I removed them. You whined about a missing help
section. I gave you videos & pics inside the app. You never saw them. Dont lie
to me-I see all your clicks inside the app. -Oh yeah! You are threatening me
with a 1-star review because you forgot to check your inbox for the result
from the app. You are an app review terrorist. I just tripled the price of my
app as insurance against such terror threats -You asked for a discount on the
app when it was priced $2.99!! I am responding by tripling my app price. I
HAVE read all my competitor's reviews. They priced it $0 for a reason.

ok...got to go catch my flight to Hawaii and relax. With your $$$ thanks

------
ghshephard
What is the worth of something precious or valuable, if all around it that
same precious and valuable thing (or a very close substitute) is available for
no charge at unlimited quantity?

I wonder if Apple was aware the App Store would lead to basically infinite
supply of (in many cases) beautiful and high quality apps for little to no
cost.

With 200 million+ users, many of whom have a greater than average tendency to
pay $$$ for apps than your average smartphone user, an outstanding Apple
developer has some chance of making money on the App Store - (That old saw
about capturing 1% of a very large market) - but I really pity the third and
fourth tier platforms - they are going to struggle.

It's an IAP future.

------
clarky07
We get posts like this all the time, but it isn't actually what is playing out
in the world. Apple paid out $5 billion to developers last year and that
obviously doesn't include advertising revenue and Android profits. People ARE
paying for apps. Developers ARE creating value. These things aren't worthless.
I know because I sell lots of paid apps every day, and every month Apple and
Google deposit money into my bank account.

My response to this article -
[https://news.ycombinator.com/item?id=6471131](https://news.ycombinator.com/item?id=6471131)

------
iwasakabukiman
While I do agree that the App Store and the Play Store both trend toward the
free apps being the most successful ones, I disagree with his mentality about
the value of apps completely.

Yes, there are plenty of apps on my iPhone/iPad that I rarely use, but there
are also a whole host that I use every single day.

The author cites Clear as an example in his article. I use it every day to
make lists and keep track of things for work.

There are also apps like Downcast (a podcast player) and Comic Zeal (a comic
reading app) that I have gotten 10x the value of what I paid for them, since I
use them so frequently.

------
programminggeek
You know how you can offer a free trial? By offering a free trial!

No seriously, make your users create an account and give them a time-limited
trial. Offer them an IAP upgrade. It's doable.

The problem is to hit the mass market of millions, well you have to be free or
have a good marketing/advertising strategy. Actually, you probably need to be
a bit of both.

Anyway, it's dumb to complain about the pricing cuz it's been this way for
what 3 or 4 years now. It's not a new phenomenon.

On Google Play, it's even harder to get people to pay for an app up front.

------
prottmann
All the time i did not understand why so many developer jump on the App-Train.
Most of them did not make money with their apps. But thats another problem.

The real problem is, that everybody try to be cheaper than others and so all
developer destroy their own markets.

Why did so many sell a good product for 99 Cent ? CRAZY !

If somebody likes your app and find it usefull, this person will pay more than
99 Cent (ONCE IN HIS LIFE).

Ok, admittedly, it exists millions of todo apps, so you have a special problem
with many competitors, but this can't be the reason to be cheap.

------
FiddlerClamp
So, in comparison - would the same people who want prices on apps to be higher
be willing to avoid using contest sites like 99 Designs? Seems like the same
principle to me...being unwilling to pay someone 'the going rate' to design a
logo because you're not sure about the value of the underlying process sounds
a lot of like being unwilling to pay what developers consider a 'fair rate'
for an app when you can pick a free one instead....

------
theneb
The tagline for the post is assuming a cup of coffee, i.e a physical product
has the same value of a virtual one.

To that end, is software value not dependent on the crowd which buys it?
However, I cannot share your cup of coffee you buy from Starbucks.

My point only further raises the question: Do consumers see Apps as shared
content? Or, Do they equate physical and virtual App products as being worth
the same?

------
timruffles
That's an overly negative interpretation. An app can can be worth a lot more
than a cup of coffee to someone, but if there's a free alternative, why would
they pay?

The business impact is the same under either interpretation of course, and the
conclusion would be: don't expect it to be easy to launch a business in a
space where people offer free alternatives.

------
easytiger
Not what I expected but I completely agree.

Most productivity applications (anecdotally) are bought on a whim and oft are
never used but at all.

------
jaynos
Comparing the Clear app to a cup of coffee is interesting, especially since I
received the app for free from a Starbucks promotion.

I quickly stopped using it because that is my M.O. with all ToDo list apps.
I've never found one to replace a folded up envelope in my back pocket.

------
useful
I happily pay $60/year for Strava. But I would never buy the app.

------
ktd
>We pour all our creativity, time, and passion into creating basically
worthless products... we're in the business of making products that provide
very little value to people.

Yikes.

------
fburnaby
It's not that your app doesn't have value. It's that the marginal value
compared to a free app is small.

------
dscrd
Umm, no. A cup of coffee is worth about $0.1

------
fburnaby
If something is worth $10,000 to me and I can get it for $0.99, I will not pay
$10,000 for it.

------
kranner
What justification does OP offer for calling mobile apps 'basically worthless'
(followed by the condescending 'let it sink in', but let's ignore that)?

I'm confused: is this whole thing supposed to be sarcasm? Or does OP mean that
apps are viewed by users as worthless because they are so cheap?

~~~
feintruled
He's not trying to denigrate the amount of work or talent people put into
making apps - he's saying that if no-one wants to pay for it (perhaps because
they can use any one of a hundred free alternatives) then it is de-facto
worthless.

