

The $0.99 Problem - EvilTrout
http://www.gamasutra.com/blogs/AdamSaltsman/20091206/3743/Bytes_The_099_Problem.php

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bd
You don't have to earn all your revenue just on purchases of the application.

It is also possible to sell virtual goods from within your (cheap or even
free) application:

[http://www.insidesocialgames.com/2009/11/30/ngmocos-free-
to-...](http://www.insidesocialgames.com/2009/11/30/ngmocos-free-to-play-
iphone-games-hit-the-top-grossing-apps-list/)

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Wilduck
This is an interesting and definitely non-trivial economic issue. What we're
presented with it the classic supply and demand pricing problem, with some fun
complications.

I'm assuming a horizontal supply curve (and marginal cost approaching zero),
which implies that pricing comes down to substitutability and demand.

The pricing strategy in the article implies that to break into the top 10,
your app has to be priced at $.99. To me this suggests that quality apps are
perfect substitutes, and are selling at as close to marginal cost as possible.
Once you fall out of the top 10, however, the competition is more
monopolistic, and you can raise your price such that you sell the quantity
where marginal cost equals marginal revenue.

This seems backwards to a traditional market, where the competition is more
monopolistic in the higher quality products, and more perfectly comptative in
the lower quality products. _Interesting_.

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pronoiac
Oh cool: this article's from the Canabalt makers.

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tptacek
And before that Wurdle, which is a _ridiculously_ popular puzzle title.

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icefox
At the end of the article he makes the assumption that he would sell 50K no
matter what the price is, but earlier in the article states that decreasing
the price can raise you in rank which can be 10X the units sold...

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tptacek
_Can_ raise you in the rank.

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gcheong
I think this is the central question though - are app store customers price
sensitive at those levels? His calculations assume they are not, common
"wisdom" assumes they are. Now I need to ask where is the data? The one app I
have (not a game) that does any sales to speak of, but so low it probably is
not statistically significant, suggest they may not be - at least going from
.99 to 1.99.

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tptacek
Huh? He comes right out and says that you need to be .99 to break the top 50.
The problem is, being .99 isn't _enough_ to get you in the top 50, and at that
price point, you're betting the farm to get there.

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robryan
Don't really know anything about the app store but maybe there should be some
sort of listing by rating of people that have paid for it?

It seems a bit stupid that to see more copies you need to have a high volume
to crack into a best selling list.

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credo
>>It seems a bit stupid that to see more copies you need to have a high volume
to crack into a best selling list.

Why do you say it is stupid ? Shouldn't a "best selling list" be created based
on the definition of a "best selling list" ?

Btw rankings based on the standard "best seller" definition cannot be
maniuplated the way that rankings based on "ratings" can be manipulated.

imo Apple's current ranking policy - ranking by best-seller-list and also
ranking by most-revenue-earned (i.e. the top grossing list) - is good.

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stonemetal
>>rankings based on the standard "best seller" definition cannot be
maniuplated

Why not?(I don't have an iPhone, so I really don't know anything about it.) It
would be fairly easy to buy your own app. A $0.99 app and 30% fee to apple,
you could buy your app 300 times a week for $90. If it is really that much of
a hit driven market it might be worth it. Apple would love it(cash and being
able to claim the next billion sold that much faster.)

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gojomo
Why does the project have to pay back its 2 months' development costs in just
an initial surge of 2 months' sales?

Sure, games are hit-driven and their sales peak early... but the iPhone/Touch
platform is very young and still growing. These games will still be playable
and sell in small quantities years from now, when the platform's installed
base is much larger.

Maybe the only "problem" here is impatience?

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ruslan
Read carefully, the author explains it very well. Basically, 90% of app sales
are made during first 6 weeks, which happens only and only if your app hits to
top 100 (which is 99.95% less probable for an average developer). After that
sales slow down to virtually zero (1-2 sales a week).

PS. Developers want to eat, support their families, pay their mortgages, etc.
so patience is not an option here.

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thwarted
_PS. Developers want to eat, support their families, pay their mortgages, etc.
so patience is not an option here._

If this is their main concern, then why are they spending their time on such a
low payout time consuming endeavor? "Not enough people are buying my iPhone
app fast enough for long enough" isn't something a mortgage lender or a hungry
kid wants to hear.

