

We're not paying enough for apps - bmac
http://news.cnet.com/8301-19882_3-57384178-250/were-not-paying-enough-for-apps/?tag=mncol;editorPicks

======
cageface
_But I still wasn't ready to part with my $50 for this little utility when the
price point in my head was $0. And when there's so much great stuff in the App
Store for $4.99._

This is _exactly_ the problem with the app store. People have an idea in their
heads of what an app is worth, no matter how much work it took to produce it.
Price is completely decoupled from cost and from sales volume. This is like
saying a Lamborghini and a Kia should both cost $9999 because they're cars.

Ultimately this is going to lead to a ton of low quality junk in the market. A
quick perusal of the top 50 selling apps suggests we're already there.

~~~
Tloewald
And of course before the app store there was no low quality junk.

Frankly the problem with the app store is app discovery (something apple
clearly understands). The emphasis is on (a) stuff that makes money, (b) stuff
that gets downloaded a lot, (c) stuff that lots of people like. Once you go
into niches it's insanely hard to FIND things. And if something looks
intriguing but is expensive, there's no free trial mechanism.

If the app store fixed the discovery problem (and supported free trials) I
think most of these issues would go away.

There's nothing wrong with a flood of free stuff, much of which is crap, and a
ton of good cheap stuff aimed at broad markets ... This is actually a sign of
progress.

~~~
cageface
Before the app store everybody was comfortable with the idea that software was
not a generic commodity sold at a fixed price. Discovery is also a big problem
in the app store, but it's orthogonal to price expectations.

~~~
waqf
Discovery of free apps can be accomplished by downloading all of them and
finding out which ones (if any) suit you.

This method sucks, but it sucks much less than paying $2 for each of them and
finding out which ones (if any) suit you. That's why they don't seem like
orthogonal problems to me.

------
underwater
He says he wants and needs the app, it's worth the money but he still didn't
pay? That's not a very convincing argument.

On the developer side pricing this kind of consumer software per-device seems
like poor marketing. It's unnecessarily reminding every potential customer
about incremental cost. It also anchors the price incorrectly: "this software
is worth $24.95, but you'll need to pay $49.90 to use it."

An unlimited $49.95 license makes more sense to me. Or a two-device license
with upgrades to capture existing users who are willing to make additional
upgrades based on sunk costs.

~~~
wallflower
I work at a software company. One of my friends there adamantly refuses to pay
for software (he is still waiting for a proper unlock for the iPhone 4S).
Talking with him about paying for software (yes, reminding him that his salary
comes from people paying for software) reminds me of talking with my
Republican-to-the-core friend about Global Warming. He just refuses to budge
on his "values".

I remember once doing a charity event (training for a triathlon). I thought I
had a good relationship with my parent's neighbor. I thought we had
interesting conversations about life. He wrote me a tax-deductible check for
$10 for my cause. That was the lowest donation out of the many I ended up
raising.

Money is weird. It's free speech, in a way. You can express what you want by
either paying it or with-holding it.

~~~
pagekalisedown
I don't understand your argument about the $10 check. Sounds like you're
looking a gift horse in the mouth.

~~~
wallflower
Going completely OT here - but let me explain the complete context of why $10
was not a generous donation:

The event was done through Team-in-Training. Team-in-Training is an
organization that raises funds for cancer research. To raise funds, they help
individuals train for an endurance event like a marathon/triathlon. Over 80%
have never done an endurance event before. The training is fairly intense and
lasts three to four months.

The hard part about Team-in-Training is not the training, however. It is the
fundraising. You actually sign a document - if you do not officially withdraw
by a certain time, usually several weeks after training starts - that your
credit card will be charged for the balance of your minimum fundraising
obligation (whatever you do not raise).

For my event, there was a minimum fundraising obligation of almost $4,000.
This was an order of magnitude and then some more than I've ever raised for
any charity prior.

My argument about the $10 check was that I thought I had a good relationship
with my parent's neighbor and that he would recognize the importance of what I
was trying to do (personal growth and all that) and help support me (it is all
100% tax deductible) with a $25 or $50 donation.

As it turns out, going back to the idea of giving money as "free speech", the
people who gave the most usually had a direct connection to leukemia or
lymphoma in their family. And they wanted to support me in memory of their
loved ones. It wasn't about me, it was more about them (and usually I didn't
know that there _was_ a connection until afterwards). As for my parent's
neighbor with the $10 check, he didn't care for the cause (even though he is
in that field) or, more importantly, for me and what I was trying to
overcome/conquer/do/accomplish. It hurt but I eventually got over it. I know
that getting asked for money is hard - but asking people for money is harder
(you're putting yourself out there).

The triathlon was a life-changing experience. I ended up raising almost
$6,000. I highly recommend TNT to anyone I encounter who ever says "I wish I
could run a marathon" or "I can't swim so I can't do a triathlon" or "I'm in a
rut" (marathons are their most popular event, by far).

<http://teamintraining.org/>

~~~
jacquesm
The decision to sign up for an obligation of $4000 was yours, not your
neighbors. He gave you $10, which is $10 more than he was obliged to give you.

Just like in any MLM scheme your ability to 'work' the people close to you is
what allowed you to sign up for the program in the first place. It is almost
as though you felt that your neighbor was obliged to give you a certain amount
based on your perception of your relationship, his station in life and his
ability to give in combination with helping you, but in fact you misdirected
him by asking him to give (indirectly) to a charity.

Chances are that if you had asked him for a contribution to _you_ instead of
to a charity that you would have ended up with more than the $10, and how you
would have spent that money would have been up to you.

I don't think you can draw the conclusion that he didn't care for you, you
simply don't get to call how other people spend _their_ money, and you aren't
entitled to a say in that.

The best thing you can say to someone when they give you free money is 'thank
you'. To go on a public forum and berate them for giving too little is really
not the nicest response.

Suggestion: talk it over with your parent's neighbor and see what his side of
the story is, rather than complaining about him to strangers. It is possible
that you will come away with another 'life changing experience', one that
teaches you about yourself and your relationships with other people.

~~~
Vivtek
Jacques, it sounds like wallflower already knows all that. The issue is the
emotional impact it had (which is in the past), not that wallflower still
resents the neighbor.

And that money is weird, on an emotional level. Which it _is_.

(Not that anything you said here is wrong.)

~~~
jacquesm
He wrote:

> "let me explain the complete context of why $10 was not a generous
> donation:"

and

> "I thought I had a good relationship with him".

Which I took to mean he still sees it very much that way today.

The whole idea that somehow your friendship status should translate into an
obligation to write a check for a minimum of 'x' for a charity that you pick
is very strange to me.

As if you can put a price on friendship that way, and as if the 'interesting
conversations about life' suddenly were not good or worthless by the act of
giving an amount that was deemed too low.

------
rmk2
To be fair, I think some people might not have this problem, but from nought
to fifty is quite a steep rise.

If I find a free app that does what I need, that is very nice. However, at a
pricepoint of 50$, I _have_ to think twice. Whatever I pay (I am a student)
basically goes out of my monthly living allowance, which means out of my food
money.

I have around 400$ (300€ really) a month for food and everything else after
rent went off, 50$ is a _significant_ part of that. I live several days off of
that amount of money.

So in order to be worth spending this much money on an app, it sort of has to
be _essential_. At that pricepoint, for me at least, the question is not "do I
feel like shelling out that money that otherwise would have been used for
nothing", the question that arises is "is this worth cutting a significant
chunk out of my food budget for this month?".

It's a nice thing that many here don't have a problem like this, but generally
saying that we just don't pay enough seems to be...arrogant.

For people, the calculation between necessity and price is necessarily
different according to what they earn, but a lower price will more likely fall
into more people's "impulse buy"-range.

A piece of software might be good and do the right thing, but the question for
me (and maybe for the author just as well) is: is it necessary _enough_ to
warrant spending this much.

~~~
graeme
An app is more like a capital expenditure. You pay once, and never again.

You definitely should think twice, but the $400 monthly figure seems like the
wrong comparison. You likely spend most of that on monthly expenses that
recur.

I have the same issue of a limited budget. But for some purchases (software,
books, furniture, etc.) I consider them on the basis of "does this provide X$
of value to me?"

If the item does provide enough value, then I use money I've set aside for
that purpose, and I buy it.

Setting money aside for this sort of one-off value purchase is part of my
monthly budget.

(Of course, I also have to weigh a $50 app purchase against other uses for my
saved money.)

edited to add: I'm not saying you should be buying $50 apps of course, that is
a lot of money on your budget. I'm just saying the reference point should be
long term rather than monthly.

------
6ren
Those examples of elastic pricing are for consumer purchases (e.g. games).

The app in question is free for home use; but paid for corporate. Corporate
customers have an unbelievably different concept of "expensive" from you and
me.

I experimented with different prices for a corporate product, and found
charging too little or too much reduced profits. (Sadly, this experiment
seriously irritated at least one developer. Who knows, maybe a cheaper price
would have lead to greater volume in the long-term.) I would love to price _by
customer_ (price discrimination), so corporates pay what suits them, and
individual developers/small businesses pay what's reasonable for them. The
standard approach is to have extra features in the "Enterprise" version, but I
haven't found a way to make this work for me. Anyway... I'd rather everyone
enjoy all features; not have version-config complexity; and get feedback/bug
reports from everyone.

{rant: "Enterprise customers are an unbelievable pain. They take weeks to
answer the simplest questions, they misunderstand, miscommunicate, make
unfathomable mistakes, they have to go through Legal, Licensing, Management.
And they tend to be discourteous, seemingly without realizing it. Their money
- and they will spend more than you could realistically imagine - isn't worth
it."}

~~~
jgarmon
I don't in general disagree, except to say that the consumerization of IT
departments means that enterprises are using consumer-oriented stuff, so you
get the best of both headaches these days.

And if you think the neterprise is bad, just try selling into the government
channel. Jeebus frak, those guys are hideously cheap and supremely demanding.
If it weren't for scandalously longterm lock-in due to high switching costs --
when everything is reviewed forever, almost nothing ever changes, including
product selections -- no one would sell to the public sector EVER.

------
dgreensp
The author tries to be a little self-deprecating about it, but basically he's
the Starbucks customer who engages the cashier in a long conversation about
how the coffee is so expensive at places like this, and he's been meaning to
start making his own coffee at home again, and shouldn't they lower their
prices?

~~~
cronitron
Yeah, my thoughts exactly. In the end he doesn't even buy it but wastes hours
of his own potentially billable hours on trying alternatives and complaining.
He also wastes the developer's time along the way.

Just buy the app if you like it. Put your money where your mouth is.

~~~
bartelsmedia
In fact I really enjoyed the discussion with Rafe.

I believe, that our pricing model was just the trigger for him to reflect on
software pricing in general. It certainly isn't his everyday purchase
decisioning scheme. :)

Pricing really is a very tricky thing. Especially for software where there is
no cost of distribution. Users have to realize that there are a lot more
factors that need to be taken into account than just development or delivery
cost.

------
chime
I've had the exact same experience with respect to my iOS app:
<https://zetabee.com/tip-of-my-tongue/>

No matter what price ($0.99 - $9.99) I set, I make the same gross revenue.
Reviews tend to be nicer when people buy it for $2.99 - $4.99.

~~~
megablast
I too have found this, and thought it was very weird. I get a lot of emails
from people using my apps (I put a highly visible email button for people to
get in contact with me with problems of suggestions), and welcome not getting
as many emails with the more expensive version.

------
gigantor
This concept points to one of Robert Cialdini's laws of influence: One is far
more likely to drive all over around town to save 50 cents in the cost of a $2
pen than spend a few seconds to negotiate 50 cents from a $400 suit, even
though the savings are exactly the same. You nickel and dime far less when you
perceive the price to be 'not cheap'.

~~~
erichocean
Negotiating 50 cents off a $400 suit just makes you look like a dick. So while
the "savings" might be the same, the personal cost is a lot higher on the $400
suit.

~~~
vpdn
Not giving a discount of 50cents on the 400$ suit makes the other guy look
even more like a dick. So this might be the easiest 50cents you've earned.

------
wallflower
> Rafe reviews mobile apps and products for fun, and picks startups apart when
> he gets bored.

The classic idea of how easy it is to criticize someone's work without having
a full appreciation of how hard it is to do the work (because he does not do
it himself)

It is one thing to write about a startup, another thing to build a
product/build a customer base.

~~~
dedward
sure. but its silly to argue about what the " correct " price is in any
transaction.

the correct price is the one the buyer and seller both freely agree to and
come away happy with. simple as that. there are no other factors.

if the seller is selling too low and cant paynhis staff, thats his mis
management. not something to talk about publicly. if they are succesfully
selling the app at a high price and people buy it, and the seller treats his
staff liks rock stars thats fine. nobody ripped anyone occ. there is nomneed
to justify price, other than closing sales.

go watch carpet negotiations in morocco, i saw a guy pay 3000 usd for a nice
rug, and a student pay 50 usd for the same size and type lof rig, same store.
(all hand made so cant say they were the same). so what was the rug worth? to
rich guy it was worth 3k because he went to morocco and got it himself, blah
blah. to the student it was worth it because he negotiated the sales guy down
from 5000 usd to 50 usd. in both cases, moreso in the latter, the salesman
negotiated as if it were an art form, and in the end, made the point thAt once
the parties avree on a price and close the deal there are no regrets. he wss
happy he sold one rug for a huge amount of cash, and happy to sell one.
henaply to a student who would appreciate it more. in both cases he made
money, And we have. o ide what he true production cost is.

~~~
JoeAltmaier
Mostly true. Then there are situations where the buyer is in a bind, has to
pay whatever is asked. They don't go away happy, believe me.

Its called scalping, or gouging, or blackmail or whatever. Consider buying a
car, or health care, or insurance, or gas, or cable service from your
monopolistic bloodsucking local cable king.

Makes me want to go live in a cave.

------
k00k
20 years ago, when I worked at CompUSA, we used to have this bin of budget
software. In it, you'd find things like "3D Home Design" software, game
clones, and Pagemaker wannabes. People used to ask all the time, why do I need
to pay $200 for X when I can buy this one in the bin. They'd of course be
cheapos, buy the one in the bin for $9.99, and then one of two things would
happen, either they'd realize, wow, this is crap, and come back and buy the
$199 "real" software, or they'd come back and ask a thousand annoying support
questions on how to make the crap software do what they need. Some things
never change.

------
stoolpigeon
I'm surprised synergy+ wont work in a pure mac environment. I use it every day
but my setup is 2 linux machines and a windows machine. If I couldn't use it -
I would buy something like what he describes. I would quickly look at any and
all options - though $75 for the option described would give me pause. The
ability to drag files from machine to machine sounds cool - though right now I
get close to the same thing with ssh.

------
suresk
I find it a little odd that he spent so much time haggling over a $50 tool
that is obviously providing a lot of value to him.

The response from the vendor (about it being hard to make money to pay his
developers when selling a fairly niche tool) resonates with me, though. I
built a fairly specific-use tool on the side last year and started selling it
on the Mac App Store. I found that prices weren't very elastic, and I had to
drop the price down to $2 to sell very many copies.

Even then, people think I'm some big company selling this software, when the
revenue I generate from it isn't nearly enough to pay my bills, much less hire
others to work on it. Even last year when I spent a while in the top 5 in dev
tools, I wasn't netting more than $25 per day.

Ultimately, I think the app store concept is really cool and will be a net
positive in the long run, but I wonder how many useful tools will fall through
the cracks because buyers have been conditioned to think that a $5 app is
"expensive", even though it isn't nearly enough to support some tools.

~~~
jwr
I find it more than a little odd. I've just bought the app (two computers),
because it's something I've been looking for for a long time. I'd pay just for
the shared clipboard feature. I can't count the number of times I had to copy
a URL into a file on Dropbox, or Notational Velocity, just to be able to paste
it into an E-mail being written on my laptop right next to my main machine.

Spending $50 saves me a lot of time and frustration. Also, it is _much_
cheaper than writing the software myself (which I was seriously considering).
I'm more than happy to pay that.

I also hope that because the software is well priced, the company won't feel a
need to diverge into multiple half-baked products. I've seen that happen to
Ironic Software (Yep, and afterwards Leap, Deep, Fresh), I'm seeing it happen
to IcyBlaze (iDocument, and then Sparkbox). I'd much rather see a company
develop ONE well-supported and polished app than diverge into multiple bug-
ridden ones.

~~~
bartelsmedia
Thank you for your support.

> I also hope that [..] the company won't feel a need to diverge into multiple
> half-baked products.

You bet. Since 1998, we have a small set of well-maintained software products.
ShareMouse is not a quick shot. We are here for the long run.

~~~
jwr
So, having used the software for a couple of hours, I've found at least three
problems/bugs. Now we're going to see whether the price is justified and
whether we indeed pay for support :-)

------
msutherl
There's an interesting ethical question here. If you charge more for your app,
you may make the same amount of money and save on support costs, but you're
also denying less wealthy people access to a good tool. It's much like, for
instance, the clothing business. Some low-end luxury brands sell clothing of
comparable quality to what mass-market brands offer, but mark up the price.
This means that only wealthy people can afford the clothing. While you could
just as well sell it for less with possibly similar profit margins.

Do you think it's ethical to exclude lower-income consumers just because it's
more convenient for you? If you really believe in what you're doing, wouldn't
you want it to be accessible to as many people as possible?

~~~
dedward
ethical? its straightforward free market principles at work. especially if
similar quality clothing is available cheaply. finding a way to et people with
more money to buy your brand even though its basically the same as the cheap
one is just cine if you can do it.

ethics only come in when we start talking serious quality of life issues, like
healthcare and food.... otherwise its all branding and marketing.

~~~
msutherl
As a designer, I have to object to this way of thinking. Perhaps I should say
"ethico-aesthetic" a la Guattari.

------
luriel
When you are used to apt-get (or equivalent packaging systems, or download.com
or whatever on Windows), the concept of paying for apps when using the App
Store is baffling.

I borrowed a friend's iPhone a while ago, and I could not even find a decent
free IRC client, I'm sure there might be one somewhere, but most were at best
badly crippled. It was very depressing.

And I thought we dealt with the whole "it costs too much to build this
software" issue ages ago, how much did it cost to build most open source
projects? And who cares? The point is that people has good enough reasons to
build software without needing to charge directly for it.

~~~
cageface
When you're used to the polish and quality of commercial applications, the
appeal of the rough and amateur GUI-centric apps available via apt-get is
baffling. Linux is a great server OS but there's a reason its irrelevant on
the desktop.

------
carsongross
100% agreement. From my experience:

Low priced apps imply loads of users to make money.

The people whose price sensitivity falls close to your low price are more
likely to be cheapskates or find your software marginally useful. They are far
more likely to complain and require support.

God forbid you are selling at a one-time-fee (which is why I think the current
mobile development land-grab will flame out and transform into services-on-
your-phone). You are going to be expected to provide support forever, at the
drop of a hat, for any version of your application. Figure out a way to get
recurring.

If you go cheap/free, you monetize with ads (often ineffective and always
annoying to your users) or by spying on your users. I doubt many of us want to
do the latter (Although, sadly, enough of us might to knock out the ones who
don't. Race to the bottom!)

I now want to pay good money for the apps I use: I want the developer(s) to
eat and drive nice cars. I want them around and in the game for bugs,
integration changes and general support. I want them to not feel any pressure
to jam new features in just to get another rev out the door for the upgrade
money. Effectively, I want to pay them a _lot_ of money for their software,
because it is often incredibly valuable to me, I just want to do it on a
payment plan where I can opt out if I no longer find the software useful.

I think that model, in most cases, leads to better software than either the
open source model, the one-time-fee model and the freemium model.

------
adrian201
I agree with the author that some apps are overpriced. Case in point, how many
people do you know that are running legitimate copies of Microsoft Office or
Adobe Photoshop? For a true bootstrapped entrepreneur - who needs project
management, site hosting, graphic design, etc. - it's near impossible to
afford “top of the line” products. Instead you're left to use Open Source
software that at times can be good (Open Office) or unusable (if you've ever
used Fireworks, don't even try to use Gimp on a Mac unless you're
masochistic).

You're other option is to become a pirate (ARRhhhhh). Here in NYC, piracy
seems to be such a pandemic that they're running Ad campaigns for people to
report software piracy at small businesses
(<https://reporting.bsa.org/r/report/add.aspx?src=us>).

Here's a business model I've been thinking of that I hope developers will
adopt. I call it “Entrepreneur lay-a-way”. Basically if someone is a-self
described entrepreneur you give them a full 1-year license to your software
for free. At the end of the 1 year you charge that users credit card for the
full license plus interest. The thought being if the entrepreneur is
successful, in 1 year he'll be able to afford your software with interest. The
entrepreneur benefits deferring payment for a year, and can use that money for
other purposes (marketing, etc). He can then utilize you're wonderful tool to
create value for his users and the world. It's a win-win all around.

~~~
lukev
Unless (as in the majority of cases) the startup fails, in which case you now
have an already broke entrepreneur getting a large charge on their credit
card, which they probably forgot was coming.

~~~
adrian201
Haha true. A monthly reminder would be key. Maybe a VC or Angel can chip in to
back any defaulted charges. VC/Angels could only allow entrepreneurs to join
their "secured" group after they are vetted.

Or maybe this could all be tied to a public profile like AngelList or
Facebook, to ensure people aren't gaming the system. I'm just theorizing at
this point...

------
wccrawford
The title doesn't match the content at all.

The content is correct in that pricing apps is complicated and there are
factors that people don't often consider. And that support costs should be a
factor.

But nowhere does it prove the _should be paying more_. Maybe the developers
could charge more, but it doesn't even prove they _should_ do that. It just
opens up the possibility.

And I think that ShareMouse is overpriced. $25 per computer? And his reason is
that he wants to pay his developers well? That's a stupid reason. He should be
looking for market equilibrium instead, then. He should be looking for the
point where he makes the most money, instead of just picking a price and
sticking to it. Even in a professional setup I would choose Synergy over his
price, despite the manual setup (took me like 10 minutes last time) and lack
of file sharing (the drives are network shared anyhow in any situation I've
been in).

Also, if the claims of his page are true, then support cost should be nearly
nil. He claims the thing automatically sets itself up, including monitor
configuration. But if it fails to do that and you need support, that's even
worse than not having it be automatic in the first place. If he's really
having so many support tickets about it, it's not worth the money anyhow.

~~~
tankenmate
One of the major points raised is that pricing is largely elastic; i.e.
raising or lowering your prices doesn't affect revenue. This may mean in some
circumstances the correct price is the one that is so high that it leads to
just one customer.

If it is the case that the pricing for this product is highly / almost
completely elastic then a high price makes perfect sense. Just look at Apple's
pricing strategies.

[Edit] fix grammar

~~~
wccrawford
No, it said that for some products, the pricing was elastic. And under those
circumstances, it still might not make sense to charge as much as you can.
Even though you avoid support costs like that, it means fewer people are using
and talking about your product. If people aren't telling their friends, you're
missing out on a lot of free advertising.

There's a lot that goes into pricing, and most of it is not obvious at all.

~~~
tankenmate
Who care how many people are using your product? The purpose of a business is
to make profit for its owners. I'd rather have a business that had one
customer that made 10x profit than one that had 100M customers and and made 1x
profit.

------
Tmmrn
I would be more interested in his reasons to abandon Synergy.

>But all good things come to an end. Especially the free ones.

Why? For the past few years my desktop has been running very successfully on
Open Source software. (With some blobs like flash that are just needed for
legacy compatibility) I don't see that changing in the near or far future.

> I have had to stop using Synergy. Setting up this free, open-source app is a
> black art,

I remember when I was trying synergy. I opened the manual and thought "that is
quite complicated" and quickly found quicksynergy (there are probably other
equally fit GUIs). It's a bit counter intuitive what IPs to put where but
after that it's just putting an IP or hostname in on each PC and click a
button... That's much less "black magic" and didn't take me more than 5
minutes...

> and when CBS replaced my PC with a MacBook, giving me two-Mac setup (which,
> I admit, is extravagant), I couldn't get Synergy to work anymore.

So what was the error?

Of course that was not the point of the article. But he spent so much time
explaining how he wouldn't buy the other application because it was too
expensive I wondered why he didn't take that time to research why synergy
didn't work or what GUI to use to make setting it up easy.

~~~
bartelsmedia
> I would be more interested in his reasons to abandon Synergy.

Please check out [http://www.keyboard-and-mouse-sharing.com/synergy-
alternativ...](http://www.keyboard-and-mouse-sharing.com/synergy-
alternative.htm) for more info.

------
eftpotrm
I confess I actually sympathise with him.

At the core his point strikes me as inane - that he won't spend a tiny
fraction of the cost of his other equipment to solve a problem, that he
clearly underprices his time - but still, the pricing strategy here sounds
flawed.

I use Synergy, too; I'm all Windows so Mac-compatibility isn't an issue, but
it's a nice program. Note _nice_ though. Not _deal-breaker_ , not
_revolutionary_ , not _transformative_. Could I be persuaded to pay for a
better version? Sure, but only so much. Elasticity of demand as highlighted in
the article only goes so far; ultimately there will be a ceiling price above
which your revenue falls.

It's a gadget, not a core tool, and (IMHO) needs to be priced at the 'impulse
buy' level. $25 / machine is enough to make people think (even if it's a tiny
fraction of total system cost) and you're suddenly out of impulse and into
avoidance.

~~~
bartelsmedia
> $25/machine is enough to make people think and you're suddenly out of
> impulse.

And this is ABSOLUTELY intentional.

We do NOT want impulse purchases. We don't believe that it is ethical to
lure/seduce users to rush to their credit cards.

We don't believe that it is for any good if people buy something and then
perhaps realize that they don't need it, are not able to use it properly and
waste everybody's time in support and finally perhaps request a refund and are
left with an unhappy experience.

No thanks.

We rather want users to be convinced. The software itself shall stand out and
trigger the purchase decision. Not the price tag and not any sales tactics.

I believe, that there are cultural differences between the US and Europe
regarding sales approaches but we are just fine with that.

Try the software. Become confident with it. Check prices. Review your options.
Try other programs. Be back and we welcome you.

~~~
Czarnian
Similarly, I have a friend who is in the comic book industry. When he does
signings, he brings a bunch of his original work (covers, pages, etc.) with
him to sell. He has about 5-10 pieces that he prices at 10x the similar
pieces. One time I asked him why cover x was so much more expensive than cover
y from the same series.

He said that he's particularly proud of those pieces and that price pretty
much guarantees that whoever buys it will take care of it. They'll put it in a
proper frame and display it somewhere where it can be appreciated. As opposed
to the less expensive pieces which may go in a sleeve and put on a shelf.

------
rtisticrahul
Nice Article. It is better to have few customers and provide excellent service
to them rather than having lot of customers and providing mediocre/bad
service. The price point should justify the quality of the software and the
support given afterwards.

------
alvarosm
About mobile apps: Apple and Google have encouraged everyone to expect
practically free apps and to develop apps practically for free. They, together
with the phone manufacturers and carriers, get the money and the market share.
The developers put half the value or more of ios and android, but they get
practically nothing in return. And this will only work even better as more and
more people get smartphones, thus increasing developer revenue somewhat, so
developers will be even more pleased than they're now. The truth is developers
are getting screwed and smiling about it.

------
glaugh
I feel like I would have read this article really differently if the headline
didn't have the moralizing tone that Marco is talking about:
<http://www.marco.org/2012/02/25/right-vs-pragmatic>

The article itself doesn't really take that kind of position, it's just a
linkbaity title, but gearing up for some moralizing annoyed me.

And it made me read the whole thing, so I guess the joke's on me and I should
stop moralizing.

------
bostonvaulter2
Synergy+ could really use some more core developers. It's quite difficult
targeting so many architectures at such a low level.

------
gte910h
As a person who's spent over $1500 of time trying to get synergy working (Time
I could have spent on customer projects), I'm purchasing 3 copies of this on
monday.

------
timjahn
"There's no way to use price to increase or decrease the size of your
business."

I'd love to see the data backing this claim up. That really intrigues me.

------
feralchimp
One buyer arguing with one seller about the pricing of one application does
not an interesting article make.

~~~
waqf
I agree with your general point, but please could we lay off the "does not $X
make" snowclone? I think it annoys me more than any other.

<https://en.wikipedia.org/wiki/Snowclone>

------
zschallz
While revenues may be the same between a $9.99 and $0.99 price point on a high
quality app, I can't help but feel that the $0.99 price point will generate
more money over time. If more people try it out and like it, they'll tell more
people over time.

~~~
bartelsmedia
We doubt it because it is a niche market, not a mass market.

Additionally, as said in the article, the support load increases and the
"quality" of support inquiries is affected by the app price.

------
DanielBMarkham
_We varied the price of one of our products. What we saw was that pricing was
perfectly elastic. In other words, our gross revenue would remain
constant...There's no way to use price to increase or decrease the size of
your business._

I really wanted to say something pithy and wise here, but this subject truly
confounds me. I have many types of product out there: websites, apps, and
e-books. I charge nothing for websites, nothing for apps, and a good bit for
my e-books.

I have to say as a content producer, I'm much happier selling ten copies of my
book about being a ScrumMaster for fifty bucks each (shameless plug:
<http://tiny-giant-books.com/scrummaster.htm> ) than I am having 20K people
visit my wife's recipe site each month where I might make 40 bucks from ads.
(<http://hamburger-casserole-recipes.com/>) Of course, she feels much
differently about this!

I've been reading about startups and pricing for some time. It's my
conclusion, for what it's worth, that you have to experiment and figure out
this stuff as you go along. It wouldn't surprise me if different people with
the same kinds of content have completely different pricing models. Looks to
me like the pricing model is based more on how the usage scenario fits into a
particular user demographic than the type of product you are selling (apps,
content, books, services, etc.) The average usage scenario of a technical
person wanting greater efficiency from his expensive set of computers is
completely different than somebody looking for a list of instructions on how
to prepare tater tot casserole. Or somebody wanting to share a random
140-character quip.

