App Pricing and How to Make More Money

May 6th, 2016

Joe Allen posted on Reddit how selling Soundboard Studio for $29.99 helps him sustain a business. You’ll find more details on his indie business blog where the latest posts circle around similar topics.

The advice is sound. If you charge pennies, it’s hard to make a living. It’s also not new advice (compare freemium advice, what the market accepts). Still it’s uncommon to charge “a lot,” whereas “a lot” is either more than $2 or $9, depending on the target audience.

The problem Joe identifies is this: charging a high price in the iOS App Store will scare people off. There’re no trial versions. The best you can have is social proof: 5-star app store reviews and praise on the internet.

Joe’s approach is interesting, though. He doesn’t even try to convince people to pay the high price up front. Instead, he builds the app for an audience of already very committed people to which he sells the app just like Mac developers or web app marketers would.

In fact, he applies standard advice for web service marketing to iOS apps: gain trust and show how your product will appeal to users.

Give away a lot for free to attract users. “Give them the fish.” This is your minimum viable product, if you will. It’s going to be a free app in this case.
Collect e-mail addresses from within the app in exchange for a freebie. More “free”, did you notice? A PDF report, related bonus content, you name it. It’s important that the freebie is relevant to your users lest they won’t sign up for an e-mail newsletter.
Stay in touch with subscribers. Ask them questions about how happy they are with the app. Collect feature requests.
Create a pro version of your app with a super relevant feature and sell it with pro pricing in mind. Joe charges $9 for his pro teleprompter. He also charges $29 for his pro soundboard. I guess the target audience of his soundboard compares the price to $1000 equipment, so framing the price in terms of current alternatives and the extra value you offer is key.
Sell to your list of subscribers. Prepare them for the release date. Give them the opportunity to get the app for a discount during the first 48 hours. Make them happy and give something back in return for their feedback.

That’s about it: collect e-mails in exchange for freebies and find out what users really wish for. Create that and sell it to them. They’ll be hooked in advance already or else they wouldn’t have signed up.

The overall situation is a bit easier for Mac developers. You can give away demos, for example. Invite people to closed beta tests and then make things right.

Joe’s approach to build a fully functional free app as MVP is a lot of work and increases the risk of producing waste: creating a product nobody wants. It’s still better than implementing ALL THE FEATURES first, releasing to the void, and still not making it.

The “Lean” crowd values learning. Giving away an app for free and gathering feedback is a costly but focused way to learn. It’s a live experiment. Another advice you’ll find on the web is to run free giveaways of your app to increase downloads and get into the top lists of the app store. Joe’s approach does that, too, only he’s not doing this sequentially but gives away a free version in parallel.

I don’t say this kind of building a list is the silver bullet. It may not work for games at all. But it’s probably more effective than releasing a free and a paid version to the app store while still not having anyone who knows about the app. Having prospects on a list is a tremendous help. Joe’s calculations give everything he said an air of plausibility, but you’ll still have to assemble the list of interested people to run any numbers on your own. Have 1 signup in 2 months? Then the price won’t matter much.

Links to this article

Evaluate and Launch Your Idea With Small Steps

As you may know, I’m totally immersed in getting TableFlip ready to ship. By some random circumstance, I recently stumbled upon Paul Jarvis’s getting started post about online businesses.

I already read the hip books about startups: Startup Owner’s Manual (meh), Lean Startup (ok), $100 Startup (inspiring), Lean Entrepreneur (meh), Running Lean (good one) – you name it. I still found Paul’s action-oriented collection valuable to get started. It’s the little first steps that matter which I tend to forget sometimes.

With TableFlip, I wanted to know if a visual Markdown table editor would be something people liked. So I put together a landing page for it and asked around. By sheer luck I managed to get 300 subscribers in about a month. I’m excited to show them the first test build. – Sadly, I cannot say that I have any fancy techniques to share. Being connected to other people that love to re-tweet your announcements or post links to their blogs helps a lot. Nothing else has had any effect for me, like, ever.

I posted a link to Joa Allen’s recommendation to get in touch with truly loyal people with a free app MVP that solves 80% of their problems already.

The bottom line of all this is: Just. Do. It. You need feedback, so get something out as quickly as possible. Then you may be able to fend off starvation in the long run.
Paid Up Front: Two Perspectives to Make this Business Model Work to Your Advantage

I found an interesting connection between two articles about paid up front apps, and how this paywall can work to your advantage in two ways by separating the ap user’s population into two groups, prospects and paying custoemrs: I never thought about the effect of paywalls on support email volume until Jordan Morgan launched his app Spend Stack the other day and now published an interesting argument pro paid up front pricing. Paid up front will limit your user base a lot compared to free-to-download/freemium, that’s true, but you’ll have a far lower volume of support emails, and you will only get emails from paying customers. Jordan receives 10–15 emails/day at 500 downloads/day right after launch. If you think freemium will increase downloads tenfold to 5000/day, he would also have to deal with hundreds of emails!