Apple App Store pricing policy

After reading a lot of comments from iOS and Mac developers about how to price apps, I feel very undefined. Especially when the Mac App Store went live, many developers began to struggle with pricing, many of which were on the wrong path.

Some developers will set the price to 30% after dividing Apple into 140% yuan to deal with Apple's yuan of profit, and some developers will decide based on the development time, pricing is based on the complexity of the App. Some developers have their own pricing strategies based on their own evaluation of the value of the App they are developing, because they think consumers should pay so much.

These are all incorrect ideas.

Within any specified period of time, there is a unique pricing point that maximizes profitability. At the same time, there is a unique pricing point that maximizes downloads. However, none of the above causes have any relationship with the two, or they cannot completely export this pricing point. This is the best solution. But for those who raise the price by 40% to resist Apple's Commission, this is definitely a bad news.

The first thing developers need to do when pricing is to determine their goals. Whether to make the most money, expand the consumer base, or mostly between the two.

For any App, the ideal pricing point is "the most profitable" and "the price that consumers generally accept. This pricing point depends on the importance of the consumer base. Pricing higher than "the most profitable" allows consumers to purchase other products. "The price that consumers generally accept" is easy. If developers do not pay for it, it is free of charge. "Making the most money" is a tough problem. This price is in a normal distribution curve, the App is unique and the changes are continuous.

To understand what is the "Maximum Profit" pricing concept, we will take the 99-cent App as an example. For profit purposes, a developer sells his App at the lowest price he/she can set for 99 cents-AppStore. Of course, the free App is omitted here to simplify the problem. Most of the time, those apps sold at 99 cents do not make money for those apps that are more expensive than them. You may not know that 99 cents is not the "biggest profit" pricing point. When your App is priced at 99 cents, if your App has 100 Downloaders, your App may have only 75 Downloaders at $1.99, when we continue to increase our pricing, your App may have only 40 Downloaders at $2.99 and 10 at $4.99. This is a basic economic knowledge. In this example, the "Maximum Profit" is priced at $1.99.

I don't want to analyze the pricing of any App in detail. If you want to do so, you will need a specific experiment and a detailed survey of potential consumer groups and competitors. At the same time, the App type, the current market driver, and other external forces also have a strong impact on it.

Of course, the most important thing is that this hard-to-capture "biggest profit" pricing point has nothing to do with any of the pricing strategies I have seen. This is also the overall point of view in this article. Development cycle, development cost, Apple Commission, emotional investment or unilateral imagination have nothing to do with this "biggest profit" pricing point.

Some developers may continue to stick to high pricing because they think the AppStore pricing should be high; or the App is worth $20 because it took six months to get stuck. However, these people do not settle accounts. They may be doing this to repay those lost in development, but they do not actually make the money they deserve.

Price is a major factor for consumers to decide whether to buy or not to buy. It is also the most powerful tool for developers to locate their apps and drive sales. Correct pricing is really too important. The reckless pricing is a huge waste of this tool and affects the success of this App.

Developers must also decide whether they are "generous" or not. In the short term, the devil-type high price can indeed produce big results, but it also swallowed up the potential market in the future. Consumers will remember the unhappiness they encounter. When Chopper2 enters the top 10 rankings at a price of $2.99, there will be a huge temptation for him to cut the price to 99 cents to achieve better sales performance and stay on top 10 for a longer time. But I won't. Because this will touch the gpoint of those who initially purchased the App for $2.99. This may consume performance growth in the short term, but it will not destroy my consumer reputation.

Original article: http://majicjungle.com/blog/461/