Pricing: We’re Doing It Wrong

Like many of you I am an independant software developer and have found some success leveraging the App Store. Many developers, myself included, have bought into the low price / high volume business model and we’ve had some mixed results…. I’ve been considering the pricing issue for a while and have come to an odd, but by no means original, conclusion: we are all underpricing ourselves. Please note before you read this that I am excluding games from the equation here

This might sound strange given the rise of freemium software and the general wisdom that cheaper software sells in higher volumes. However, it doesn’t seem to hold up.  Taking a fast look at the current top ten grossing paid applications on the Mac App Store, the average price of an app is $75 and the most commonly appearing figure is $20. Now before you get too excited about that $75 figure keep in mind that the average is shot up by a few apps at $200 or more. Also, keep in mind that I am using the ‘top grossing’ for my metrics rather than ‘top paid’; I’m using ‘top grossing’ because it isn’t clear what it means to be a ‘top paid’ app but an app’s gross revenue is an accepted metric I can use to judge its commercial success.  A few other things I’ve noticed from looking at the top grossers: none of them is $0.99, none of them is $1.99, none of them is even $4.99, and the lowest priced apps are $20.

To be honest, I don’t know what price points we should all be hitting, but anything below $4.99 for desktop software seems like far too low; in truth, I am starting to feel like the $4.99 price point is even a bit too low given how much work we put in our products. All I know is that we (software developers) need to end this race to the bottom on price.

Comments? Questions? Drop me a line on App.net, Google+, or Twitter. Also, pickup Code Journal.

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