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.
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.
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.
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.
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.
Agreed. The App ecosystem may soon become a race to the bottom.
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.
> 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.
Even if you want, need and can, doesn't mean you should.
Personal purchases are almost never about economy but always about psychology. You buy to feel good afterwards. If high price spoils the pleasure for you then you are better off not buying even if you need, want and can afford.
Similarly low price or other circumstances like service or affiliation of the seller can spoil pleasure for some.
However ... if we adjust prices lower, people buy more. If we set prices higher, people buy less. Sellers price their product to maximize their profits.
I'm just saying that it's entirely possible to fulfill all economics perquisites for the purchase and still not make the purchase because we just plain don't like the price and won't feel good after paying it.
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.
That said, would you gladly accept a SICK gift horse?
That you would then have to take care off as it dies and or spreads its decease to humans? If not, then better LOOK at the gift horse's mouth (which is an old heuristic to judge it's general health).
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).
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.
Agreed. A common thing here is sponsored parachute jumps for charity. I flat out refuse to give any money to them regardless of how much I can afford it or how well I know the person. I'd much rather donate directluy to the charity where ill know that they get it all instead of a large portion subsidizing someone's parachute jump. I feel is dishonest saying you're doing it for charity yet pay for it out of the sponsorship money. On the other hand if someone I know were to ask me for money to do a parachute jump, Id happily give it to them if I have it. I just feel like Im being tricked otherwise.
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.
> "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.
> 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.
Or he just donated to something else. Or he had no idea what "normal" is. Or he had his mortgage payment coming up, or the medical treatments for his wife's condition. Or he thinks that giving shouldn't be artificially tied to high quotas and sporting events.
Or, it could be that he's picked up on your judgmental and self centered attitude and didn't feel good about giving the money to you. To ask people for money for a specific cause, and use that to judge them about their feelings toward you, and their overall generosity is obnoxious on several levels.
I still don't get why you keep saying, "I thought I had a good relationship with him". Because he won't support your charity, he's suddenly not your friend? You think you can just milk him for money any time you feel like it?
Did you ever stop to think that he only cut you the check because you were guilt-tripping him and he was thinking, "I thought I had a good relationship with this guy, but here he is shaking me down for money"?
Stop and take a look at things from the other side before you accuse the person of being a bad friend. It's rarely so simple that it only has 1 side.
This sounds like quite an odd way to raise money, and I too would be much more hesitant to giving money to this situation rather than straight out to a charity. I do not see what helping someone get fit has to do with curing cancer. I think you need to take that into consideration when judging someones donation.
"For my event, there was a minimum fundraising obligation of almost $4,000."
Which is to say that the majority of the first $4,000, so 2/3 of your $6,000 went towards paying for your training, not for the charitable cause.
This is why I won't contribute to sponsored parachute jumps, walks in the Andes, cycles across the country or other similar pursuits. If you want a vacation pay for it yourself, then we can talk. $10 was $10 too much.
I don't think page was saying that $10 is a generous donation, just that it's >$0. There are a lot of people who don't give a lot to charity, or are uncomfortable putting $$ amounts on relationships/friendships/etc.
Having been on the other side of a similar situation I can only echo jacquesm's comments. You made the choice to take on this fundraising obligation. You didn't ask this man first to see if he would commit to putting in some amount of money. You can't unilaterally obligate him to do so.
In my own situation, which did involve TNT, I found myself rather skeptical, if not cynical, about the Big Cancer Research Establishment. I think it exists primarily as a self-preserving bureaucracy and does precious little actual research. (I could be wrong; I haven't really looked into it.) Under the circumstances, I nonetheless gave an amount which I thought was generous (and which was larger than $10). It was still received as inadequate. This did not dispose me to be generous with similar requests in the future.
I remember reading that the American Cancer Society is the richest non-profit organisation in the country and that the top X people are paid a LOT of money.
I don't care enough to look up citations to back that up though, if anyone is interested I'd suggest going on Google and looking into it for yourself.
Maybe he had just that morning cut a larger check for some other cause he WAS interested in, and hence when you came asking he would have preferred not to give at all but he gave $10 because he respected you.
Horrible. If I knew donating $10 would get me badmouthed, resented and despised, I'd donate $0 like 99.999% of the people in the world donated to this event.
Also, based on what you say there about how it works, that "charity" is obviously a scam.
> 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.
Did you happen to peek at his checking account on your way out the door? Maybe he just paid his property taxes earlier that afternoon, or his grandkid's tuition. Perhaps he wholeheartedly approved of your fundraiser but didn't feel like liquidating assets that morning to help you finance it.
The author has what looks like two mac laptops plus an external monitor. At least one of the macbooks is a macbook pro from the image in the article, so conservatively $3.5K in hardware? And $50 -- less than 1.5% of hardware price -- is too much money! I understand people have been conditioned to think software should be free, but getting hung up over $50 to fix what sounds like a significant hassle seems dumb. The alternative is what -- getting a hardware kvm or physically switching keyboard + monitor connections?
Also fta:
Since arguing with Bartels, I have discovered Teleport, a newer, free,
Mac-only keyboard-and-mouse sharing app. Its existence made me think,
briefly, that I had won the argument. But Teleport has issues (the mouse
gets stuck on target machines) and I've found it, for me, unworkable.
The mind boggles -- does this man not value his free time at all? He continued searching for software to avoid paying the $50. I'm curious how much time this guy would spend to avoid paying $50 and moving on with his life. There's obviously a limit, or he'd be enrolling in a CS undergrad to write his own to avoid spending that precious precious fifty bucks.
That said, I kind of agree with underwater the vendor misprices the app: $24.90 per computer, when the software is literally useless without two computers, should be $50 per pair + $24.90 for 3rd, 4th, etc.
At least one of the macbooks is a macbook pro from the image in the article, so conservatively $3.5K in hardware? And $50 -- less than 1.5% of hardware price -- is too much money!
I'd say a specialized application like that provides well below 1.5% of the value that two Macbooks provide. But even if it wasn't:
when CBS replaced my PC with a MacBook, giving me two-Mac setup
He didn't pay for the Macbooks, his employer did. So their price is irrelevant to this discussion.
> $24.90 per computer, when the software is literally useless without two computers, should be $50 per pair + $24.90 for 3rd, 4th, etc.
Uhm, but the price is just that as you said: 2 x $24.90 = $49.80 which makes around $50 per pair.
The decision to sell individual licenses is made because it makes it easier to offer add-on licenses which you can conviniently add later at any time. I agree though, that we may need to improve how to communicate it.
I've often found that journalists place a very low value on their time, possibly since they're paid so little. I had one conversation where I convinced a journalist that this software would save him 7 at least hours and cost $100...to which he responded, "If it's just 7 hours, why would I spend $100?"
The mind boggles -- does this man not value his free time at all? He continued searching for software to avoid paying the $50.
I understand your reasoning, to a point. But remember that he was previously paying $0 for an open source app that provided mostly the same functionality, and it's a big jump going from nothing to $50. In that situation, I'd probably spend quite a bit of time researching my alternatives so that 1) I didn't have to pay $50 more than I'm used to paying, 2) I don't have to pony up an extra $25 if I add another computer to the mix, 3) I can tell my friends and coworkers about the free alternative so it gains momentum and supplants the pricy version.
The "price/utility" equation is very much at play here. A $50 replacement for a free app better provide an enormous utility to make it worthwhile. There's a certain cross-platform text editor that gets mentioned lots here on HN that I bought because it was very useful to me. "Small" apps like a mouse sharing widget just aren't useful enough to me that I'd be willing to support that price point.
yeah this is an interesting point. on one hand it's a dead-simple model to explain and makes sense if you're using 6 computers. on the other hand the majority of users will not go above 3. i would probably say $50 for every 3 devices, only sold in 3-packs. this tiered version would seem a bit more fair and not have much impact on sales/support IMO.
To be fair, I think some people might not have this problem, but from nought to fifty is quite a steep rise.
If I find a free app that does what I need, that is very nice. However, at a pricepoint of 50$, 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.
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.
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."}
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.
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?
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.
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.
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.
I would be extremely curious if this holds for content as well as app. We've trained users that content is free, while apps can occasionally cost money. This has led to all kinds of price distortions in music and, most especially, ebooks.
As a content producer who works closely with engineers, I can vouch that good content requires no less training and effort than good apps. A novel-length ebook probably takes more time and effort to produce (for any level of quality) than an app. I'd imagine an album of music requires even more. Yet we we never hear stories about perfect price elasticity in content.
I'm genuinely curious if price elasticity holds true in content and, if so, why we haven't heard as much about it.
I can vouch for this as well with my app (http://www.teaapp.com )--it appears to be unit price elastic, based on some price experimentation I did on it at launch (varying between $1.99 and $4.99).
In spite of this my intuition tells me to price it at $.99 when Apple features it, and between $1.99 and $2.99 when people are hunting for it.
I just released my first iPhone app: http://www.wrestlingscorecard.com and priced it at $4.99 ($1 more than the other app on the app store.) I set the price point based on what I thought the app was worth, not on an expectation of sales. I haven't received enough reviews or ratings to show on iTunes, but the feedback I've gotten has been mostly positive. Even the complaints have been extraordinarily polite.
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'.
I noticed this too about myself when I negotiated with different contractors for work on my new house. At first it bothered me that I spent 5x as much time & effort finding a good cleaning company ($400 budget) than tile installer ($8k budget). Moreover, though I negotiated with everyone, including the electrician and painter, I didn't negotiate as much with the higher cost contractors as with the lower cost. Here's what I've come up with so far:
1. Knowledge: Part of it comes from the bike-shed phenomenon - I know how to clean, I don't know how to apply knock-down texture. So the more I know about something, the less I want to pay for it and consequently, the tougher I bargain. My solution to get a better deal is to simply learn more. I call up contractor A with absolutely no knowledge about how to fix the problem or what costs to expect. I get some idea (and learn industry-wide terminology) and then call contractor B. I use some of my new-found knowledge to show I'm not absolutely clueless. By the time I've called contractor E, I know more about my problem than anyone else, plus I have a good idea of the expected costs.
2. Past relationship: I only go through lots of contractors when I don't already have a good relationship with an existing one. I didn't have to get quotes from five tile installers because I did that three years ago and found a good guy to install tiles at my old house. This time I simply called him up and he gave me a reasonable quote. You could have a past relationship with the fine-suit tailor and don't need to negotiate 50c each time because you know he is already giving you a good deal.
3. Quality: In the end, you pay for quality at a given price point. I don't mind the cleaners missing a spot but I do mind the tile installer messing up a center tile. You don't want to negotiate too hard with the fine-suit tailor because a 1% risk of damaging a $400 suit due to cutting corners is a lot more expensive than 1% risk of damaging a $2 pen for the same reason.
4. Fungibility: All $2 Bic-black pens are same, not all $400 suits are. Same with cleaners vs. tile installers or painters. You do not want to use price as the only negotiation basis when advanced levels of workmanship is involved. Price can be the primary basis when it comes to common objects or services, available in many places.
5. Continued relationship: I don't much care if I buy another $2 pen from the same vendor in the future because there are many good stationery vendors but I'm not going to find another tailor, painter, or tile installer as easily.
6. Negative perception: I don't want higher cost contractors to think I'm a cheapskate who wants a $5 discount on a $8k project because then they will treat me like a cheapskate and will make decisions based primarily on cost-saving instead of the overall value. I don't want the tailor to use cheaper thread or tile-installer to use less thinset just to lower my immediate project cost because we all know this will cost me more in the long run. I don't mind what a stationery vendor does as long as he sells me the cheapest pen in original packaging.
My overall point is that it's not always irrational to find a better deal for cheaper objects than more expensive services.
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.
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.
> 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.
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.
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.
"the bitter truth we critics must face, is that in the grand scheme of things, the average piece of junk is probably more meaningful than our criticism designating it so." - Ratatouille
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.
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.
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.
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 :-)
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.
Why?
ssh othermachine 'pbpaste' | pbcopy
Bind that to a launcher and/or key shortcut. Instant shared clipboard!
It's cool, but it's another thing one has to do beyond cmd-C. Why not just have a proper shared clipboard plus keyboard/mouse sharing in a multi-computer, multi-monitor setup?
Automatic keyboard sharing is just a small step away from that, but that seems really annoying to me. I'd rather control when I want to share.
Why not just have a proper shared clipboard plus keyboard/mouse sharing in a multi-computer, multi-monitor setup?
Because if you don't need keyboard/mouse sharing that's just bloat running on your machine, because you become dependent on yet another utility that may be discontinued or receive a crappy update at any time, because it's less flexible (can I share only on demand?), less portable and it costs $50 that would be better spent on blackjack and hookers (or whatever you do for relaxing).
I mean OS portable. I use Windows and Linux, you don't support that.
Oh, we should always listen to such kind of advisers.
I don't mean as an investment, I mean as entertainment. The "blackjack and hookers" is a reference to Futurama: http://youtu.be/z5tZMDBXTRQ
By the way, I'm not saying my solution is better than your application as a whole, far from it. I'm talking about the case where you only need clipboard sharing, which I know is only one of the features of your application.
I am more inclined to think the customers may be right and this app is not worth $50 to them. There are competing free products, but also competing work flows like using Dropbox to move documents between your two laptops depending why you are using two. The guy has clearly thought about this a fair amount.
There is apparent oversupply of app developers who seem to think they will make money but the evidence is very few will build sustainable businesses while the rest just help Apple out by adding diversity.
people think I'm some big company selling this software
I'm convinced this is a significant insight. Most consumers are trained to assume that they're always buying from Megacorp and that cheating and complaining is perfectly valid behavior.
Back when I was landlording, I had a HUD tenant who was a total pain - until she found out that her rent minus my mortgage was about twenty bucks a month. She had just assumed that as a property owner, I was rolling in cash. After that, she was pretty nice.
Even last year when I spent a while in the top 5 in dev tools, I wasn't netting more than $25 per day.
I've had apps in the iPad "what's hot" music app list many times but they're still only bringing chicken scratch compared to what I could have made consulting instead. The handful of home runs you hear about obscure the fact that for 99% of us the best way to make money in the app store is to charge by the hour for writing them for someone else.
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?
Perhaps, but there's a threshold below which it just isn't profitable to code apps. Contrary to other developers reports, I haven't found that my net revenue is independent of unit price. And, as much as I'd like to play the philanthrope, I'm not rich enough to work for free.
> If you really believe in what you're doing, wouldn't you want it to be accessible to as many people as possible?
I don't think this is a real issue. Small developers love their apps and want people to have them, but are seldom filthy rich.
The equivalent of luxury goods are the crappy EA Tetris apps that people buy on the App Store for the name alone, and I doubt anyone involved in their production believes in what they do.
On the other hand, I really miss student discounts on the Mac App Store :(
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.
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.
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.
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.
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.
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...
Maybe, I haven't checked it out (I'm a diehard Apple Fanboy). But what I'm envisioning is that this model could be applied to various desktop software and SAAS sites.
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.
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.
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.
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.
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.
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.
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.
> $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.
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.
I've been a Synergy user several times in the past, and it always seemed great for the first few days and then descended into annoying bugs. (No connection this morning for no apparent reason. Or my mouse gets trapped on one system once or twice a day.)
On the one hand, my notion of how much software should cost says $50 for a Synergy clone is insanely expensive. But if I think of the benefit received, I've got to say that a Synergy clone which Just Works probably is easily worth $50.
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.
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.
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.
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.
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.
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.