Realmac Blog – App Pricing and the Freemium Trend: “So what does this mean for us and the future of apps? Given the right product, a freemium model is something that we may have to consider. To throw in some business speak, the right product matched to the right target market is critically important here, and when done properly going freemium could be a massively successful strategy. That said, how it affects the perceived value of our craft remains to be seen.”
(Via. Realmac Blog)
While I agree with Rob that there’s a place for freemium, this disturbing trend of assuming that price is the major factor in a particular app’s success always gives me pause.
I think Letterpress would have done fine if it weren’t freemium. Why? Because it was made by Loren Brichter, and it’s an awesome game. You can’t just look at the pricing model and assume that’s the reason why something hit or didn’t. We have no way of knowing for sure how well Letterpress would have done at $2 or $5, but we can’t assume that it would have done worse. It could have made more money.
A couple of things to keep in mind if you’re getting into the App Store software business, especially if you want to make a productivity, or some other sort of “non-game” app:
- The vast majority of iPhone and iPad owners only buy games. Actually, to be more accurate, most of them don’t buy games; they download free games. And then a very small percentage of those folks actually pay the $1 or whatever for the “advanced” features. Those hundreds of millions of devices that Apple talks about at every keynote? Most of them are never going to run your app at any price. Not because these users are cheap. They paid for an iPhone or iPad. They have a few bucks to spare. Not because they hate you. They don’t know you. It’s just that paying for apps is not on the radar. They just like playing casual games once in a while, and that’s all they need from their phone. So forget them. They’re not your customers. There are hundreds of thousands of other iOS users who are interested in your product and do pay for software regularly. Don’t confuse those users with everyone else. They are two very different groups of people. You don’t need to get them all.
- The Top Grossing Apps list is a complete waste of your time. Repeat after me: You will never be on this list. Furthermore, the apps on this list have almost nothing to do with your success or failure. Everyone there has all sorts of advantages (connections, press, luck, VC backing, etc.) that you don’t have. Trying to emulate anything about any of these apps is an exercise in futility. You can make money just fine without ever paying attention to this list at all. In fact, you’re more likely to make money if you forget the list exists.
- You’re not Loren Brichter. You’re just not. Maybe you’re a genius, and you’ve made an app that’s even better than anything Loren has ever done. That’s nice, but you’re still not Loren Brichter. You didn’t work at Apple on the original iPhone. You didn’t have one of the early App Store successes with Tweetie. You haven’t guest lectured at Stanford. You didn’t earn the reputation he has for building the highest quality stuff, and you aren’t universally adored in the Apple community as an all-around nice guy. You may be all those things some day if you keep working at it like he did, but you’re not there yet, and you’re not getting there this week. If you want to emulate anything about Loren, emulate his commitment to quality, his ability to take advantage of the luck that comes his way, and his focus on the product rather than the profit motive. Don’t emulate his freemium game pricing model. That’s like donning a white suit and thinking you can dance like Travolta. Not going to happen.
- There are ten times more failed freemium apps than successful ones. The bottom grossing apps are mostly free or freemium, too. You know why? Because far too many devs embrace freemium as the “only way to make money.” Most devs are smart engineers but terrible business people. Don’t be that.
- The goal isn’t to get rich quick and retire young. That could happen on the App Store, but there are much easier ways to reach that goal. You haven’t heard many stories about the dev who makes an app in his spare time and hits it big a la Steve Detemer lately because we’re past that stage. Far richer and more connected people have descended on the App Store with well-known brands and armies of resources, and they get the bulk of the attention and the money. But that’s fine. There’s still plenty of room for you. Find a measure of success that’s both realistic and noble, and work towards it. Make something you’re proud of and figure out a way to make a living with it so you can make it better. Be ready for that to take years.
- Buy apps. And start encouraging everyone you know to pay for quality. If you balk at paying $1.99 for any app that genuinely interests you, get out of the business immediately. You’re part of the problem.
- If you’re in the apps business to get rich quick or to get into the Top Grossing list, you have to be prepared to play an entirely different game, with venture capital, millions in investment, teams of engineers, and an exit strategy. Just making your app free to play isn’t going to do you any good. That’s one piece of a much larger and very different business strategy.