App Store Pricing
One of the projects I have in the pipeline will be an OS X application. The market for this app supports pricing of several hundred dollars; in fact, $299 is considered a bargain. Will this app ever be ported to iOS? Not until Apple reduces its cut1.
Seriously Apple? I sell a $299 iOS app and you take 30%? There’s no way to justify that other than “it’s our app store and we’ll do whatever the hell we want.” Which, while that obviously is a successful business model for Apple, doesn’t do so much for my bottom line.
Granted, this reluctance is psychological: 30% of any amount is still… 30%. But psychologically, 30% of $1.99 is one thing while 30% of some price north of $299 is an entirely different matter.
Here’s a thought: Apple switches to a tiered model for their cut. For example:
| Tier Level | Apple’s cut |
|---|---|
| Tier 1 – Tier 50 | 30% |
| Tier 51 – Tier 72 | 25% |
| Tier 73 – Tier 78 | 20% |
| Tier 79 – Tier 80 | 15% |
| Tier 81 – Tier 82 | 10% |
| Tier 83 and up | 5% |
Maybe this scheme would help to reverse the downward pricing trend? Maybe not, since the change wouldn’t occur until tier 51 which would be a huge jump for a lot of apps. But at least it would be some incentive to raise prices. It would certainly provide an incentive for more productivity apps, maybe engineering and science apps too.
I don’t think that this scheme would cut into Apple’s profits too much since the vast majority of apps (i.e. games) are probably in the first few tiers, certainly not above tier 502.
Will Apple do this? Developers have zero pull with Apple barring a 100% boycott (which will never happen). We might see some change if Samsung/Android start eating Apple’s lunch, but:
- That’s not going to happen in the immediate future
- If it does we’ll have other worries
And frankly I don’t want Apple to suffer, I honestly don’t wish them ill. I love developing for OS X and iOS: I can’t stand all the Visual shit I have to put up with and if it wasn’t for Parallels Desktop, gah! I would like Apple to change though.
Interesting note: while doing research for this post, I ran across this from 2008: “The consensus seems to be that prices are too low, that people expect cheap apps, and that they won’t buy more expensive iPhone apps.” My, how things have changed… not.
(1) The OS X app will probably also have a plugin API, which is another reason that an iOS version is DOA. But let’s focus on one Sisyphean task at a time.
(2) I can not find any public data to support this statement. If anyone reading this knows of some, I’d love to see it.