Appsfire exclusive: iPhone apps pricing is not what we all think it should be!

by Yann and Ouriel, founders Appsfire.com - September 4, 2009

By now, the (mass) market is well aware of what an iPhone application is or can be. And Apple has done a fine job educating users that getting an app is actually an act of "purchase" whether the application is free or not (indeed, you get a receipt for $0.00 when you download and install a free app). Actually, we should be thanking Apple for that; Microsoft, Google and the established handset makers and operators would do well to acknowledge what opportunity Apple has opened for them!

But let's be frank here, an app is not a trivial endeavor. Developing an app that ain't a fart is not for the faint of heart! Those who live in the "web" world think that it's really just a matter of throwing a few graphics and some code, and done! Not so. An app requires actual compiled code, in an object oriented language known as Objective-C, itself requiring rigueur typical of Java or C++ projects sprinkled with a literal touch of complexity. Yes, developing a complex iPhone app is not very different than developing a desktop applications like Photoshop or Word (except that it really shouldn't be that big!). And yes, it takes quite a bit of development time and effort to get to the desired outcome - what justifies this effort when you could do all of this painlessly in a plain-html web-app you may ask? Because the degree of sophistication that goes into a 'compiled' app is far greater than in a web 2.0 page, in terms of the experience that is: graphics optimization, offline caching, with GPS/compass integration, etc... Mobile applications need everybit of optimization and polish to be actually useful in a... mobile context, where every half second matters because you're on the go. Sure, DHTML and Ajax will get us there too in a few years. So far, only Google has really managed to do something decent. The thing is, most companies are not Google, and need to derive revenue from somewhere, and the App Store offers global and built-in invoicing...

Now, how can companies and developers sustain themselves when they are not Google? Well, writing a $0.99 app sounds like a good idea, since Apple managed to educate the market that 'buying' an app is o-k-a-y (in an age where free and illegal downloading is pervasive)? And clearly, we've all heard about these $0.99 apps that made millions. Surely, $0.99 must be the right price since it is the median price (our stats confirm this)! Not so. Most iPhone app developers make very little from the proceeds, if any! With 65,000 apps and counting, the app store offers too many apps, too many 'small-efforts' that really don't help anyone.

We at Appsfire believe that there is a better way to approach the discoverability issue, at the same time perhaps helping reconcile development talents with users in need of innovative software solutions. This is what we do, and we have a lot of cool ideas in the pipeline, Appsfire being almost a pretext ;-)

Today, we are proud to offer you what is perhaps the first ranking of its kind, here to the left: the top 50 grossing apps on the Apple App Store, extrapolated from our database (our sample counts more than 1200 synchronized devices, with a slight early adopter bias). This list computed using the simple UNITS SOLD x UNIT PRICE formula may yield a few 'outliers' and the science is not perfect (i.e. we do not know if the top app has been given away with vouchers, or whether the price is the same today as it was at the time of purchase, etc...). In any case, the findings are staggering: the money makers are real apps, all very solid, all but one with a price tag greater or equal to $2.99, but often well above $10.00. The top app costs $899 and the second one $99. These apps solve real issues, and are made by solid developers. And guess what, they are deriving serious revenues too!

The key takeaway here is for the developers and businesses that are hard at work developing apps: if your app brings something real to the table, be it a game or a utility similar to the ones you find on the left, then price it accordingly. The price is right when there is a salary at the end of the month. Don't succomb to the temptation of the $0.99 app, it's a lure and only serves to feed the get-rich-quick fairy tales that even kids would find hard to believe.