Simply: Apps are so cheap because the bar for entry is low.
People can't successfully charge $10 for something a reasonably talented high school student could make (and consider a runaway success if it brought in a couple hundred dollars). And I don't think that's a bad thing.
And the popular 'app vs subway token' kinds of comparisons are ultimately unfair.
You don't pay $2 to ride the subway. You pay $2 to get somewhere; because the destination is worth it and you know you'll get there.
If you had no idea where the subway stopped and whether it would get anywhere close to where you were going, let alone in a timely manner, how eager would you be to step through the turnstile for $2?
Similarly, if you didn't know anyone who had successfully gotten where they were going via the subway, or if the last few times you rode the subway you had terrible experiences, how eager would you be to step through the turnstile for $2?
You know, it's funny. People frequently accuse credit cards of enabling you to spend money freely because you don't see physical cash changing hands, so you don't think about it. Yet here we have a case where if you could actually hand two dollar bills to someone, you might be more likely to do so, whereas when the transaction is entirely virtual you hesitate.
I can't speak for everybody, but I can see where my reluctance to buy XBox games online comes from. (I don't have an iPhone but it would be the same way for me there.) My brain circuits for game buying were initialized when I was a kid, when $10 dollars was a lot, not because of inflation but because it was all the discretionary income I had for several months. (Think 10 or 12 here.) I've gotten over this, because I have noticed the irrationality of dropping $20 for a movie in the store on a whim on some item but choking on a $5 game that will last ten times longer, but it took me a while. Now, while I don't think of myself as rich and actually don't *want" to think of myself as rich lest I become too loose with the money, the truth is that the occasional $10 or $20 purchase isn't going to meaningfully change my financial position. It has taken my brain a bit to notice that. It doesn't help that I've spent several years of my adult life where $20 did matter.
I find that marginal costs/benefits for low-priced items are best contemplated multiplicatively, not additively. A $4-5 pint at the bar? Only a couple bucks of markup, but replaceable with 3-5 bottles of beer at home. Out to lunch for $6? that's 2 or 3 home-cooked dinners. 80-cent vending machine candy bar? only 30 cents more, but that's 60% more expensive than walking to the student store. The habit of thinking this way stretches pocket money multiplicatively.
I would think on any given night that most people without alcohol problems would prefer 1 pint of beer at a pub to 5 bottles at home. Same for a lunch out with friends vs 2-3 dinners home alone.
Your theory is obviously sound, but many times the "more expensive" (on a dollar per unit basis) item is even more valuable (on a hedon* per dollar basis)
Only because alcohol problems were mentioned: I drink one beer at a time (ok, sometimes two), so "5 bottles at home" is "5 nights at home that include a bottle of beer".
In 1985 I shoved quarters into a Gallaga machine, one after the other, without a second thought. Now, even though apps offer unlimited play, like the author, I'm hesitant to pay $1.99 for one.
It was all incredible then and there was a value to the experience which is far cheaper these days. Further, you are fearful of getting suckered into something that's a thirty second glance and which you realise is rubbish. The 'desktop' real-estate on the phone is precious and you don't want it to be cluttered with rubbish but on the other hand once you've paid for something you won't get rid of it because you've paid for it.
what if you paid a quarter to buy it and then every time you lost, you had to pay another quarter with the new in-app purchases, just like an arcade game? if you beat the game on one quarter, you'll own it and not have to pay any more. if not, eventually you'll "put in" 8 quarters and own the game.
For some reason, I find "4 quarters" to be "cheaper" than than "$0.99". Maybe it's because I associate quarters as disposable and any dollar amount in $x.yz format to be more significant. I wonder what the effect would be if in the App Store a developer has the option of pricing the game as "4 quarters".
It could be the same illusion that $99 seems so much cheaper than $100.
People are just terrible at reasoning about money. People don't know where the money they spend goes, people don't know where they waste money on, and so on.
( My biggest vice is wasting time picking the best "value for money" product, while I would be much better off if I work a few more hours, and then buy the best reviewed product in the most expensive class. )
Most people are absurdly irrational when it comes to money. Luckily, people are predictably irrational. So the sane solution is to avoid the whole iPhone marketplace.
A great product can still fail when people realize they should be willing to pay for it, and yet can't bring themselves to pull the trigger. Some markets just are like that.
Because the AppStore does not consistently deliver good apps. Some are great and a steal at that price, some crash your phone, some are so bad that you feel cheated even though you only spent $2 and 5 minutes on it.
If there was a decent chance your $2 bought a rotten tomato thrown in your face, you'd be hesitant to pay as well.
My theory on why apps are priced too low is that it's because of the expectations set by the prices of the initial apps on the store. The first apps on the app store were priced really low and this set the trend that continues today. A lot of the initial developers can afford to price them really low because a good number of those apps were novelty apps that took very little time to develop.
So now even developers who do take the time to develop polished apps will still need to take into account the expectations of users for their app's pricing.
To the original author: you might want to consider your marketing. I've never heard of your app, and it's the exact kind of game I like.
I'm not impressed by your site, either, because it does practically nothing to sell me.
Your giant header graphic says nothing at all about the game.
The actual name of the product is hard to read and in a poor location (not to mention, unremarkable).
The headline "Streaming Color Studios Presents" is useless, because I neither know who you are, nor do I care.
The screenshot is cuteish, but not compelling enough on its own. The app honestly looks too busy, and busy in a chaotic way, not in an awesome multilayered way like Stone Loops of Jurassica.
"Now on the App Store!" may be impressive to you, but it's not to anyone else.
Your call to action is practically hidden because it's light grey on a light grey cloud, and the smallest thing there. The whole banner isn't clickable, which is, if you ask me, insane.
On your main page, on my 30" monitor, WHAT Dapple is isn't even above the fold. And I keep my browser size about 85% of the vertical height of my Cinema Display.
And on and on. I could go on forever. And I regularly pay more than $1.99 for my iPhone kicks.
Your article's overall premise is pretty silly, given that the very existence of the iPhone proves that cost is only a differentiator in a market full of mediocrity.
Your game is admittedly "another color matcher."
Its design doesn't jump out.
Your site does little to sell it.
I haven't heard of it by any other means (and all my friends, like me, are deeply into puzzle/matching games).
Maybe that's why you can't sell your game. It's easy to blame price, but feh. Price is a symptom in your case. I see you wrote how you had a temporary spike after you dropped your price. That doesn't mean that price is the main reason your app isn't selling, just that at a lower price, those other problems are slightly compensated for.
It seems like your only source of sales, to me, is people browsing the App Store itself. Well, that's just not going to cut it, for anyone except a few statistical outliers.
Yes, it takes a lot of exposure or a lot of prepping to convince to buy something over 99 cents, that's true.
But if you do that exposure and prepping, and be a Purple Cow, you can easily charge more.
Do yourself a favor and spend less time writing articles about iPhone app prices, and study the art of making sales.
Your critique of his marketing is spot-on, but I think his analysis of why the prices are so low and why people will only pay that much is still valid. His problem is mainly marketing, but the pricing issues affect every app.
I don't think he addressed THE main issue from what I can see: utility. I pay $2 for a single bus ride because it has high utility to me (going somewhere is important), and similarly I have paid $5+ for iPhone apps that I thought I would use regularly and would provide a good benefit to my life.
His game, like most iPhone games, provides low utility. It would at best be a 2-minute distraction while I wait for the bus. In other words, it provides a minimal utility that I can live without. This drastically lowers what I'm willing to pay.
If a game offered the immersive, cinematic experience that a movie does, then yeah, I'll easily pay $10 for it. The Mass Effect game for example is awfully tempting.
But as it is that is not what most iPhone games are. Most iPhone games are time wasters so you're not interminably bored at the metro station - that to me is not a high-utility use case.
The amazing nature of humanity, and business, dictates that most people are not you.
You must be shocked daily at what other people choose to spend their money on.
I make a living off this very fact, because nobody else in my field has the balls to presume that people would spend money on their stuff. (And I can shout about it all I want on HN and know that nobody will ever use my "secrets," because they'll never believe it.)
And the popular 'app vs subway token' kinds of comparisons are ultimately unfair.
You don't pay $2 to ride the subway. You pay $2 to get somewhere; because the destination is worth it and you know you'll get there.
If you had no idea where the subway stopped and whether it would get anywhere close to where you were going, let alone in a timely manner, how eager would you be to step through the turnstile for $2?
Similarly, if you didn't know anyone who had successfully gotten where they were going via the subway, or if the last few times you rode the subway you had terrible experiences, how eager would you be to step through the turnstile for $2?