The Awkward Pricing Structure of the App Store

The Apple App Store has revolutionized the mobile phone industry, and in the process, created dozens of copycats and changed the way people purchase software. But with all of the different pricing options, what really designates value? What makes a free app worth the download and an expensive app with lots of value too pricey? To find out, we decided to dig a little deeper.

The Free App Dilemma

The problem with some free apps is that they’re really a teaser; a gateway drug as it were, designed to hook you in to the paid stuff. Take one of the original big apps, Shazam. For the uninitiated, Shazam listens to music playing in the background and then tells you who the artist is, the title of the song, and a link to buy it either on iTunes or various other sources. Originally, the app was free, offering unlimited music tagging. But as time wore on, they saw they could make money from the app and crippled the free version to just five tags a month, then offered a paid version for $4.99. What was a great app supported by advertising is now just another example of App Store greed.


Shazam, a once free app, now with a paid and free version.

But that’s just one part of the free app problem. Then there are people just looking to make a buck through Google or iAds, and even compromise the product itself if it brings in money. Let’s take Craigsphone, for example. The other day, I was looking for a specific car and I figured that Craigslist was my best option. I opened up the app on my iPhone, typed in my search criteria, and then was presented with my options. But when I clicked on one of them, it pulled up “JamesList,” a competitor’s site that had nothing to do with Craigslist itself. Just another way to bring in money, without added value.

The 99-Cent App Dilemma

The lower the price of the app, the more popular it will be. This is probably the best place to be in the App Store, because it’s cheap enough to be an impulse buy, and will most likely sell a few thousand copies. It’s the Radio Shack principle of sales: Sell millions of a part that costs very little. Not every app at 99 cents has a lot of production value to it, but those that do will sell millions – See, Angry Birds.


Angry Birds for the iPhone

For some consumers though, 99 cents is still too much. Some people balk at a price point that’s under a dollar because they don’t think they should have to pay anything for software. No matter what is put into it. In reality, 99 cents is a pittance to pay considering the months of development time that some Apps have into them.

The “Anything Over $4.99” App Dilemma

Here’s where it starts to get sticky. In the world of OSX, most pieces of big software run at least $50, because of the development time and resources put into them. Although it’s never really discussed this way, the more expensive the software, the more that’s assumed goes into it. If you buy Office 2011 for $199, you get a full suite of programs. If you paid $49, you’d get just one program in the suite, and so on.


OmniFocus for the iPad

So let’s put this into use. OmniFocus is an excellent task management program available for OSX, the iPhone, and iPad, and with the exception of screen real estate, they all have the same features. Buy one version, and you have most, if not all, of the functionality of the desktop version that retails for $79.95. The iPhone version runs for $19.99, and the iPad is $39.99, which many consider to be just too expensive. In reality, it’s a bargain, offering full-priced features for half the cost. The nature of the App Store is that cheaper is better.

Final Thoughts

The App Store has truly changed the way people do things, but it has also bred a system where the lowest priced apps win. Some developers even openly complain about the forced pricing structure that Apple forces them into, claiming that they need more value at their price point. The problem is that for developers to truly make money, they need to charge more to have that return on investment. The result is that you get either high quality apps that cost a lot of money, or low quality apps that just are trying to make a buck. There are exceptions to the rule, but it seems like the App Store pricing structure is just a race to the bottom.