Upgrade Pricing and Used Apps

The Mac and iOS App Stores don’t offer upgrade pricing, and they probably never will.

Apple’s model for apps is akin to physical products.  If you bought a toaster last year, and this year a new toaster comes out, there is no upgrade path.  Your old toaster still works.  If you want the new one, you buy it.

This puts the onus on software developers to charge a low enough price for the software that buying it again seems reasonable.  It also means developers need to add features compelling enough to get users to pay for the software again. 

As software developers, we feel like we have to update existing applications when circumstances change.  And customers have been trained to expect it.  If Twitter changes and breaks TweetBot, we just expect a free update to TweetBot to support those changes.  

Apple’s model offers two solutions.  Provide a free update, or ask users to pay for a new version.

If a user is using an old version of an app that doesn’t work anymore (because it’s not compatible with their new device, for example, or because the web service API it depends on has changed), they will have to buy the new one if they want to continue using it.  People don’t need to be trained to expect things to work this way; that’s how the world works.  

We need to stop training users to expect free or inexpensive upgrades, and move to less frequent, “big bang” updates that add a lot of value at once and are worthy of repurchasing the app.

If developers can keep prices reasonable then this isn’t such an unworkable solution.  Spending $9.99 once a year for an app that you use frequently is still pretty reasonable.  Or even spending $199 for an app that’s an integral part of your business.

An important difference between the App Store and the real world is that if I buy the 2013 toaster, I can sell my 2012 toaster.  It still has value.  

Because you can’t sell apps, their residual value is zero.  If you spent $199 for Logic 10 in 2012 and you spend another $199 for Logic Pro X in 2013, that $199 you spent last year is gone.  You will get none of that value back.

That’s really the missing piece to treating apps as physical goods. 

With the Xbox One, Microsoft initially proposed a way to compensate developers for sales of used goods, and maybe there’s a solution in there somewhere.

Imagine a “Used App Store” where you could list your apps for sale.  Post your previous version of an app for $50.  Apple takes a commission, the developer gets a percentage, and you get the remainder.  Everyone wins.

I’m not holding my breath.