There’s been some chatter going around (spawned by Brent Simmons) about whether it’s possible to run a business solely on the profits of selling an iOS app in the App Store. Here’s my two cents on why the low price of apps is hurting our ability to promote them.
There’s a good chance you’ve never heard of them, unless you’ve gone looking for an app in one of these categories and run across my products. I don’t advertise them, because I can’t afford to.
In most product businesses, scaling is based on marketing. You figure out a price point and a marketing plan where spending $1 on marketing results in >$1 in sales, and then you turn up the marketing tap until your market is saturated.
Think about the products you buy. How many of them are from companies that you’ve never seen any advertising for?
In the iOS app world, a focal point of app marketing is the initial press push, because it’s free. We all know what the sales curve for an app promoted this way works: An initial spike in sales, and then a drop off to trickle.
There’s social, which works great for apps that are naturally social or involve sharing. This doesn’t work well for productivity apps. I want to make it easier for MealPlan users to share meal plans, but my app’s marketing shouldn’t depend on it.
There’s App Store search, which honestly is how I get a lot of my sales. But that’s fickle, and almost completely out of our control.
There’s word of mouth (and I appreciate every one of you). But that’s also hard to scale.
The proven way to scale a product business is through advertising, and we don’t make enough money off apps to afford it. The cost per customer acquired is too high.
What can we do?
Honestly, I don’t think there’s much that we aren’t already doing. Unless everyone in a given category agrees to raise their price by enough to cover marketing costs, you’ll find it difficult for your $9.99 app to compete with the $0.99 or freemium alternatives. That’s just too much of a price premium, and customers have been acclimated to the lower prices.
Adding a Mac counterpart and pricing it at a premium seems like the best way to go. Mac users are used to the higher prices, and Apple is making it very easy for your Mac app to be a great adjunct to your iOS app.