One reason is the risk involved in app purchasing.
With all the other items you essentially already know what you are getting.
With apps you essentially buy them blind.
A crappy app already has your money when you realise it's crap.
Uncertainty leads to a tendency to put things off.
Apps might be much better off if there was an easy way to have a free trial period/limited feature set.
One reason free apps are desirable is because there is no downside risk in obtaining them initially.
If more apps had a free trial period, be it a day or hell even an hour I think we'd see a much greater propensity for people to pay and pay more after the quick trial is open.
While this is an interesting contributory factor, the kind of feedback people get regarding pricing is epic. I have a friend who released an app for customer relationship management ("FollowUp!", or something like that; it could also be used to keep track of friends you don't talk to often enough) and got a comment that read along the lines of:
"""This app is amazing. It changes the way I do business. I use it every single day. It exactly solves my problem. However, $5 for an app? Come on, that is unreasonable."""
Additionally, there are good ways to mitigate people purchasing things "blind": in addition to having good screenshots, and a well written description (preferably one you redraft often and are A/B testing), you are also going to want a website that includes more: maybe a video.
I mean, a ton of video games are also "crap": I remember many Nintendo games I used to own that simply sucked, and where you regret having spent $35 on the cartridge. However, people still paid $35 for those cartridges, as the good games spent the time to do marketing.
At the time that meant getting into trade magazines (Nintendo Power! being an epic one, but there were tons of smaller ones that I used to subscribe to); today that would mean being covered by various blogs or online papers. A few years ago, we had a game company, and one of our three people spent most of his time just handling press.
This is no different for iPhone games either: the guy who wrote GeoDefense (one of the most popular and most profitable games for the iPhone platform) talks endlessly at conferences about how what made him successful was hiring a PR firm to handle his press announcements: he was simply covered everywhere.
With things like this in place, users aren't "buying blind": they are making informed decisions about products they heard about elsewhere, and are simply using the App Store as a payment and distribution vehicle.
(Which, seriously, is all that it is good at; too many people try to use it for "discoverability", and then end up with these very problems: users don't really know what their app is or what it does, no one finds it unless you are under top-selling, and before you know it you are stuck in a $1 price category or trying to work freemium; they are bargain-binning themselves.)
Though screenshots seem to be fair warning against lousy apps. For instance, a lot of lousy apps "waste" 2 or 3 of their screenshots with obscure details or marketing slides because (I assume) they don't really have much in the app itself to show off. Any time I've seen 5 full-screen, detailed, unique, functional screen shots I haven't really been disappointed; a quality app doesn't have any trouble looking that way.
I think developers probably have a little too much leeway over what they can change (since you can't really "go back" once you "upgrade"). For instance, I've seen games change fairly substantially compared to their original versions a year ago, and sometimes it's for the worse.
No. While I laugh as hard as the next guy at that Oatmeal comic, the reality of the situation is that these examples aren't actually true: people are /often/ "really cheap".
1) tons of people refuse to go to Starbucks: "coffee should cost $0.50; I'll just stop at McDonald's"
2) tons of people don't go to see movies when they are released: "why watch it now when I could wait a month and watch it at the budget theater?"
3) tons of people don't buy concessions when they do watch movies: "I can make popcorn at home for almost nothing; maybe I can even just sneak it inside"
4) tons of people buy Dell laptops: "why would anyone knowingly pay the 'Apple Tax'? I can get a much better computer at half the price if I go with a PC instead"
I know people who refuse to purchase soda water in bottles: they only use the SodaStream, as the compressed air cartridges are cheaper (or, more simply, drink flat tap).
Everyone knows people who sit around endlessly comparing prices on plane flights on the one hand, while constantly complaining about the decreasing in-flight meal quality on the other.
Hell, McDonald's is even trying to take advantage of this by directly attacking Starbuck's where it hurts: they are now selling stronger and more intricate coffee concoctions.
This isn't because these products were introduced too cheaply (I remember when domain names cost $75/year), or even because there are lots of free comparables (people optimize fractions of a percent on their plane tickets).
People are simply cheap. If you want to list a reason for it, I'd guess "short-sighted": they expect (nigh unto demand) things to be commodity products that aren't.
I mean, how many of these people who complain about in-flight meals ask themselves "how much would I pay for a better meal"? The people I know who ask that question are already drastically different consumers.
I went out shopping for a microwave yesterday, reading reviews of the various models, and I see tons of complaints that X model only lasted a year or two.
You have to wonder: if a company makes a product for $20 less that starts to fall apart in a year (as it is held together with cheap glue and plastic that wears through), will people actually not buy it?
As far as I can tell, people still buy it, and they buy a lot of them (these are the microwaves with the largest numbers of reviews; yes, the ones that don't work even have more positive reviews, as more people are buying them).
The incentives that consumers are enforcing on their suppliers simply suck. If people looked into their purchases ahead of time, asking the right questions, and knowing what they are willing to pay for various benefits, these broken products might simply never be made.
This is why companies like GoDaddy can exist: charge slightly less than the competition (as people are cheap), make it up in the backend with irritating upsells or by directly selling your personal information.
How many people who demand unlimited bandwidth wonder how that business model possibly works? Further, how many of them wonder whether the answer is more complex than "they have secret caps"?
(For the record, the answer is pretty complex, and involves a market where application vendors such as Netflix would normally pay off carriers on the backend to get their apps onto devices; the App Store has disrupted this market.)
So, given all of this, we now have to direct our questions to the story of the app developers, to see why they think their situation is so different, and I think this is where it gets good.
First off, it isn't in fact the case that people offering cheap goods are making the most money. They have the most downloads, but are not the highest grossing.
This became really clear when Apple added a "top grossing" category: in the market where everyone was whining that apps "had to be $1 to sell", t...
Because when I tried to open your page on my iPad using an acclaimed 3rd party browser (that I 'underpaid' for)...it crashed. And when I relaunched and attempted a gesture that I thought would get me back to your page it instead loaded 5 blank tabs. Generally my coffee doesn't explode and Brokeback Mountain was ... Ok. I finally got back to your site on my desktop, but generally the apps themselves are the best explanation for their cost. If you want a mildly theoretic explanation, usability and programing languages are probably where you should look... despite the sun never seeming to set on the behavioral economics empire...
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[ 9.3 ms ] story [ 37.1 ms ] threadWith apps you essentially buy them blind. A crappy app already has your money when you realise it's crap.
Uncertainty leads to a tendency to put things off.
Apps might be much better off if there was an easy way to have a free trial period/limited feature set.
One reason free apps are desirable is because there is no downside risk in obtaining them initially.
If more apps had a free trial period, be it a day or hell even an hour I think we'd see a much greater propensity for people to pay and pay more after the quick trial is open.
"""This app is amazing. It changes the way I do business. I use it every single day. It exactly solves my problem. However, $5 for an app? Come on, that is unreasonable."""
Additionally, there are good ways to mitigate people purchasing things "blind": in addition to having good screenshots, and a well written description (preferably one you redraft often and are A/B testing), you are also going to want a website that includes more: maybe a video.
I mean, a ton of video games are also "crap": I remember many Nintendo games I used to own that simply sucked, and where you regret having spent $35 on the cartridge. However, people still paid $35 for those cartridges, as the good games spent the time to do marketing.
At the time that meant getting into trade magazines (Nintendo Power! being an epic one, but there were tons of smaller ones that I used to subscribe to); today that would mean being covered by various blogs or online papers. A few years ago, we had a game company, and one of our three people spent most of his time just handling press.
This is no different for iPhone games either: the guy who wrote GeoDefense (one of the most popular and most profitable games for the iPhone platform) talks endlessly at conferences about how what made him successful was hiring a PR firm to handle his press announcements: he was simply covered everywhere.
With things like this in place, users aren't "buying blind": they are making informed decisions about products they heard about elsewhere, and are simply using the App Store as a payment and distribution vehicle.
(Which, seriously, is all that it is good at; too many people try to use it for "discoverability", and then end up with these very problems: users don't really know what their app is or what it does, no one finds it unless you are under top-selling, and before you know it you are stuck in a $1 price category or trying to work freemium; they are bargain-binning themselves.)
Though screenshots seem to be fair warning against lousy apps. For instance, a lot of lousy apps "waste" 2 or 3 of their screenshots with obscure details or marketing slides because (I assume) they don't really have much in the app itself to show off. Any time I've seen 5 full-screen, detailed, unique, functional screen shots I haven't really been disappointed; a quality app doesn't have any trouble looking that way.
I think developers probably have a little too much leeway over what they can change (since you can't really "go back" once you "upgrade"). For instance, I've seen games change fairly substantially compared to their original versions a year ago, and sometimes it's for the worse.
1) tons of people refuse to go to Starbucks: "coffee should cost $0.50; I'll just stop at McDonald's"
2) tons of people don't go to see movies when they are released: "why watch it now when I could wait a month and watch it at the budget theater?"
3) tons of people don't buy concessions when they do watch movies: "I can make popcorn at home for almost nothing; maybe I can even just sneak it inside"
4) tons of people buy Dell laptops: "why would anyone knowingly pay the 'Apple Tax'? I can get a much better computer at half the price if I go with a PC instead"
I know people who refuse to purchase soda water in bottles: they only use the SodaStream, as the compressed air cartridges are cheaper (or, more simply, drink flat tap).
Everyone knows people who sit around endlessly comparing prices on plane flights on the one hand, while constantly complaining about the decreasing in-flight meal quality on the other.
Hell, McDonald's is even trying to take advantage of this by directly attacking Starbuck's where it hurts: they are now selling stronger and more intricate coffee concoctions.
http://www.seattlepi.com/business/article/McDonald-s-challen...
This isn't because these products were introduced too cheaply (I remember when domain names cost $75/year), or even because there are lots of free comparables (people optimize fractions of a percent on their plane tickets).
People are simply cheap. If you want to list a reason for it, I'd guess "short-sighted": they expect (nigh unto demand) things to be commodity products that aren't.
I mean, how many of these people who complain about in-flight meals ask themselves "how much would I pay for a better meal"? The people I know who ask that question are already drastically different consumers.
I went out shopping for a microwave yesterday, reading reviews of the various models, and I see tons of complaints that X model only lasted a year or two.
You have to wonder: if a company makes a product for $20 less that starts to fall apart in a year (as it is held together with cheap glue and plastic that wears through), will people actually not buy it?
As far as I can tell, people still buy it, and they buy a lot of them (these are the microwaves with the largest numbers of reviews; yes, the ones that don't work even have more positive reviews, as more people are buying them).
The incentives that consumers are enforcing on their suppliers simply suck. If people looked into their purchases ahead of time, asking the right questions, and knowing what they are willing to pay for various benefits, these broken products might simply never be made.
This is why companies like GoDaddy can exist: charge slightly less than the competition (as people are cheap), make it up in the backend with irritating upsells or by directly selling your personal information.
How many people who demand unlimited bandwidth wonder how that business model possibly works? Further, how many of them wonder whether the answer is more complex than "they have secret caps"?
(For the record, the answer is pretty complex, and involves a market where application vendors such as Netflix would normally pay off carriers on the backend to get their apps onto devices; the App Store has disrupted this market.)
So, given all of this, we now have to direct our questions to the story of the app developers, to see why they think their situation is so different, and I think this is where it gets good.
First off, it isn't in fact the case that people offering cheap goods are making the most money. They have the most downloads, but are not the highest grossing.
This became really clear when Apple added a "top grossing" category: in the market where everyone was whining that apps "had to be $1 to sell", t...