Show Notes
T-shirts
I am doing another run of t-shirts for the show. After I did the campaign for them last fall I heard from a lot of people that they missed out. This year I’m giving the campaign a nice long run (through April 28). The shirt design this year combines three distinctly geeky things—underscores, square brackets and fixed width fonts.
Shirts are $14.59 (never longer than 15 minutes). Get one at http://teespring.com/developing .
Wrapping up
I have published the consolidated, summarized article for my Towards a Better App Store series.
Unconventional Wisdom
Today I thought it might be fun to start another series of episodes. I like doing series because then I don’t have to think so much about my topic each week. The concept I’m starting with is modeled a bit after debate exercise where you are given a topic or statement then told to take either the pro or against position. The process of having to defend either side of an argument often helps to think in ways you wouldn’t otherwise. Along those lines I’m going to try and take the intentionally contrarian position against ‘conventional wisdom’ in the software business.
The result is something that isn’t 100% my actual position on things but should be productive and hopefully thought provoking nevertheless. I’ll be making sweeping, un-nuanced statements for effect. As with everything in life, it is more complicated than I’m going to present it. The interesting part of being in business is navigating that nuance for yourself.
The first topic I’m going to attack is pricing.
Paid software is good for customers and developers?
When I first got into the software business nearly 6 years ago the prevailing ‘best practice’ for software sales was to charge a reasonable up front price for your product. Then provide minor update and bug-fix update patches for free. Then charge (with upgrade pricing) for each major update to the product. This model had worked pretty well for many years and had grown up in the era of boxed software. More importantly this system had been widely accepted by customers as reasonable and appropriate.
It is, however, an awful way to sell software. For, at least, 3 reason.
Barrier to entry
Software typically has an extremely low marginal cost. Unless you are hosting media for your customers you can typically add one more customer to your user-base for a tiny cost. Even with things like customer support you each additional user is essentially free. As such charging a large up front amount for your software doesn’t make sense. This pricing model could only be maintained in an uncompetitive marketplace. Otherwise, you will quickly be undercut by someone else who is willing to lower their prices, to get them closer to their marginal costs.
You are also scaring away potential customers. Often the hardest part of selling software is getting it known to potential customers. If you finally have a customer considering your product (after whatever long, drawn out marketing effort) and then you put up a barrier to them then actually getting it you are shooting yourself in the foot. That is likely your only chance to convince them to download it, make that process as easy as possible.
Unsustainable
The paid software model is fundamentally unsustainable. To most clearly demonstrate this imagine a world where your paid sales are going well, you’ve built up a reasonable customer-base of happy users and then suddenly your sales drop off. The reason for the drop off isn’t particularly important. You now find yourself in an extremely awkward position. You continue to have expenses and have made commitments for minor updates to your customers but have no income to back them up. You either need to start squeezing your existing users progressively harder for additional income or go out of business.
The fundamental flaw in this model was that each purchase was necessarily short-lived. You had no plan to make a continuous income from your product. Each day you need to
More from Developing Perspective
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I walk through the history of Apple developer platforms over my history as an app developer and grade them, then think a bit about what has made them worthwhile.
I’m bringing Developing Perspective back. This first episode wrestles through why being an indie app developer right now feels so “pivotal”, in both senses of the word. There’s the constant, week-by-week change in our tools and workflows, and there’s the bigger structural shift in what it even means to “make” apps.
I tend to think of my app business in terms of revenue per day. Breaking it down to that level helps me keep a close eye on it and know how well or poorly I’m doing. Today I walk through the reasoning for this as well as do a thought experiment of what the numbers might look like for a new business.