Required Reading On App Store Pricing For Developers
The development of an app no doubt involves many tough decisions and trade-offs that you have to make, and one of the biggest will be at what price to sell your app for. To help clarify the important lessons and issues to consider when pricing an app, Michael Jurewitz has posted a five-part series based on his Çingleton and NSConference talks on ‘Understanding App Store Pricing’.
I’ve included below a brief summary of each article by Michael, but it’s really no substitution for reading the entire series yourself. It’s well written and although at times it covers some moderately complex microeconomic theories, it is broken down in easy to understand language with helpful diagrams and practical examples.
Part 1:Michael delves into the common fear of “falling prices” and examines what the prices actually are for those in the Top Paid and Top Grossing lists. An important discovery is that those apps on the Mac App Store’s Top Grossing list are on average nearly 300% more expensive than those on the Top Paid list.
On Friday, Apple (along with Microsoft and Adobe) will front the Federal Australian Parliament’s inquiry into IT Pricing. You may recall that after failing to voluntarily appear, the committee in February of this year summonsed the three, effectively forcing them to appear. Given Apple’s appearance, I wanted to take a closer look to see what Apple actually charges for their products (both hardware and media from their iTunes and App Stores) and see how it compares to the US.
Doing this kind of analysis can be fairly contentious given there are a few ways to do it, various assumptions you have to make, and different ways of presenting the information. To be clear, here is how I have constructed the data presented in the graphs in this article.
I collected from Apple’s website, the Australian and US prices of all their key products and main models (but not built-to-order models).
GST is removed from Australian price: The Australian price includes a 10% GST (goods and services tax), so I removed that from the Australian price because US prices do not include a sales tax, that is added at checkout based on which US state the customer is from (sales taxes varies across US states).
Now that both prices don’t include sales taxes, I convert the Australian price from Australian dollars (AUD) to US dollars (USD). I use a 3 month average of the exchange rate. The 3 month average smoothes out any temporary peaks or troughs in the exchange rate and gives Apple a fairly lengthy period of time to alter prices if there was a significant change in the exchange rate.
This now gives me the price of the Australian good in USD and without GST, a figure that can now be compared with the US price. So I calculate the percentage markup of the Australian price based on the original US price.
NOTE: Methodology for the Media calculations do vary a bit, read the notes I include with them.
I encourage you to scrutinise my calculations by taking a look at the Excel document I created, linked below.
In the past week Apple’s marketing chief, Phil Schiller, gavethreeinterviews and the company sent out a new “Why iPhone” email campaign – both timed perfectly around the announcement of Samsung’s new flagship smartphone, the Galaxy S4. Some have called it out as Apple going on the defensive, others have said it's Apple on the offensive. I’m not sure that you can categorically say it’s one or the other – it doesn’t really matter much.
Rovio today released the second major update to its Angry Birds spin-off game, Bad Piggies. The big new addition to the 1.2 update are the 30 new ‘Flight in the Night’ levels, with some of them requiring you to “sneak past the napping Angry Birds” – making too much noise will wake the birds up who will attack to try and sabotage you.
In this massive update to IGN’s 2012 game of the year, the Bad Piggies are on the move, and they’ve managed to hang on to the eggs so far! But watch out – you need to sneak past the napping Angry Birds, and they’re sleeping with one eye open! Navigate through 30 new Flight in the Night Levels but don’t make too much noise, or you’ll wake up some seriously furious birds! Also make sure to check out the new “Road Hogs” time trials: can you beat the clock (and your friends) with your crazy contraption?
Also included are 6 ‘Road Hogs’ levels which are time trial levels, another new sandbox and six new achievements. The teaser video of the update which highlights some of the new features is embedded below.
Instagram today announced that it has over 100 million monthly active users, an increase of 10 million since they announced in early January that they had passed 90 million monthly active users. In a lengthy blog post, Instagram co-founder Kevin Systrom shares a story from the early days of Instagram and highlights a few Instagram users that have inspired him and highlight the power of Instagram.
Images have the ability to connect people from all backgrounds, languages and cultures. They connect us to aid workers halfway across the world in Sudan, to entrepreneurs in San Francisco and even to events in our own backyards. Instagram, as a tool to inspire and connect, is only as powerful as the community it is made of. For this reason, we feel extremely lucky to have the chance to build this with all of you. So from our team to the hundred million people who call Instagram home, we say thank you. Thank you for sharing your world and inspiring us all to do the same.
Given the news I thought I would go back and create an updated version of our Instagram users graph which you can see above: it plots all of Instagram’s publically released user statistics since its release in October 2010 (click it to view a larger version). Note that the last two data points are ‘Monthly Active Users’ rather than total number of signed up Instagram users. Nonetheless, it hasn’t taken too long for the Monthly Active Users catch up and hit the 100 million users mark.
Apple has just released two new adverts for the iPad and iPad mini with a strong emphasis on the apps available for the devices. The adverts are different to many past iPad and iPhone ads in that there is no real narration, with just three words said in each.
The first, titled ‘Alive‘ features the words; ‘Loud’, ‘Deep’ and ‘Alive’. After each word is said, a number of apps related to the word are demonstrated. For example, after "loud", music apps are shown, a medical app showing the ear and a fashion app are demonstrated. The second ad, ‘Together’, features the words ‘Wild’, ‘Bright’ and ‘Together’. Both ads are described on Apple’s YouTube page as "With over 300,000 apps, iPad is up for anything you are".
Apple, Microsoft and Adobe have been summoned to appear before a Federal Australian Parliamantery Committee that has been investigating IT pricing in Australia. The move forces the three companies to appear on March 22nd after they had refused to do so voluntarily. Ed Husic, a driving member behind the creation of the committee and one of its members, put out a press release welcoming the move, but stating it is one “we shouldn’t have to take”.
“Adobe, Apple and Microsoft are just a few firms that have continually defied the public’s call for answers and refused to appear before the IT Pricing Inquiry.”
The IT Pricing Inquiry has been examing whether a price difference exists between Australian and international pricing of IT goods and services, and if so, why they exist, what impact they have and what actions can be taken to reduce the disadvantage of Australian consumers. Formed in May last year, the committee received 100 submissions from individuals, organisations and companies and has so far held 5 public hearings which included the appearance of Australian Recording Industry Association, the Department of Foreign Affairs and Trade, consumer group CHOICE and many others.
It should be noted that Apple, Microsoft and Adobe all made written submissions to the Committee but refused to appear before the committee to answer questions of the committee members.
What do you know about Dual Screen AirPlay games? Chances are, you don’t know much about it and might not even know what on earth I’m talking about. It’s a feature of AirPlay – the protocol that allows iOS devices to stream audio and video to an Apple TV. More specifically, Dual Screen AirPlay is the ability for app developers to use a connected Apple TV as a secondary screen, displaying different content on the TV as to what is on the iOS device. In theory it’s an awesome feature that has significant potential. In reality there haven’t been many examples of its implementation, let alone many that did so in a unique and exciting way.
So today I look at where Dual Screen AirPlay has been used, focusing on games in particular and then look to why it hasn’t been as widely deployed. I’ll also touch upon the problems with its implementation, where it could be improved and lastly a brief discussion on its potential in video apps as well.
Horace Dediu of Asymco today wrote and shared data on the availability of the iPhone 5 and iPhone 4S by potential buyers – measured by the subscriber counts of the carriers that sell the iPhone. It’s an important and valuable extension of an article I wrote last week, discussing the international rollout of each generation of iPhone and iPad. That analysis had a weakness in that I treated all countries as equal which isn’t necessarily true (depending on why you’re looking at the data).
Announcing availability in Mauritius is not nearly as important as announcing Madagascar. A better measure would be to track the countries’ populations being added, or, better still, the populations which subscribe to operators who have a distribution contract with Apple.
So instead, Dediu looked at which carriers held the iPhone in each country and what their approximate subscriber count was. By calculating the availability this way, you can now see the potential number of iPhone buyers, as seen in Horace’s graph here.
That’s a handy measure: the iPhone 5 was 30% more available than the iPhone 4S. The big contribution was having China and Indonesia available during the fourth quarter rather than in January 2011.
Make sure to head over to Asymco to read the full article and all of Horace’s observations, it’s an interesting read. If you didn’t catch my article last week, it’s also available to read here. Just note that if you are trying to compare Dediu’s graph with the one in my article (shown here), Dediu went with actual dates whereas I went with relative time. This is because I wanted to look at the first 110 days of every iPhone, Dediu was specifically looking at the fourth quarter availability.