Stemming the Crapware Flood: How Cheap Is Too Cheap?

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Craig Hockenberry, the programmer behind Frenzic and Twitterrific, has a bone to pick with Steve Jobs.  Well, not Uncle Steve directly, but the App Store.  In particular, the flood of cheap, disposable apps that become super-popular BECAUSE they're cheap.

In an open letter to Jobs, Hockenberry decried the rise of what he termed "ringtone apps" — quick and dirty programs whose prices are being slashed to US$0.99 for no other reason than getting favorable positions on iTunes.  This is producing a mindset where iPhoners will buy an app just because it's at the magical ninety-nice cent price point, and pass over a more useful program for US$4.99 because it's "too expensive."  It also forces programmers to rethink what they want to develop, based on development costs vs. target pricing:

Before commencing any new iPhone development, we look at the numbers
and evaluate the risk of recouping our investment on a new project.
Both developers and designers
cost somewhere between $150-200 per hour. For a three man month
project, let’s say that’s about $80K in development costs. To break
even, we have to sell over 115K units. Not impossible with a good
concept and few of weeks of prominent placement in iTunes.

But what happens when we start talking about bigger projects:
something that takes 6 or even 9 man months? That’s either $150K or
$225K in development costs with a break even at 215K or 322K units.
Unless you have a white hot title, selling 10-15K units a day for a few
weeks isn’t going to happen. There’s too much risk.

Raising your price to help cover these costs makes it hard to get to
the top of the charts. (You’re competing against a lot of other titles
in the lower price tier.) You also have to come to terms with the fact
that you’re only going to be featured for a short time, so you have to
make the bulk of your revenue during this period.

This is why we’re going for simple and cheap instead of complex and
expensive. Not our preferred choice, but the one that’s fiscally
responsible.

Hockenberry fears that, if and when the feted "killer app" (i.e. the one program that will make everybody truly want and need an iPhone) shows up, it may slip through the cracks on pricing alone:

I also worry that this low price point for applications is going to limit innovation on the platform. Sure, apps like Ocarina and Koi Pond are very cool and very cheap. But when are we going to see the utility of the platform taken to another level, like when spreadsheets appeared on the Apple ][ and desktop publishing
appeared on the Mac? (It could be argued that Safari has already
accomplished this, but I still think there is a third party idea that
will be just as transformative.)

It would be great if the killer app for the iPhone cost 99¢, but given the numbers above I can’t see it being very likely.


Let the market decide what is crapware and what is "killer app".  What do you think?

About Dactyl Anapest

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