“Leave it to a company as cocky as Microsoft to dictate prices in a sector over which it has no control,” Rick Aristotle Munarriz writes for The Motley Fool.
“The software giant wants mobile software developers to forget the $0.99 price point that Apple’s App Store is championing, as it gears up for the fall launch of its Windows Marketplace for Mobile,” Munarriz writes.
MacDailyNews Take: Is Apple’s App Store really “championing” the 99-cent price point or did prices just gravitate to that base point? Plenty of apps are free (like ours) and plenty of others cost – and are worth – more than 99-cents, too. Apple provides the App Store, the developers set their own prices.
Munarriz continues, “‘You make more money selling applications than selling your application in a dollar store,’ Loke Uei Tan — a member of Microsoft’s Mobile Developer Experience team — told developers this week. ‘Ninety-nine cents? Come on. I think your app is worth more than that.’ He may be right, but that doesn’t matter.”
“Kidding developers about the notion of jacking up prices is preposterous,” Munarriz writes. “Microsoft may not see what it likes when it peers into Apple’s App Store, but it’s really only looking at the grim reality of software pricing’s future.”
Full article here.
MacDailyNews Take: Since Apple makes the bulk of their money on hardware, they can continue to drive down software prices (look at what they did to MSFT on OS pricing) until Microsoft’s look even more outrageous than they do now (if that’s even possible). Microsoft will never be able to make up that loss with mice and obscenely faulty Xbox units (Xbox 360 failure rate is 54.2%). Apple’s turning Microsoft’s gold into lead.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
This is a hoot. Is it not the developer who sets the price of his app?
Furthermore where and what is the hardware units in consumer hands that this pricier software will be used on?
Seriously M$ is losing it’s sanity.
When Snow Leopard and Windows 7 hit the street I’m expecting Apple to bash MS over the cost to upgrade and the pain to upgrade in new rounds of Mac vs PC ads.
What a ridiculous assertion that Apple is “championing” 99¢ apps. Some developers have made a decision price their apps at that low prices hopes to gain high volume acceptance, but their a plenty of pricier apps. Apple, would actually benefit if the same quantity of apps were purchased at higher prices.
Geez, what a hash I made out that last post. Please excuse spelling and grammer; I think you know what I mean.
It’s okay, Spark. I just assumed you were borrowing someone’s Blackberry with a physical keyboard and typing with a catcher’s mitt on.
tz writes, “Is it not the developer who sets the price of his app?” Exactly so. The only thing Apple sets is its “cut”.
What Apple has created is a free market. Bejeweled at $2.99 is not worth it to me (though I’d grab it at $.99), but ooTunes *is* worth $3.99 to me to give me access to some overseas radio streams. That Pandora and Bloomberg are free is just a gift.
I paid $100 for TomTom. I could have bought 100 99 cent apps instead but I bought what I wanted. Show me the value – and I’ll show you the money. I loaded it on 4 iPhones so now I’m down to $25 per.
I also agree that the current pricing for the typical app is way below their true value. I have no problem paying more for quality software and support the dev who created said software. Hopefully things will change and they get what they’re entitled too. Because without them the iPhone is a dead platform.
Sell a million 99¢ apps or 60 $5 apps.
Decisions, decisions.
Even if those X-Boxes were 100% defect-free and perfect (as hardware) in every way, they’d still be losing MS money. There isn’t a single MS hardware product (other than perhaps mice and keyboards) that is NOT a loss leader for some other software product. MS is a software company, and their X-Box hardware is sold so that they can make money on licensing for games (for third-party developers) and on their own games division. If Apple’s App Store continues to encourage game developers to lower the pricing and expand the market, Apple won’t care about that, developers will for sure see benefits from greater volume, and MS will suffer, watching their margins evaporate.
Is it easier to get 99¢ from 1 million customers or $99 from 1% of 1 million customers?
= same revenue
At 99¢ you can establish your software base and grow!
Big Als MBP was writing as I was calculating!
If MS wrote Office for the iPhone/iTablet how much would the apps sell for – 99c each (Word, Excel, PPoint, Access, Outlook) totalling $4.95? No wonder MS is worried!
This *wisdom* from M$ follows right on the heels of their statement that the term “netbook” is defined by their license agreement with OEM’s… See Microsoft and the great netbook price-fixing scam of 2009 from Infoworld.
Microsoft has obviously never taken an economics course; they’ve never heard of the price-demand curve.
Even Hollywood finally learned about it years ago, when they reduced the price of videos from $100+ to $20-, and saw demand explode.
The 60 cents that a developer gets for each sale of a 99 cent product on the App Store may not be that bad compared to what you might get out of the old boxed software approach after considering the additional costs and the pirating.
I disagree with the MDN take. Apple is directly “driving down software prices.” Developers are able to charge more for the software that is worth more as judged by the consumer. The nice thing about the App Store is that the barrier to entry is low. That promotes competition and naturally results in lower prices. But the developer can still make decent money relative to the amount of work that is put into a product, if it is worthy.
Correction:
I disagree with the MDN take. Apple is *not* directly “driving down software prices.”
OK, let me try to understand the advice(?) here : according to M$, it’s great if I can find a cheap-o laptop for $699 and save some $ instead of buying a Mac laptop, but I should be paying MORE than 99¢ when buying any mobile app (i.e., stay away from those cheap Apple iPhone apps)??
Me thinks the BORG is speaking out of both sides of their collective mouth.
Microsoft cocky?
Now you MAC astroturfers have stepped over the line. What’s next? Declare Microsoft an arrogant bully? I’ve had it. I’m going home.
Your potential. Our passion.™
P.S. The Microsoft guy is right. 99¢ for burp and fart apps is way too low. That stuff is gold; besides, Windows Marketplace for Mobile will charge $29.99 for their hemorrhoid app. And it’s subsidized with ads from Preparation H. It’s called innovation, MAC dorks.
I think it is better to sell 100,000 or 1,000,000 at 99-cents, and get 70% of that revenue, than to sell 10 at $9.99 at the Microsoft Store. How can a developer sell anything and make money to a user base that does not even exist yet (for the new “Zune HD” Windows Mobile) or is fragmented into dozens of small segments (based on existing hardware limitations)?
Spark. I love hash!
@IPhoner
Having also purchased the TomTom app how do I load it on to my wife’s iPhone as well? Do spill the beans.
ZT … welcome BACK!
Most excellent!
It’s brilliant. The apps gravitated to 99¢ by market forces — developers make more money with a high volume / low price approach. But only on a platform with 50 million units in the wild. The crazy part is that it will end up reinforcing iPhone dominance:
Who wants to buy a different platform if apps cost more than iPhone apps?
Who wants to develop for a different platform if they can only charge 99¢ and there aren’t enough users to generate the volumes needed at that price-point.
I might buy the complete MS Office suite for my mac if it were 99c. Then it’d have value.