Paid Upgrades and the Mac App Store
Comments on the blog post at
http://www.mentalfaculty.com/mentalfaculty/Blog/Entries/2012/3/28_P...
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1 Posted by Ilja Iwas on 28 Mar, 2012 01:34 PM
I'm glad to hear that releasing a major update for free paid of for you. But I guess getting featured by Apple also helped a little bit.
But I doubt that your experience can be applied to all applications. There's software like ours, which serves what I would consider a niche market. Such software titles need paid upgrades.
Here's why:
No matter, how good you software is, at same point you got your market covered and sales start a slow decline. You probably won't see that happen with games or general purpose apps that appeal to everyone (TO-DO lists).
Still existing customer will ask for support, bug fixes, maintenance updates to keep the software running on new devices and new OS versions.
There are three factors that worsen the situation:
1. Your app also provides some kind of back-end infrastructure, which comes at a monthly cost. These bills have to be paid no matter how many customer still buy your software.
You software interfaces with a service (let's say eBay), which is not under your control. This service is constantly changing, sometimes fundamentally, thus requiring rewrites of large parts of your code base. It's just economically feasible to implement all the required changes just to keep the software useable for free.
The original cost (let's say $20+) of the software make it unreasonable to release a major upgrade as a new product at full price. Customers don't like it. They will keep using the original version instead.
You are not Wil Shipley having made a fortune on the original release of the software.
Regards,
Ilja
Support Staff 2 Posted by drewmccormack on 11 Apr, 2012 04:37 PM
I still maintain you are exaggerating the importance of the upgrade pricing itself. Wil Shipley showed that for 18-24 months after his DL2 release, upgrades accounted for 24% of revenue. That would be a lot, if it were to continue over the full 4 years since DL2 was released. I suspect the figure is something closer to 10% taken over 4 years. The question then is whether you would get that 10% back via other channels in MAS, such as featuring, or just word of mouth generated by all those people installing their free upgrade.
If you are truly in a niche market, you will probably have to use a different approach to mainstream apps, that is certainly true. But I would argue there are plenty of different options already available in MAS. For example, you could introduce in-app purchases for the backend syncing you refer to, or other features. The advantage of this approach is that nobody is ever left behind on an unsupported version because they don't want to pay the upgrade. Everyone starts with the same base configuration, the very latest version, and can purchase modules that they want. The customer gets the latest gear, and you get extra revenue when they purchase IAPs.
Customers in a true niche market are generally also prepared to pay more. Scarcity has a price. If you really can't get by with IAP and unpaid upgrades, then you could just use full paid upgrades, like Apple will undoubtedly be doing. I'm sure the next Keynote will cost $19.99, whether you bought the first one or not.