Understanding App Store Pricing — Part 2

In our last installment, we looked at pricing on the Mac App Store and the substantial difference in pricing between the top 50 apps on the Top Paid list and the top 50 apps on the Top Grossing list. Apps on the Top Grossing list were 294% more expensive than apps on the Top Paid list at the time I sampled the data. The median app on the Top Grossing list was 329% more expensive than its Top Paid counterpart.

The percentage difference between average and median prices on the Top Paid and Top Grossing lists on the Mac App Store

The percentage difference between average and median prices on the Top Paid and Top Grossing lists on the Mac App Store

The Top Grossing list is where you want to be. These are the apps that are making the most money, and making money means food on your table and a sustainable business for years to come. Don't be ashamed of making money and don't let anyone else shame you about it either. This is the livelihood for you, your families, and your coworkers.

So what separates Top Grossing and Top Paid apps? Let's take a quick look at some raw data from when I ran these numbers in late February and early March:

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The first step to understanding what separates the wheat from the chaff is understanding how they differ. When I looked at these lists, there was a collection of interesting results. Let's examine those for a moment.

There were 200% more Finance apps on the Top Grossing list than on the Top Paid list. This result is interesting insofar as it shows a possible strong seasonal trend toward Finance apps in the lead-up to the US tax season. Does your app's segment have season tendencies? If so, are you planning your features and release schedule around it? You ignore this fact at your own peril if not. Seeing Utilities drop by 25% is an interesting comment on the fact that users are generally willing to pay more for more substantial software. Utilities tend to be small, single-serving kinds of apps that typically accomplish a single task. While useful, it's unusual for these kinds of apps to command high prices so their prevalence on the Top Paid list makes sense.

Finding 22% more games on the Top Grossing list was another remarkable result. What was more remarkable was that the games on the Top Grossing list shared next to no overlap with the games on the Top Paid list. The games on the Top Grossing list were more substantial titles, but they also included fewer iOS game ports, which tend to be plenty of fun but also try to compete at far lower price points. While they may get downloads, they earn less money.

50% more Graphics titles is our first indication of the real link between solving substantial problems and a user's willingness to pay. Graphics titles are, by definition, apps that require greater investment and typically have a higher level of intellectual property that they developer needs to create. Apps like Photoshop, Acorn, Pixelmator, Sketch, SketchBook Pro 6, and AutoCad are all great examples of graphics titles. These apps help users accomplish a specific task, one which they often cannot accomplish without the app or something like it.

A word on Social apps. Social apps do not make money. Period. Ok, maybe not period. TweetBot for Mac makes money. FaceTime makes money. Pretty much nothing else makes appreciable money. If you're planning to build a social app, please don't bet your career and livelihood on it. Unless you're going to make the Next Big Thing™. Then I guess go ahead. You have been warned.

Similarly, Weather apps don't make money. They didn't appear anywhere on the Top Paid or Top Grossing list. While I love the artistic and user experience experimentation happening in the Weather app space, please don't count on paying your bills with a Weather app.

Not listed here are Productivity apps. This isn't because Productivity is a bad category, in fact quite the opposite. Productivity apps were simply incredibly stable between both lists. If you think about it, Productivity apps, while being a dime a dozen in some cases (*cough* to-do apps *cough*), provide us with the incredible allure of getting more organized, doing more with the time we have, and being less burdened by the mundane things in our life. Who doesn't want more time, to forget fewer things, and to work more efficiently? Consequently, these apps tend to be able to charge reasonable prices assuming they are designed well enough and contain a compelling feature set.

Let's talk Business apps. Most of us think of Business as the least interesting type of apps we could possibly build. True, most business apps aren't great artistic or interaction experimenters, but businesses who come to rely on particular apps pay for them in droves, and sometimes again and again. OmniGraffle, OmniPlan, OmniOutliner — who can imagine accomplishing any number of business or organizational tasks without these apps or those like it? While Omni has identified lots of apps over the years that lots of people need, there are literally tons of vertical markets that are ill-served by the existing app market. Talk to your friends, your friends friends, your family — find out what they do, find out what makes their lives hard. You may find there's a big problem waiting for you to solve.

Finally — let's talk about In App Purchase. The Top Grossing list had four free apps on it. Think about that for a second. The app was free, and even so, it managed to earn enough revenue to make the Top Grossing list. For all of the hate levied at freemium apps (and with good reason in many cases), the fact of the matter is that is that In App Purchase is one of the few ways an App Store app can provide an easy, approachable download while still letting users pay for your hard work. If you haven't thought about In App Purchase, you're only hurting yourself.

In App Purchase might not be the silver bullet for all apps and navigating App Review can feel a bit tricky, but IAP is literally the most effective way to get downloads, get people using your app, and hopefully convert some of those into real sales. Go pick up the In App Purchase documentation, read through your App Review guidelines, and think about how you can possibly incorporate this into your own app. However, please remember to be clear about what costs money, do as much as possible to remove the friction between using your app and completing a sale, and avoid the fatigue associated with an endless number of purchases or combinations. As always, keep things simple.

And this is really one of the most important points to begin to take away from this data. Not all apps are created equal. If you create a single serving app that mostly solves an occasional need then sure, I'll give you a cup of coffee's worth of cash for it. But if you fundamentally change my life, how I work, or make it easier for me to get more done with less effort, I will pay you truckloads of cash. Most users are exactly the same. Solve a big need for them in a simple, delightful, and thoughtful way and they will give you money. Cheap apps might get downloads, but higher priced apps pay the bills.

So we've looked at how these apps differ from list to list, but how do you know if you can charge more for your app? What economic forces are at play and how should you think about them? And really, doesn't selling an app to a greater number of people ensure you'll probably make it up in volume anyway? We'll take a look at these and several other questions in the next part.