Distimo Report: iPad App Prices Slightly Higher

One of the common exasperated calls of the more experienced independent app developers for Apple’s iPhone or iPad is for everyone to please try and price apps at a more realistic level than 99 cents. Unfortunately in the last couple of years developers seem to have been in what has been called a “race to the bottom” in their app pricing decisions. With the majority of developers going for lower prices this has meant that many others have lost their nerve and followed suit. It’s an illness the App Store is yet to find a remedy for in the iPhone and iPod Touch arena.

The iTunes App store has a lot of up sides, but pricing is definitely one of the down sides. It also has a knock on effect of making developers invest less time in an app if they are going to have to take a risk in pricing versus volume of sales. 1000 apps at $5.99 is hugely different from 1000 apps at 99 cents. And that difference in projected revenue can make the difference between a couple of weeks spent on a title, or perhaps a month or two. From the consumers perspective it’s the difference between the price of a Big Mac Meal or a coffee.

Unfortunately, mostly wrongly, people have got the impression from the few “get rich quick” stories in the early App Store days, that the secret is to price low and sell lots. Sure this can still happen, but generally it is with low value, topical apps that get some kind of distorted media exposure. Its a crapshoot, and is not sustainable for developers who hope to make a living from making quality apps.

It has to be said there are also a lot of apps out there that are only worth 99 cents anyway. And that just adds more confusion for all. But there are also a lot of apps out there priced at 99 cents that are worth $5.99 or more. It’s also genuinely hard for the consumer to spot the difference unless they are buying from a company with a track record. So often a new business feels it has little choice other than to price low.

When the iPad came along a few developers tried to raise prices and had some success. The thinking being that with the launch of a higher priced iDevice, the iPad, and its premium look, feel and bigger screen, developers might be able to push the App Store pricing model upwards a little so that both they and consumers were getting a fair deal.

Distimo has published a report today that is a little discouraging for App Store Devs. in some areas, but perhaps encouraging in others.

Distimo looked at the average price of the roughly 5000 iPad ready apps when compared to the almost 200,000 iPhone apps currently available.

Overall on a one to one comparison, without taking categories into account, iPad apps are around $1 more expensive than iPhone apps. Not very encouraging as an overall comparison. To be fair some of this is to do with the idea of having Universal apps that will work on all iDevices. Obviously a lot of those are utility and twitter style apps, and the pricing is the same for both. Perhaps the Universal model is not so good for Developers. Especially if they are having to create more content, and content of a higher quality for the bigger screen of the iPad.

Content is primary in entertainment software like games. Consequently the one area where a big change in prices has been seen is in the game market, where the average price for an iPad game is $10, whereas the corresponding iPhone version is around $3. iPad games do generally involve a lot more content, so it is almost a necessity for those to be priced higher.

Even so the iPad games are still at least $15 cheaper than an equivalent Sony PSP or Nintendo DS app.
So consumers are still getting a bargain, and some developers are being forced to sell at prices that are probably marginal for them in terms of staying healthy financially.

Other categories where there are healthy price differentials between the iPhone and iPad pricing are more specialised categories for Music, Sports and Education, and noticeably business applications – where the iPad pricing is often significantly higher.

Apple’s own iWork apps, and their pricing of those at $9.99 each, probably helped drive the pricing up in those categories. Apple’s productivity apps have a proven track record, and the pattern is repeated with other developers’ productivity apps, which already have a proven track record with their own desktop versions of iPad and iPhone apps too.

The conclusion that we can draw from all of this is that consumers are certainly willing and able to pay for good quality software. And on the iPad it’s a little easier to drive a higher price model as it has been around for less time, competition is less intense when there are only 5000 titles versus almost 200,000, and the novelty has yet to wear off.

On the iPhone and iPod Touch, more realistic pricing is possible too. But developers need to focus on providing quality over quantity and stick to their guns with sustainable pricing. Otherwise they will always be seen as the cheaper cousins of the iPad developers, and perhaps eventually drag the iPad pricing down also.

I am on the consumers side here, as well as the developers side. Remember that if developers can earn money from apps, rather than just breaking even, then they can afford to produce more for the end user.

Ironically at the moment a lot of high price entertainment apps are funded by AAA game companies, and are little more than adverts for their console titles. The funding they use to produce them is taken from a promotional budget, and they can even afford to make a loss – whereas Indies can’t. But people are paying higher prices for them for the same reason they are happy to pay for Apple’s iWork apps. Because they know the vendor, and have confidence in them. However in many cases, as I have just said, the games they are buying are little more than adverts, and they are overlooking some real gems from independent Devs. priced at 99 cents and $1.99.

No-one ever said the App Store was fair I guess.

Would you be willing to pay more for apps? Or do you think that the prices in the App Store are fair, and that Sony and Nintendo are priced too high? Let us know in the comments. We’d love to hear from developers and consumers.

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Stephen NorthcottDistimo Report: iPad App Prices Slightly Higher