How iPad Application Pricing Will Change the App Store Game

04/03/2010

With today marking the dawn of a new era in computing (I seriously believe this, but only time will tell), Apple’s App Store is going to deliver different results to developers than it did for the iPhone. While lots of apps will sell for the iPad, this store is going to stop being the El Dorado that it has been for many developers. The App Store took off for the iPhone and the iPod touch in part because of pricing: when it’s just a buck or two to try an app that, in the end, you’ll only use a few times, you’ll take the plunge without second thoughts. Developers have sold, in some cases, more than a million copies of their 99-cent apps. But this is all about to change.

When Apple announced the prices of the first apps they presented – Pages, Keynote and Numbers, from their iWork suite – they set a new bar for App Store pricing. Instead of being one or two dollars, they are ten dollars each. Granted, these apps are designed to do far more than any dollar app, but if you look at the current top sellers for the iPad in the App Store (yes, lots of people are buying apps before getting their iPads), you can see that prices range from a handful of one- or two-dollar apps to a few 20-buck programs, but the majority float around the 5- and 10-dollar range.

Many of these apps will sell well, but nothing like the sales some developers have seen for iPhone apps. When you spend a buck, you can do it without thinking; when you spend five or ten, that’s another ball game.

Now, you could think, “But the iPad will sell millions of units.” True. But so does the Mac. There are very few applications for Mac OS X that sell in the hundreds of thousands of units. Most shareware developers don’t make much money from their programming. Sure, there are a handful of people who make a living, but very few, far fewer than the number of almost industrial iPhone app developers who churn out dollar apps like sandwiches.

For iPad developers to make a living, they’re going to need to provide unique solutions that provide essential functionality, not fart apps or games that people will play a few times and then delete. We will see some of the latter, just because developers can make them. But I don’t think anyone should expect the same type of app purchasing on the iPad as the iPhone. Part of this is because of the pricing bar that’s been set, but also because this is not a pocket device that people will whip out when they have five minutes to wait on line at the bank. The iPad is more of a “couch” device, and usage will reflect that. Time will tell exactly what types of apps people really use, but developers shouldn’t expect to sell what they did on the iPhone.