How Low Mac Software Prices Harm Users and Developers

Some time ago – never mind how long precisely – most indie or shareware Mac applications cost at least $20 or $30. It wasn’t uncommon to pay, say, $50 for a useful utility, or $100 or more for a word processor or text editor. Now, browsing the Mac App Store, you can see that most apps sell for $10 or less, and those that cost more are the exception.

While these decreased prices are good for users in the short term, I think they represent a dangerous long-term trend, and that, over time, this will result in less good software available for the Mac.

I recently wrote about a utility I use to control iTunes, called CoverSutra. At the end of my article, I said, “It’s worth far more than the $5 it costs,” and, in fact, the first time I bought CoverSutra, several years ago, it did cost more: it was $20. (I know this isn’t the best example, as there was quite a kerfuffle when the developer released version 3, after having promised free upgrades to users of version 2, but I don’t want to go there…)

It was a fair price to pay for a utility that I use constantly – there, I just used it again to adjust iTunes’ volume. There are other utilities that I use daily, whose price of $30 or $40 is fair. (For example: LaunchBar, €24; Scrivener, a steal at $45; BusyCal, perhaps a bit expensive at $50, but much better than iCal…) But these days, as prices drop, users are no longer willing to pay more than $5 or $10; yet they’ll happily dump more than that on a movie, or even a cup of coffee.

Users seem to have lost sight of the value of software. And in some ways, Apple is to blame for this. When Apple opened up iOS to third-party applications, the rush to the bottom in pricing was nearly instantaneous. Developers could benefit from high sales to sell apps for a buck or two and still make money. These were often very simple apps that didn’t require a lot of development or support. When Apple launched the Mac App Store, it even started selling its own software at bargain basement prices. Pages, Numbers and Keynote are $20 each, rather than the higher price previously applied to the entire iWork suite. Heck, even Mac OS X is only $30 (and Mountain Lion, due out in a couple of weeks, only $20.) With full-featured applications selling at those prices, how can an independent developer justify selling a utility for the same price? How can a utility be worth more than an operating system?

Another problem is that software sold through the Mac App Store doesn’t offer demo versions (unless the developer offers a demo on their website; many don’t, because they’re happy letting Apple handle everything). If you can’t try out a $40 program, and you find it’s not right for you, then you’re out a lot of money. At $5, you might be tempted to take a chance, and just delete the software if you don’t like it.

By not offering demo versions of software, the Mac App Store is certainly losing sales. For example, my eyesight is not great, and I have found an annoying trend in software where developers don’t want users to be able to change fonts or font size. If I buy a specific program where I need to read text and discover I can’t change its size, then I simply can’t use the software. So, if I can’t download a demo version to find out, I’ll just look somewhere else. There are plenty of ways that a specific program just won’t “work” for specific users, and not offering demos prevents users from buying programs they may find useful.

Beyond that, I simply won’t buy an application that’s, say, $40, if I can’t try a demo. It’s too much to pay for a crap-shoot, and it’s the fault of the developers if they don’t offer demos. While I understand why some don’t want to bother with this, they’re harming themselves and other developers. Because most users think like me; they won’t cough up more than a few bucks on an unknown app unless they’re confident that the app will be useful.

On the other hand, I know a number of independent developers who are selling apps for $5 or $10, and who find that the cost of support far outweighs what they can make from these apps. Some developers are increasing their prices to compensate for this. Yet the Mac App Store still features plenty of apps in the less than $5 range.1

Over time, as users frown against spending more than a couple of dollars for software, we’ll start discovering that there isn’t that much great software. Sure, a young developer can make an app in his spare time, start selling it for $2, and find some success. But when he tries to make this his day job, and realizes how much work it is, even if he sells a lot (a lot is several thousand copies), he won’t be able to make a living from this. So he’ll sell the app or kill it off, and move on to another job.

This deflation in software pricing isn’t inevitable. It simply needs two things. First, developers need to price their software realistically. Sure, they can run promotions from time to time, dropping their prices to $2 or so to get their apps noticed, but they need to maintain realistic prices that reflect the value of their work. Second, developers who sell Mac software at more than $5 or so simply must offer demo versions on their web sites. This is not just a courtesy, but should be an obligation. Expecting someone to drop $50 on an app they haven’t tried is simply foolish. Finally, Apple should offer a way for developers to provide demo versions of software from the Mac App Store. This shouldn’t be hard to do, since all software downloaded from the Mac App Store is tied to an Apple ID.

Notes:

1. There are certainly many exceptions to this: to name just a few, Coda, OmniOutliner and 1Password are all priced more realistically. But the overall trend is toward low prices.

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27 replies
  1. Mark says:

    So true! This is precisely my experience, but in the music industry. I spent countless thousands of dollars and man hours crafting albums, only to have iTunes come along and devalue everything. As a result, not only has the value of downloadable music suffered, but is what people are willing to spend for live performances. I’ve had to give up the music biz completely and take a job in retail. Unless there’s a change, I see the same unfortunate future for the software world.

    Reply
    • kirk says:

      I have to disagree with you. It’s not iTunes that devalued music, it’s free that killed it.

      And it’s Amazon selling albums by download for only $2-3, and songs for a quarter.

      Reply
    • Yacko says:

      It is more likely the music devalues itself, and now is priced appropriately.

      1) More and more new music makes use of old music samples making music more a copy and paste activity than ever before.

      2) People who cannot play well but can write a score can produce music. Once limited to a single instrument, now can be produced multi-track with samples.

      3) Band In The Box can create instrumental music in styles. Any lower level video production would be foolish to license known music when a decent generic style will suffice.

      4) Because of tools like the above and other aspects of computer recording, more people can make more music nowadays. Quantity is greater.

      5) Music no longer expires. Since music has been recorded in the last 100 years, a significant chunk of music is no longer forgotten. Older music competes with newer music in a mature market. Admittedly a 1920 recording is unlikely to compete with emo, but it is funny how much of the last 50 years is haphazardly explored by the current generation.

      6) Music competes against other ascendant forms of entertainment like video and games. The number of dollars for music is static or going down, while the amount of music continues to grow at a healthy pace. If inflation is too many dollars chasing too few goods, music value has been deflationary, too much music pursued by less money.

      Reply
      • kirk says:

        I mostly agree with point 6 of your comment. I don’t believe there is too much music, but I’ve always been a serious music fan, kind of like those guys in High Fidelity. So I’m always finding more interesting music to listen to.

        Reply
      • Nadyne Richmond says:

        I’m not sure what you mean by “quantity is greater”. If you use the metric of number of albums released, the quantity is not greater. The number of albums that are released has dropped off a cliff in the past 10 years.

        Reply
        • kirk says:

          I would agree that there is more music available. I’m a classical music fan, and the sheer number of re-releases, bargain box sets, and new versions of recordings is breathtaking. There is far more classical music available than ever before. (Not to mention digital-only availability.)

          Reply
  2. Jon says:

    You need to do some homework on this issue to convince me. Is there even a slowing in the acceleration of the number of apps available for the Mac? Are total revenues lower even if prices are? When prices were higher you often got a box, a printed manual, and a disc.

    Finally, developers can set prices at whatever they want, but unless what you’re saying is what demand will support, what you’re suggesting is more or less a combination in restraint of trade if it’s large enough to work, which I doubt.

    This seems to me like the least likely time to complain about or worry about the lack of good apps in the future.

    And free didn’t kill the software biz. Linux has been around for long enough and is good enough now to show that. The analogy to music is too thin to be meaningful.

    Finally, aren’t people making millions off of very cheap apps? Zynga comes to mind.

    Reply
    • kirk says:

      Where to begin…

      First, downloadable software has been around for many years. I can’t remember the last time I got software in a box. Wait, it was Office 2011, in late 2010.

      Developers can set prices, but higher prices are perceived as abnormal. Trust me, I know indie developers who get emails from people saying that they are students and that they can’t afford to pay $5 for an app. Yet they’re able to afford Macs.

      Linux? Don’t make me laugh. I think it was more than ten years ago that I did a lot of writing about Linux for a website. It was then “ready for the desktop.” Linux has never gone beyond servers (where it is great) and “hobbyists.”

      People making millions? A handful. Does one Zynga keep all the hundreds, even thousands of indie developers afloat?

      Reply
    • Nadyne Richmond says:

      The number of applications is not the metric to use; the quality of the applications is the important metric. It’s meaningless if there are a million applications made, but they’re all buggy or useless.

      Zynga isn’t a valid comparison. They’re making games, which isn’t representative of the software market as a whole. Further, their games are free; their money is made on a combination of advertising and in-game sales. Even if we leave that aside, there’s the point that Zynga lost more than $400 million last year.

      Disclaimer: I am a software engineer, and I work for a company that makes Mac software (although that Mac software isn’t our main bread and butter).

      Reply
      • Martin says:

        Further, their games are free; their money is made on a combination of advertising and in-game sales.

        The same is true for more and more iOS apps – and I hate it.

        Reply
      • kirk says:

        Zynga also sells their games. I have a paid version of Words With Friends; I’d rather pay a couple of dollars than see ads every time I play it.

        Reply
        • Nadyne Richmond says:

          If I’m not mistaken, the only games that Zynga sells are the ones that they acquired that had price tags already associated with them. Words With Friends is a great example of that: it was already a very popular iOS game that cost a couple of bucks when Zynga bought them out in late 2010.

          Reply
  3. Bob says:

    Actually the low prices increases sales for everyone. A developer selling an app for a lower price will sell more and this will provide the same convenience benefit that iTunes does. A good price, an easy purchase and happy customers that will find a reasonable price attractive even with the option of easy piracy.

    Heck, its good for Windows users too. They dropped their upgrade price to $40.

    This will also ultimately bring a lot more money into the market overall and improve things for everyone, those developing apps and those buying them.

    Reply
    • kirk says:

      Do the math. A $20 app that sells now for, say, $5, means the developer has to sell 5 times as many. But you also need to factor in Apple’s 30% cut, compared to other fulfillment costs (5-10%).

      I agree that it’s good for Windows users; finally!

      As for bringing more money into the market, this is how things were in the early days of the Mac App Store, but sales slumped early this year across the board. Marquee programs will still sell, but it doesn’t seem that sales are strong across the board.

      Reply
      • Mark says:

        While you are playing economist, what is the cost to the developer to sell those additional copies? When delivering digitally, you don’t have the cost of copies you can’t sell, packaging, shipping, and the like.

        Reply
        • kirk says:

          No, but you do have increased costs of maintenance and support. It’s not like with, say, music, where once you’ve sold a long or album you have nothing to do.

          Reply
      • SeymourB says:

        10-15%? Holy cow, what fulfillment system is this?

        When I worked for a software company we set our retail prices, which retailers would purchase from distributors for 50% the retail price, and we sold to distributors for 50% of what retailers purchased it for. That was a long time ago, but it wasn’t before retailers started selling things for “25% off!” and “40% off!” as a method of increasing sales.

        So in other words, my employer, as a developer and publisher, only made 25% of official retail sales, and whatever portion of the remaining 75% the distributor and retailer would fight over. And if any product failed to sell at retail, the retailer could return them to us and get their 50% back. Direct from us.

        A 30% cut sounds pretty sweet compared to that.

        Reply
        • kirk says:

          Yes, a 30% cut also sounds good to someone who writes books. But authors generally only get around 10%.

          Reply
  4. Sponge says:

    While I agree whole-heartedly regarding demo versions, ultimately this is just the market doing what the market does. Prices will reflect what people are willing to pay. If the quality of software goes down, someone will step in and provide a better alternative, perhaps at a higher price. If the need or desire for this better quality and higher priced app is there, people will buy it.

    Reply
  5. Maria says:

    This is EXACTLY the same kind of problem professional writers are experiencing. We’re finding it harder and harder to make a living as writers with so much cheap (or free) content out there to satisfy readers’ needs. We’re already suffering from the impact of content mills — a recent story on NPR reported on newspapers having local-interest stories written by content mills in Pakistan — with fake bylines to fool readers into thinking the paper had local reporters.

    I believe that in the long run low prices will discourage quality content creators (including programmers) from creating content, leaving us with a whole lot of cheap crap.

    Reply
  6. Mark says:

    I pay what the supplier says the value is. In the case of Omnigroup, I pay full price that is higher than most, since there stuff seldom goes on sale. Mariner products are always on sale so their value is always questionable. It’s not the delivery method, it’s how the products are marketed. A lot of software houses could use branding and sales help.

    Reply
  7. Howard says:

    In response to Mark, I believe that software from Omnigroup (and a few other developers) has actually risen since they began selling on the Mac App store. And by risen, I mean to two or three times what I remember paying for their software not that many years ago.

    I have two other problems with the Mac App store that you didn’t address: 1) There are some applications, like Mellel (a terrific word processor) that integrate iCloud, for instance, but only if you buy from the App store. I bought Mellel a few years ago through the developer’s website, and so although I get all the same updates as everyone else, I can’t gain iCloud integration unless I repurchase through iTunes what I already supposedly “own” (yes, I know all I actually have is a license, so there’s technically no unfairness, but it still stings).

    My other problem is that, connected with the race to the bottom pricing model that you describe, you have the issue of developers randomly putting their software on sale for $0.99 (or for free, even) at random times throughout the year. I’m not against sales per se, but this also erodes the consumer’s perception of the value of the software if they know that with some diligence they can pick up a fairly “expensive” (by App Store standards) app for less than the cost of a cup of coffee if they exercise some (extreme) diligence and patience.

    Reply
  8. stephane says:

    The point regarding Apple selling its software at a bargain on the Mac App Store is a tricky one:

    . Software sales are a small fraction of Apple revenues. They could be giving away these programs for free, it would not impact their business model which is fully relying on hardware sales.

    . While Apple is selling its programs at a bargain, it’s also pulling our legs by selling products that were free or ought to be free (Xcode or FaceTime). Legal reasons are always invoked in these cases. It’s more likely bullshit.

    . The Mac App Store is an advertising media for Apple’s products. Strangely enough, when Apple releases a new product or an updated version on the Mac App Store, this product always appears on the front page of the Mac App Store (same is true for the App Store: e.g. buggy Podcasts app). This is totally fair considering the Mac App Store is Apple’s casa. But, by being always on the front page:
    – the visibility of their products is obviously higher and so drives even more sales.
    – it’s free advertisement.

    . Apple has also an advantage other 3rd party developers don’t have when it comes to the pricing of their products. Apple gets 100% of a sale on the Mac App Store. So would Apple be selling a photo management application for $19.99. A 3rd party developer would have to price it $26.99 to get the same final revenues.

    Reply
  9. Kawaii Gardiner says:

    The biggest problem I have with many software developers is their unwillingness to accept that maybe the days of charging a small fortune for software is coming to an end. Microsoft received that loud and clear when it came to Microsoft Office and now it is priced the more reasonable NZ$249 incl GST for the Home and Student Edition when compared to almost a decade ago the price was almost a half a grand for the same standard version of Office.

    Regarding what is being sold – NZ$49.99 for MarsEdit blog editor is what I’d consider reasonable, OmniGroup prices aren’t excessive nor are they overly cheap, the small decompressor was NZ$6.49 at the time. I don’t think people are necessarily demanding cheaper and cheaper but they are demanding that developers justify their pricing and deliver a product that stands up to the price being charged.

    Reply
    • kirk says:

      I’m not sure that study really looks at a broad selection of apps. There are many factors other than price that affect sales. A good mention on a web site or in the press, for example, can lead to big sales bumps.

      There has always been free software; it’s nothing new. So I disagree with that point.

      Reply

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