The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component.<p>The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Trello, which is free, but the business of providing administrative tools to large organizations using Trello can sustain the whole business.<p>This is more than just "freemium" or "advertising-supported." Freemium and Ad-supported business models are special cases of this general model. The real insight is that the free product has a chance to reach an enormous audience which provides distribution/advertising/marketing making it trivial to go to market with your paid product.<p>What Marco is reporting here is that the old-fashioned "make something and get people to pay for it" business is much harder to pull off and likely to always be left in the dust by someone making the same thing for free, getting 100x the user base, and getting 1% of them to pay for some value added feature.
>Everyone outside of the immediate Apple tech sphere assumes, since I make apps for iOS, that I work for Apple.<p>Interesting. I've never heard anyone having this misconception. Everyday people seem to know that app developers are completely different from Apple or other mobile phone manufacturers.
I think one of the main reasons it's so hard for new developers to make money is that -- as has been said so often -- discovery is broken on the App Store. The "new" category basically doesn't exist anymore, and even if it did there are a ton of new apps being released _daily_.<p>For everyone's complaints about Apple's stringent review process, there's a ton of crapware on there, which makes customers really hesitant to buy.<p>In [some] ways you're better off charging _more_ money and targeting a highly specific user base. Then you at least have a good shot at reaching the top-grossing lists in niche categories and gaining visibility.<p>Edit: to be clear, there's a lot of different types of apps and the free or IAP route can be the right choice. But, IMO you need something that has mass appeal if you're going to rely on converting small percentages of free users to paid users.
I never understood why in-app purchases have been branded as "evil" in the first place. As long as Apple doesn't offer developers a way to do trials, it's the closest way a customer can get a taste of an app's features, esthetics before deciding whether to pay or not for an app.<p>EX : I wouldn't have paid 10$ for flighttrack pro without the in app purchase option.
I would go as far as theorize that the main reason why the average price for an app has remained stuck at 1$ is exactly that fear of paying for something worthless without much of a recourse.<p>in-app purchases all the way.
Flip-side on the IAP suggestion: I despise ads, but if I have an app with ads I can't bring myself to buy an in-app purchase to remove them for an app I probably won't use that often. Whereas if the app was just $.99 to start with, and it looks decent, I'd happily buy it even if I don't use it much.<p>I wonder how this attitude would differ depending on whether you're an early adopter of the technology or whether you're just getting your first smartphone. I come from the Mac sphere where it's entirely reasonable to spend a lot of money on a good app (I'm considering paying $90 to upgrade to the latest OmniGraffle for example), so buying apps on a phone where most are super cheap doesn't seem so bad to me.<p>Either way, I think losing the paid app market is a Bad Thing. Quality apps are expensive to make, but I have an expensive phone; I don't then want to load it up with cheap, ill-designed apps. It doesn't matter how good the phone is if the apps are crap.
People say they are willing to pay but more often than not they look not to pay. Same as airlne tickets. Everyone complains the service and quality is terrible yet everyone is always looking for the cheapest price. It's the real consumer behavior drives the markets rather than our idealized behaviors ;)
I general Marco's points seem accurate, except for the first one. I've mentioned to many people that I build iOS apps and never have I had someone assume that I work for Apple. There are certainly various misconceptions about the app business (ie. it's an easy ticket to millions), but assuming I work for Apple is not one of them. These are "regular" people that have no knowledge of the Apple or tech sphere, other than owning a smartphone. Doctors, teachers, retail employees, elderly relatives (who have no idea where I work), all sorts of different people. There is definitely some interesting psychology going on with regard to the amount anyone is willing to pay for an app, but I really don't think believing the developer works for Apple has anything to do with it.
On Windows Phone, every app has the ability to offer a free "trial" version. So you can make a paid app, but still let the user try it (with less features, or ads). I think this mechanism is ideal.
In my experience it's gradually gotten worse over time. Up until someone in 2010 charging people $1-3 up front worked well for me. Then sometime in 2010 it slowly stopped working as more of the 'top' apps switched to a free with IAP model. Consumers didn't want to pay up front for an app from an unknown developer when people like EA were giving their apps away for nothing.
Is there anything in the app store TOS preventing developers from releasing, for example, free versions that are 14-day trials, that are upgraded to full version in-app, or else stop working?<p>I have nothing against paying for apps, but after having been totally burned a bunch of times, I refuse to pay for an app I can't even try out first. Lots of people say "just look at the reviews", but they usually don't tell you what you want to know -- it's not a substitute at all.
There's really nothing new here. There was only a brief window during which you could immediately charge for mobile apps. Desktop software has relied on try before you buy for a while now. Mobile has simply matured.
Lately I have been thinking a lot about the giant leap of faith you have when installing an app. There is no free trial, and most apps you can't understand until you start using them. One of the biggest gaps is games - most promotional videos do not even display in-app activity.<p>I think most of us would pay for instagram and twitter now. I would have to think twice about it above 20$/month. I don't think they could get to where they are with a paid app model.<p>I tried out a few ways to solve this problem. Better app landing pages. Better app videos. Nothing works, apps are an experience. Also their utility skyrockets in certain situations.<p>Twitter is essential when something major is happening, like an earthquake in your area.
Instagram is essential when you want to e-brag.
Yelp is essential when you have a group of people deciding where to eat.<p>The barrier to pre-installing the app needs to be incredibly low, and the ease of use for a noob needs to be low.
On Android a common method is free / prime. A free version has basic features while a paid prime apk acts as an unlocker for advanced features.<p>Haven't heard of removing a free app and replacing with a paid. That doesn't make sense or work for anyone. That free app is an essential promotion. The only downside/difficulty is all the user support. Free users can be pretty rough.
It's all about value-add really regardless of whether someone assumes it "comes from Apple" or not. If it's obvious what the value-add for your application is in the app store, then pay-up-front works. One problem is, 5 screenshots and non-rich text descriptions really make that hard.
To the App Store developers out there: is it even worth getting into this market? I've dabbled in Objective C/iOS development, but never built a full app. Never released anything into the app store. I've been looking for something to direct my free time toward and was thinking this would be it, but I've read an increasing number of articles like this essentially stating that the single-developer part-time app model is dead and you'll be lucky to make enough to pay the $99 to Apple every year.
Dude made searching my own instapaper articles on my own device a "subscription service", I switched to Pocket just for that. Unforgivable existing-customer f*king.
There is one hack that seems to work.<p>Keeping the app free for its first week on the store. This gets the app in the hands of the right people, the "early adopters". If the app is good, they'll use it and recommended it to friends long after the promotion week is over.<p>People are not afraid to pay when the trial was confirmed as a success by their friend (who is an iPhone genius).
One thing I think he overlooked was the benefit of cross-promotion through a proven track record. Had he held on to his old apps, he would have been able to leverage them to promote his new app. Now he has to start from scratch, using only his blog to promote it.
What's Overcast? He talks about it like I know what it is. I even follow him on Twitter, I must have missed a tweet. Is it a podcast app? Is it out?