The Sky is Not Falling: The Realmac Team on App Pricing

The App Store made buying software something normal people do again — but almost as quickly, it’s seemingly turned into a marketplace of free apps paid for by in-app purchases. Marco Arment of Instapaper fame has argued that “Paid-up-front iOS apps had a great run, but it’s over”, while Joe Cieplinski, the developer behind Teleprompt+, argues that “there is a whole world of untapped potential on the App Store for developers who can solve real problems for people who are happy to pay.” I’ve always sided with the latter argument that paid apps will never die, but it only takes a few minutes of browsing the App Store to see that freemium apps have seriously encroached on the domains previously held by paid apps.

Are paid apps dead, or not — and is this just about iOS, or is it the same on the Mac? To answer that, we’ve talked with Nik Fletcher, product manager at Realmac Software, about their team’s experiences with app pricing and sales on both the iOS and Mac App Store. Realmac has recently faced backlash on the iOS App Store over Clear+’s pricing, but at the same time decided not to run discounts on their pro Mac apps, so they have a unique perspective on both markets.

To them, there’s a bright future for carefully considered in-app purchases and paid pro software. Here’s the interview:

Are paid app sales declining over time?

There’s a definite feeling that paid app sales on iOS are declining. I suspect that it’s being felt particularly strongly in the very lowest price tiers (99¢ – $4.99). Higher-priced apps are less likely to be affected, but they’re a different market.

Is that the same for brand new apps?

Unlike even a year ago, a huge jump up the Paid app charts no longer generates the level of revenue you’d traditionally associate with the App Store. A look through the Top Grossing charts shows where all the revenue is being made — free apps using In-App Purchase — and that’s a notable change.

The Mac App Store's top grossing list, still filled with paid apps

The Mac App Store’s top grossing list, still filled with paid apps

Is this true for iOS and OS X, or are the two platforms substantially different for app sales?

A quick look at the Mac App Store in the UK shows that there’s just half a dozen free apps using In-App Purchase in the 100 Top Grossing apps. It’s clearly still a very different market.

I think at this point, whilst the Mac App Store is a great buying experience, we’re certainly finding that offering an app directly — as well as from the App Store — isn’t cannibalizing Mac App Store sales. If anything, for certain products, direct sales are consistently stronger. That may be down to pricing expectations (RapidWeaver, at $79.99, is a pricey product for the Mac App Store), but the Mac App Store hasn’t destroyed the market for direct sales.

Is the App Store + your own store driving more or less sales to your apps than it was a year or two ago?

The revenue we’re seeing is consistent for where we are in the update cycle for our products; however, the iOS paid market for low-cost is certainly changing.

If you could change one thing about the App Store today, what would you add: free trials, paid upgrades, something else?

All the gripes about the App Store — free trials and paid upgrades — are effectively being replaced with IAP. I honestly don’t think that these gripes would make developers more money — the place at which low-cost apps prove value has changed, and we have to respond to that. The indie community can wish that it hadn’t changed, or we can embrace the change and stop treating IAP as taboo. If you’re building a paid app, you should probably reconsider your pricing plans.

The Realmac team at work, making the promo video for Ember

The Realmac team at work, making the promo video for Ember

Your team has stayed away from in-app purchases, and also recently said you won’t run discounts on your Mac apps. Could you explain your reasons for sticking with the traditional, relatively high upfront app price model?

We’ve stuck by our pricing for our Mac apps, as they’re far more involved, with a much bigger team to support. We’ve been working on Ember, as an example, for over a year — with a team of two developers. We’ve got a lot more planned for the app in coming updates, so we’ve priced it at a level that is sustainable for the team, and at a price that professionals can justify. Quite simply, we think the app saves you more than $50 worth of time.

Of course, iOS is a different. IAP is something we’re going to be carefully considering in the coming months. Whilst we work incredibly hard to balance the needs of the business with our desire to give customers all the free updates we can, ultimately we want to ensure that our products are sustainable — and IAP is very clearly the route that (when carefully considered) looks to be providing that in the longer term.

Knowing what you know today, is the world a better place with the App Store?

Absolutely. The way in which apps and iOS devices enable people to do more is incredible. This, combined with the trust and distribution of the Apple brand, has made software far more approachable and consumer friendly. It’s forced the software industry to raise the bar for design, interaction and careful consideration of the user. We’re far less tolerant of poorly designed apps than we were.


In Conclusion — AppStorm’s Thoughts on App Pricing

It’d seem to me that, if anything, the days of $0.99 paid apps on the App Store were the anomaly, but their death and switch to freemium models does not by any means mean that the days of professional paid apps are over. The Realmac team’s perspective from both the iOS and Mac sides is fascinating, and it’ll be interesting to watch going forward to see what they do with both their lower priced iOS apps and their professional Mac apps that are priced accordingly.

And carefully considered IAPs? We’d love to see what innovative developers can do, building on the example of the likes of Paper and others. It’s an exciting time for apps — and absolutely not a time of doom.