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Why Apple Wants Higher App Prices

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When it comes to App prices, there’s a fine line for developers to walk. Price to high and you lose out on sales, price to low and you leave money on the table.

For the most part iOS developers set their own app prices, but according to Steve Ackerman, studio director for Somthin’ Else, Apple is playing a role in the pricing of apps.

Before the studio launched Papa Sangre, Apple contacted the company to discuss promoting the app, with a particular interest in the price of the app. Speaking at Edinburgh Interactive, Ackerman told the audience, “They asked us how much we were going to sell it for, and we said maybe ₤1.99. They said ‘you must be joking, this is a premium app, this is worth more than the price of coffee.’”

Somthin’ Else took Apple’s advice and priced the app at ₤3.99, selling around 50,000 copies at this price.

Why is Apple getting involved in app pricing? There are a few reasons Apple wants to keep app prices high.

roll of bills

Apple's motives aren't all financial.

Financial Motives

First off, Apple takes a cut of every app sold, 30% of each app. In the case of Papa Sangre, Apple doubled it’s cut of the profits when the price jumped. The financial incentive is real, but isn’t likely the major reason.

Ecosystem Health

A more likely reason is Apple’s desire to have a thriving app store. When developers don’t earn enough money to support their operations, it becomes difficult to build out the app catalog with games from high-end developers.

Apple obviously has the most data about app sales, which puts Apple in a better spot to suggest pricing.

Future of Gaming

App sales are often discussed as a race to the bottom, with prices dropping and dropping. As developers are able to do more with their games, and deliver higher caliber games, Apple wants to keep prices from crashing.

Why? Aside from the first two reasons mentioned above, Apple has high hopes for gaming apps, and likely views the iPhone, iPad and Apple TV as a new way to game, which cuts out the traditional players. We expect to see a number of iPad apps that launch with iOS 5 that streams wirelessly to your HDTV, with an Apple TV, and Apple wants to keep premium app prices high.

If the iPhone 5 gets a faster processor, it might also support this new game style, which could turn it into your new gaming controller.

Courting Big Names

new super mario bros

Coming to the iPhone?

Apple thinks big. The company could be working to coax new games to the platform from big names such as Nintendo.

While the current head of Nintendo won’t stand for Mario on the iPhone, investors see lost sales as consumers flock to the iPhone and Android and shun dedicated mobile gaming consoles like the Nintendo 3DS.

It’s tough to bring Nintendo apps over when they typically retail for $30 to $35, significantly higher than iPhone and iPad games. It will take a lot of effort to convince consumers it’s better to buy one game instead of eight for the same price.

 

We’ll have to wait and see if this is part of a master plan, or just Apple’s typical control freak mentality spilling over into the app store pricing.

What do you think about higher app prices?

  • Bad news, I like iOS games because they are affordable. (53%, 32 Votes)
  • Good news, As long as the apps are worth it. (47%, 28 Votes)

Total Voters: 60

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Images: Money Roll via AMagill, Mario Bros. via Amazon

Josh Smith is Editor of GottaBeMobile and Notebooks.com. He's always looking for ways to help you get the most of your gear and loves to talk about tech on radio and TV. Josh uses an iOS and Android devices as well as Mac and Windows Computers. Josh Smith on Google+ Email: [email protected]

5 Comments

  1. Anonymous

    08/16/2011 at 3:18 pm

    excellent article

  2. Michael Anderson

    08/16/2011 at 4:16 pm

    Assets cost money, and currently big publishers are eating most of that cost on consoles and then making profits through volume on handhelds.  Even for indies, the game that they sell for ~$20 – 25 on Mac or PC can go no higher than $9.99 on iOS … yet the costs are not significantly different.

  3. Anonymous

    08/17/2011 at 1:03 am

    This is precisely why more and more developers and app lovers are heading toward independent app stores like GiveMeApps. Developers can receive 100% of their download revenue, open their own store fronts, feed their blogs and social media account content straight into their GiveMeApp Storefront, and users have the choice of Free and Paid apps for every platform. Why stand around to be robbed blind when you can receive 100% of your profits? http://www.givemeapps.com

  4. donturner

    08/19/2011 at 7:59 am

    Sorry to be a pedant but please, learn to spell the word ‘too’. First para 2 mistakes. 

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