There’s a vast difference between software you can use for free and apps you pay to use: different customers, different business model, different commitment for developer and user.
When you price your mobile app, for example, it doesn’t really matter whether you make it cost $1 or $2. The majority of people who want your app and are prepared to pay something for it won’t balk at two bucks versus one. But making your app cost anything at all puts up a hurdle much greater than 100 pennies, especially in new markets.
Android Market users have paid for significantly fewer apps than iOS/iTunes Store users. My own numbers confirm this. This isn’t because Android users are inherently freeloaders, it’s because they’re not prepared to buy apps, psychologically and practically.
Amazon is a place where you buy things online. iTunes is a place where you buy things online. Your credit card information is already entered; you’re all set up to go shopping at these destinations. Acquiring a new app, song, movie, game, TV show is a one-click affair.
Google, as a brand, isn’t a place where you buy things online.
This is one of the challenges for the Android Market. Android users don’t already have their credit card information entered into Google Checkout (or is it Wallet), so the difference between downloading a free app versus buying an app is the inconvenience of setting that all up. Since apps are often impulse buys, and typing your credit card information into a form on a touchscreen handset is annoying, it’s easier for an app-buying virgin to pass, or decide to put it off till later… indefinitely. My own wife hasn’t bought my Android app on her phone because she hasn’t gotten around to setting up her Google Checkout account yet. For a year.
That’s why Google’s recent 10 cent app promotion made a ton of sense. Instead of giving apps away for free, the 10-cent price tag gave users incentive and a deadline to get their Google Checkout account set up in order to get the deals. Once a new user breaks the seal and buys an app for the first time, they’re much more likely to buy again.
Starting in 2003 with 99-cent songs, Apple made buying digital content not only easy, but normal. In 2011, that means indie app developers like me can charge a couple bucks for a software application and not price myself out of the market. Back when I was running Lifehacker, we almost never reviewed downloads or webapps if they were not free. Today, I’d do things differently, in large part because of the app store model.
A couple of people have asked why my (simple, small) app costs $2, instead of $1 or free. The answer is pretty simple. I’m charging at all because I can, and I’m charging $2 instead of $1 because for the customer, the difference between those two prices is tiny enough to justify doubling revenue.