Do you think the price of software is too expensive? Do you think updates to software should always be free? Do you complain when you aren't happy with app pricing?
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I ask these questions because Flexibits recently launched version 2 of their popular calendar app, Fantastical for the Mac. The price of the new version is about three times what version 1 cost and you can imagine how people reacted to the news. Let's just say, many didn't take the news well.
It reminded me of something similar regarding an iOS game called Monument Valley. I'll fill you in on the details momentarily, but it was another case of people being upset with the pricing of an app.
If you don't use a Mac or iOS or just don't care about apps, imagine I'm talking about Adobe and their switch from selling software to selling membership in Adobe Creative Cloud. The changes and reactions are similar to what happened with Fantastical and Monument Valley.
I want to share my initial reaction to both apps as well as my thoughts after I had some time to think more. This may seem like a very unrelated topic, but I think there are some interesting points about about business models, what to charge for your product or service, and managing expectations.
A Tale of Two Apps
Let's start with Fantastical. A few weeks ago I saw the news that version 2 had been released. Like many people using the app I was excited. I enjoy using Fantastical and use it daily. I saw images of the new version, liked the look, and wanted the update.
Unfortunately I thought I was already using Fantastical 2. I am on my iPhone and iPad, but not on my Mac. Thinking I was getting a free update, I checked the Mac app store, but didn't see one.
I thought maybe the announcements had gotten ahead of themselves, but when I went back to read them I realized this was a new app that would require a new purchase. I paid $15 for what I now realized was version 1 and figured there would be a launch day sale on version 2 and it would probably cost $10.
Then I saw the price was $50 (sale price of $40), which is a sizable price increase on what was a $15 app. I thought the new price too much for a calendar app and based on the comments I saw, I wasn't alone.
I had a quick feeling of anger and frustration and I cursed greedy developers under my breath. I went back to reading comments and reviews, cherry picking the ones that felt like I did so I could justify how I was feeling.
Then I went about my day, thinking a little more clearly about Fantastical and it's new price on and off throughout the day.
My experience with Fantastical reminded me about what happened with Monument Valley. I don't remember exactly when the game launched, though I think it was last summer or fall. I do remember the launch itself.
If you haven't seen it, Monument Valley is a game, with a heavy visual influence from M.C. Escher. Imagine moving parts of Escher structures to form new Escher structures that help your character navigate to the next puzzle.
The app is beautiful and sells for $4. The first time I saw a screenshot I wanted it, but I was just about to start my work day. I decided to check on the game later in the day when I assumed I would buy it.
When later arrived and I checked reviews, I found a lot of negative comments. Yes, the game was visually stunning, but it wasn't challenging and within an hour you would probably have finished all the levels.
Some felt like they paid more than they got back based on how much gameplay other iOS games provide at a similar price. The developers promised more levels, but when the levels finally arrived, they were attached to a $2 price tag.
People left 1 star ratings and very negative reviews. That led to a backlash from some Apple bloggers who called all the complainers entitled and cheap.
From the Perspective of the Developers
While I understand the initial anger from customers let's look at this from the side of the developers first. The developers of both apps made a business decision, or rather a number of business decisions.
I can't know with certainty what those decision were as I don't work for either company, however I think I can make some reasonable guesses.
I assume both development teams want to sell to the higher end of the market. They want to sell their apps to people who are more interested in quality than price, people for whom price isn't the main consideration when buying.
As a business owner, I'd much rather sell less of a high margin product than more of a low margin product. Quite honestly you shouldn't be surprised by this strategy from app developers on Apple's platform. It's how Apple operates so why expect different from developers for their ecosystem.
The developers of Fantastical had been selling a mini app that lives in the menu bar on Macs. It accessed Apple's default calendar and in many ways serves as a better interface for Apple's product. This was a $15 mini calendar that was reasonably priced, though still more than I wanted to pay for a calendar.
Flexibits decided to add a full calendar to the mini calendar in the menu bar, and they decided to charge $50 for everything. They made a decision to compete with other calendar apps like BusyCal.
I'm sure they knew some people would be put off by the price increase and calculated that enough people would still buy the app to offset any loss in revenue from those who won't. For every 50 people that purchased version 1, if 15 of them purchase version 2 it'll be a wash in revenue, though with many fewer customers needing support.
This is just a guess, but I have a feeling the developers were also motivated by wanting a full calendar for themselves.
I completely understand the business decisions and likely would have made the same ones if it were me. I do wonder if a large discount, say 50%, would have stemmed some of the criticism. At 50% off the app would cost $25 for existing Fantastical customers. I think the large price increase combined with the smaller discount felt like a slap in the face to some.
I think the developers of Monument Valley made similar business decisions about serving the higher end of the market. True it is a $4 app, but many iOS games are $1.99 or less.
The main draw of the app is the visual treatment. The focus of the developers is on the game's aesthetics and no matter what aesthetic treatment there's a limit on how many levels they can continue to create without additional revenue. They opted to charge for those additional levels.
This isn't anything new. It's the revenue model of arcades. I remember feeding quarters (Yep, quarters — I'm that old) into the machines to play again. Now you'll pay $2 for another set of levels.
My suggestion would be to make the initial app free to get people in and then sell them additional levels over time. perhaps the app could start with more free levels initially to get people hooked on the game before selling more. The developers could have offered more gameplay for the initial price, though they can see their numbers better than I can and they know if they chose the right strategy.
From the Perspective of the Customers
Like I said, I get why customers were upset with both companies. I had a similar initial reaction to both apps as many others.
There's no question a large number of the complaints were from people who do exhibit a strong sense of entitlement. The developers can likely ignore these people as they aren't real customers and they aren't likely to buy from again or at all.
However, not everyone is complaining because they feel entitled. Some people have reasoned arguments for why they're upset with the pricing of both apps.
Let me start with Monument Valley this time. A number of people felt the initial gameplay didn't offer enough for the price. Some to the point of feeling cheated.
It wasn't about the absolute price of $4. That's not a lot of money, but the game offered little challenge and lasted about an hour before you'd finish every level. That seems low based on other games selling on iOS.
A few more hours of gameplay, something that couldn't be finished in a single sitting, would be more in tune with the expectations that have been set by several years of iOS games.
When the developers said more levels were coming, some customers thought that meant they'd be free. I don't think the developers ever promised free levels, but given the timing of their response it seemed to be the indication to some.
When the new levels came with a $2 price tag some complained and complained based on the expectation of free levels and not specifically because of the price. I don't think most of these people had a problem paying $2 for more levels, but not until they felt they received the $4 worth of levels they had already purchased.
For some people this is about value and feeling that the developers of the game didn't provide enough value compared to similar and similarly priced apps.
In the case of Fantastical, a fair amount of the complaints are again from people with a strong sense of entitlement. I didn't see it to the same extent given Fantastical already had a higher price tag, but it was there.
Still some have reasoned arguments. $15 to $50 is a large price increase, especially for an app some people don't use enough to justify the increase.
Keep in mind that version 1 of Fantastical was a menu bar app and not a full calendar app. Its customers are people who are fine using another calendar and using Fantastical as a quick and easy interface to that calendar. Now they're being asked to pay the price of a full calendar app to upgrade their menu bar app.
Again it was the expectation and I'll use myself as an example. Initially I thought I had version 2 and was awaiting a free update. Then I leaned the app was a new app and I'd have to pay for it again. That's broken expectation #1.
I adjusted and figured the price would be inline with the previous price. I thought $10 on sale, but anything up to $20 would have felt perfectly normal. When I saw a price of $50 ($40 on sale) it was broken expectation #2.
Then I thought about what a full calendar app was worth to me and I projected that value onto calendar apps in general. My feeling was the app was overpriced and should have been $20 at most and I found plenty of comments and reviews to agree with me.
I've paid $50 and more for apps before. My negative feelings weren't about the absolute price, but the price in comparison to my expectations about what the price would be.
Again, there are many people who just expect everything for free and unfortunately app developers will get flack from people for charging anything. It's wrong, but it's going to happen.
But there are people expressing genuine disappointment with the pricing not because they're cheap or feel entitled. They don't have a problem buying apps in general, but they do have specific reasons why the particular prices of these apps were too much.
You and I might not agree with their reasons. The developers might not agree with their reasons either, but that doesn't make the reasons any less valid. They're real reasons from real customers for why they won't buy an app.
I have to say I was disappointed in a lot of Apple bloggers for lumping everyone into the entitled group when Monument Valley was being criticized. Their message was if you don't buy the app, you're cheap and entitled and want everything for free. It was similar, though to a much lesser extent, with Fantastical.
I'm also disappointed with anyone who calls the developers of these apps greedy. I'm sure there greedy app developers, but I think the vast majority are people like you and me, good and decent people just trying make a living.
The developers made a business decision to serve a certain market at the exclusion of other markets. That's a tough decision, but one I understand and agree with. It's not any different than firing a client, which I've done a few times over the years.
The decision may turn out to be less than what the developers hope or it may turn out exactly as they hope. Either way it's their right to make either decision.
Value, Expectation, and Price
Forget about the entitled people. They aren't future customers. For the people making reasoned arguments, the specific price isn't the issue. I would never argue that $2 is a lot of money, though that is coming from a first world perspective. In some parts of the world $2 is a lot of money.
Speaking again from a first world perspective I don't think $50 is a lot of money. If it brings back more than $50 of value in return, it's not expensive.
The initial gut feeling comes from the disconnect between the actual price and the expected price. Where Monument Valley is concerned for right or wrong, people expected new levels to be free and they complained when they weren't. Where Fantastical is concerned people expected an app similar in price to the previous version and possibly with a 50% discount.The reality was a $50 full calendar app.
I think a significant amount of the angry reaction would have been lessened had the developers of both apps set better expectations.
Instead of the big one day launch, they could have broken the news slower, over the course of a week say and set the expectation closer to the reality. They would probably still get some initial angry reaction, but there would be no app yet to rate or review poorly and by the time there was, the anger would have subsided.
In the case of Monument Valley the developers could have been clearer that they would charge for new levels. They could have also offered one at least one set of free levels before charging for more.
In the case of Fantastical the developers could have offered a lite version of the app that includes only the menu bar version. They could have charged $20 or even $25 with the full calendar being an in app purchase taking the total price up to $50. Perhaps they did and decided against it, but I think it would have kept most of the existing Fantastical customers who only want the menu bar app.
Then again they know their numbers better than I do and maybe losing some customers in favor of those who aren't put off by the price is the best decision for their business. Maybe ripping the band aide off all once was the better option.
What Did I Buy?
You might be wondering after all this if I purchased either app.
With Monument Valley I asked myself if I would rather have $4 or a game to entertain me for an hour. It's not too hard to find things to entertain me. The hard part is deciding what to choose.
I decided to find something else to entertain me, which wasn't difficult, and to save the $4 for another purchase. I figured I could look at the work of M.C. Escher for an hour and come away with more value for my time. As nice as the game looks, it's still derivative of the original.
I was never a big fan on throwing all those quarters into the arcade either. It always felt like more money than the value I gained in return. I was happy to watch friends play and it didn't cost me anything.
$4 and $2 are hardly expensive. I can guarantee I'll waste more on something this month or week and possibly today. For me the value wasn't there with Monument Valley. It's hard to justify $4 on an hour of gameplay when I could spend that same $4 to rent a two hour movie.
That doesn't make the app or the developers bad in any way, but it does mean the game isn't for me. I suspect many who did buy the game and the levels are happily both. I also suspect many people made the same decision I did.
With Fantastical there was something about the app that made me want it. I've used version 1 daily since buying it and a large part of what I felt was because I wanted version 2, but wasn't expecting a $50 or $40 price tag.
I'm hardly a power user of calendars. I don't have a lot, or really any, meetings and I tend to work off To Do apps like Things as opposed to a calendar.
I purchased Fantastical in the first place because it was a menu bar app. I was fine with Apple's default calendar, but I grew tired of opening and closing it or leaving it open all the time on an older computer. I wanted a menu app and I found one.
I didn't need the new version with the full calendar to do what I wanted. The list of new features looked useful, but useful for someone not named me.
Still, I do use and rely on a calendar for one thing. I use it as an editorial calendar for what I write on this site. I plan the content I'll write for the month and add events to the calendar. I add notes to each so I can see what stage a post is in and see the progress I've made and how much work I have left.
That has value to me. It lets me quickly see the work I've done and have left to do. It saves me time and if it saves even an hour a year, which I'm sure it far exceeds, then it should be worth my hourly rate to me. How is $50 not fair?
I've had Fantastical 1 for a year and a half and paid $15 for it, which works out to $10 a year. I think this is the first time the developers have asked for more money in three years. Assuming it's the same between now and the next version.
- $40 ÷ 3 = $13.33
- $50 ÷ 3 = $16.67
It's hard to argue against the price when I was happy spending $10 a year and would now pay $13.33 a year. It's not as much of an increase for me as it seems.
Even after seeing these yearly numbers, I wasn't sure if the new version offered anything for me besides looking nicer and it was still hard for me to justify the price. I did the sensible thing and downloaded the trial.
Between playing with the trial for a day and reading up on the features of the full calendar, I thought of a better way to set up my editorial calendar using one of the new features, calendar sets, and color coding, which I could have used previously. The color coding helps me better distinguish the stages of each post. My calendar is now quicker and easier to read at a glance.
I also thought why not multiple editorial calendars. In addition to writing here, I write books and guest articles. Why not use a calendar with them too. Then I thought why not create one for client work. I don't expect I'll work to the calendar, but I could probably schedule projects better with one.
Then I thought of an entirely different use. Instead of using a calendar to schedule future work, I could use it to show the work I finished and how I actually spent my time. I can take information from my time tracking app and add new entries to the calendar at the end of the day.
This use of the calendar will enable me to quickly look over a week or month and see where my time goes. It can become part of my weekly productivity reviews.
I bought Fantastical 2 the next morning. I keep thinking of new ways to use it and I don't mind opening and closing the app, especially as it has keystrokes combinations to make it easy.
Closing Thoughts
I understand both sides of this issue. Developers need to earn a living and they make business decisions to improve their businesses. That's irrelevant to their customers, though. Customers don't buy your app because you worked hard on it. They buy it because the perceived value is greater than the price.
With both Fantastical and Monument Valley the decisions made by developers angered a significant amount of customers, but ultimately the developers think their decisions will be best for their business and they have that right. I probably would have made similar decisions in their position.
There are two types of people complaining. One group is made up of people with a strong sense of entitlement who think anything they want should be free. Even a nickel or dime is highway robbery to them.
There's little you can do about these people so don't worry about them. They'll leave poor reviews, but others will leave positive ones for counterbalance. App developers also have the trick of a new point release which will render all reviews to appear as reviews of older versions of the app.
However, the second group consists of real customers who are also expressing anger over the price, but their anger comes from valid reasons. This group is very consistent with their reasoning. Whether you agree with them or not they are worth listening to, because they are paying customers or would be other than the reasons they're giving.
As a customer if you don't see the value then don't buy the app. However, before you make that assumption I'd suggest you think about the value you get and what you're being asked to pay.
$50 is more than $15, but it's hardly a lot of money if that $50 will cover a couple or three years of the app. It's also not much of a business expense. Any business related app that saves you an hour of time is easily with $50 or more.
Developers would do well to [http://kensegall.com/2015/04/apple-the-customers-shoes/set expectations better]. This is what I hope you take away from this post, that setting expectations about price and the value you'll deliver for that price will lead to less angry customers.
If version 1 of your app sells for $15, then a $50 version 2 is going to upset a lot of people. The $15 price of version 1 attracts customers who are willing to pay $15 for an app and it sets expectations about the price of version 2. People will complain if the real price is too far off from their expected price.
If you leave room for interpretation about there being a price on a future update and some people interpret the price will be free, then they'll complain when that price is anything else.
Understand how your customers will react to the unexpected and do what you can to change their expectation so they're more aligned with reality.
There's nothing wrong with making the decision to develop a new app with a larger price tag or to charge for game levels that take time to produce. Just remember that if you do a good job setting expectations for price changes or for charging any price you'll have less unhappy customers who leave angry reviews that convince others not to buy your app.
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