Having a hard time paying $.99 for an app?

Maybe I’m alone on this one, but often when I’m browsing the app store on my iPhone I come across pretty spectacular looking apps, (Angry Birds not included…I hate that game). Inevitably though, I often balk at their prices — even the $.99 ones. For some reason I have a hard time rationalizing the purchase price. Why? I mean I can buy a latte at Starbucks for $3.85 that lasts me 10 minutes (of bliss I might add) and not consider the cost implications. But I can’t fork over $.99 for an app I might play for the next 12 months (Angry Birds again)…huh, what kind of sales methodology is that?

The psychology around this has always fascinated me, so I reached out to one of the most successful app development shops out there to pose this very question: Cocoa Box. With their award winning Penultimate handwriting app, I felt they might have some thoughts on the pricing phenomenon. For reference, Penultimate is currently priced at $1.99 but has been as low as $.99 and as high as $3.99.

Their thoughts? Well, part marketing strategy, part product positioning. But what was really interesting was the following:

“The difference between an app and a latte is with the latte you know exactly what you’re getting, and you know it’s worth $3.85. With an app, you might find it incredibly valuable, or you might find it worthless. Hard to know. It doesn’t even necessarily depend on the app itself, just your usage.

“This is also parallel with music industry. $8 feels like a lot of money for an album, sight unseen. If the album is awesome, you’ll get HOURS of use out of it, the flip side is, most of us have spent $8 on some real clunkers that never make it through a full play once.”

Pretty simple, yet effective explanation. The next time you’re trying to justify an app purchase, try thinking back to that last album you bought that wasn’t worth its weight (Jessica Simpson, I’m looking at you). 

Peter Zotto
Peter Zotto
GM

Peter Zotto is the GM at Price Intelligently. Previously he was an analyst at OpenView where he helped to identify qualified investment opportunities.
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