The Mac App Store has been a huge boon to Mac software developers, but has an enormous flaw: it needs to allow developers to charge existing customers a discounted price for major upgrades.
Right now developers selling through the Mac App Store face a lose/lose choice: either provide all major upgrades to existing customers for free (thus losing a quarter of our revenue), or create a â€œnewâ€ product for each major version (creating customer confusion) and charge existing customers full price again (creating customer anger). Why The Mac App Store is Nice
This was one of those things I got to talk about with developers a lot back in webOS land. All developers want this. No app store (with any significant audience, that I can findâ€¦) implementation provides it. Why the disconnect?
Behold the three stages of product manager hell:
- Okay, to make this date, what features do we absolutely positively have to have for launch? Upgrades? We can add that later. It waits.
- The SAP geeks say it’ll take eight months to add support to the back end for this. We need to launch in Botswana. It’ll have to wait.
- I know the developers are asking for this, but we seem to be doing pretty well without it. It just doesn’t seem to be a priority right now, not compared to [REDACTED].
Now, throw in a random “oh my god, do you know what this will do to our tax liability and reporting requirements in Lithuania?” and you get some sense of how you end up down this path. I’m sure no software developer has ever had discussions like this about their product, right?
My view on this: I see the developers pain. I see what the expectations users have for this. One of the things I asked for when we implemented coupons (aka promo codes) was the ability for a developer to send out discounts to existing users so they could release “Delicious Monster: TNG” at list and give existing users a code to upgrade at 20% off. Did I get it? (hollow laughter).
If you look at what Apple does (since it doesn’t actually say anything) and guess to their intentions, I’m guessing — based on what they’ve done with Aperture — that their model is moving forward without upgrade discounts. Instead, they’ve cut the cost of the product up front. What used to cost $200 now costs $79. When they release Aperture 4, it’ll cost $79. And Aperture 5 will cost $79. And if a user complains about paying full price for each release, Apple can ask if they’d rather go back Â to paying $200 for the package and getting upgrades for $99. it’s actually a persuasive argument, if your business plan can handle it and you don’t mind getting hit on the head a lot while explaining it.
And so, if you’re building product, that’s what I’d recommend you plan for. No upgrade discounts. Which implies setting your pricing scheme so that you can make a good “cost over the life of product” argument to users, and make sure each release has persuasive upgrade features (I’m looking at you, Adobe CS 5) or users will simply yawn and skip the release.
Honestly, as a user, I can live with that model. And yes, if I think a product is overpriced or the features of a release are not persuasive, I will skip it (he says, as a proud owner of CS 3; neener, Adobe, I spent my money elsewhere — but happily upgraded to Lightroom 4, because it was worth it. hint hint). It’s going to require retraining users who expect discounts. that will be painful. But I think Apple has set this standard, and I think that’s going to be what it is moving forward. I don’t see a persuasive reason for them to change their strategy.
And whether they admit it or not, I bet a lot of product managers for app stores on various platforms have the “if Apple isn’t doing it, why should I?” test for feature requests. And then they go off into a closet and come up with reasons for the powerpoint that don’t sound so, well, reactive and lame.
The Mac App Store has been a great new source of revenue for Delicious Monster â€” weâ€™ve seen almost double total sales of â€œDelicious Library 2â€ through it. And although paying ~â…“ of our gross to Apple is pretty steep, if Appleâ€™s finding new customers who wouldn’t have found us before the Mac App Store,
Of course, if you remember back to the good old daysâ€¦ Not the good old days of selling downloads on your own site, but the REAL good old days, if you could have gotten your software INTO a store like Best Buy, you’d have to pay for physical packaging and distribution, and deal with returns and all of the sales and management of your retail channels — and those channels would suck about 50% of your sale price off on top of it for THEIR margins.
And FWIW, that 30% margin they take is maybe break-even. they certainly aren’t paying for expensive cars in the parking lot with it. App stores aren’t cheap to run. Or so I hear.
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