Where are Apple App Store prices heading?
The Apple App Store, famous for its huge popularity and rapid growth, is seeing the prices of its apps rise precipitously, a trend which at least one analyst feels will continue to accelerate.
When the Apple App Store first opened, most of the available apps were simple and most were free or cost just 99 cents. Two billion downloads later, that situation is changing, with more complicated apps available in almost all categories and the prices of those apps rising dramatically. With two billion apps served and prices rising, it seems that both Apple and developers will be making more money, a trend that is expected to continue, according to an SFGate article.
A recent Gartner Group report takes note of the current trends and predicts a future which includes higher prices. In addition, the Yankee Group recently produced an analysis that says one in four downloads will be a paid app that costs on average $2.37 by 2013. In the Gartner Group analysis, Van Baker says “Now we see free trial versions paired with a $4.99 price in the gaming space as a pretty common tier.”
Baker also says, relative to the $99.99 price of the U.S. and Canada TomTom app, “I personally think that the TomTom price is probably too high and they will likely have a challenge moving beyond the early adopter segment at that price.” He believes that a $19.99 price point will become commonplace at the high end, while $1.99 will continue to be the low end. Three middle tiers will emerge, he says: $4.99, $9.99 and $14.99.
Worse, although many of the original apps were priced at 99 cents, consumers now have formed the impression that apps at that price today are cheap, sophomoric, and even dangerous. In the mind of the consumer, apps that cheap in today’s market are too simplistic or may even be carrying malware when installed. Thus, the lower end of the attractive pricing range has moved from 99 cents to $1.99 and many apps are beginning to be priced higher. In addition, a lot of free apps, especially in the game area, are free only for a preview, and will need to upgraded to paid app status in order to really provide a full-featured experience. If these analysts are right, be prepared to find few, if any, good free apps in the future, and to pay a higher price for apps that are considered worthwhile.
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