App Store Revenue Strategies (Wolfram Alpha & Other Apps)

Anyone visiting recently will have noticed a lack of content since the last article but September’s article seems to have dropped off my blog and I don’t know why. Anyway, I have recovered a poor early draft of the post “Summer Shoots” which can now be seen underneath this article.

There’s a lot of focus on the Apple app store at the moment. Having become a revenue channel / revenue stream in itself, the tech industry as of late has been able to review and assess its progress since the opening of the app store’s doors from July 2008. Wiki states there are currently around 85,000 third party apps within the store, with over 2bn total downloads to date.

One of the issues a company faces, when trying decide where their iPhone app sits within a product revenue strategy, is to try and chart the financial returns and decide what revenue to model to employ. Whether to give away the app to encourage increased contact points, brand awareness or a value-add benefit for the brand, or to just do a straight unit fee charge. This week has started with postings on this topic with a mini debate on a welcome addition to the app store family from Wolfram Alpha.  This is a fantastic application that I am not sure I really know how to use fully but have a sneaking suspicion  that this is going to be an incredibly useful tool for me once I learn how to use it (Note to self, “see if there’s anything on YouTube perhaps?”). Wiki calls it an ‘answer engine‘ but its kind of a data crunching tool that does searches using the parameters that you feed it and comes back with data answers. However, the headline issues relating to their iPhone app launch all centre around the pricing of the application as it hits the app store. I’m sure I saw it last night on my iPhone at £29 (TechCrunch have it as $50. Is that the same as £29?). TechCrunch are not convinced with the current price tag, as anyone who uses the service will know, the app store is not a place for venders to realize full price on their software. It’s the place to go and see what free stuff you can find that might be worth pulling onto your iPhone. Next come the apps that you don’t mind paying a little bit more for. For me, the £1.79 I paid for my little Chirp bird spotting app was bargain of the year. However, as I look though my iPhone apps, aside from the freebees and fun stuff, the only “must have” app on my phone is 1Password. This comes in at £2.99 for the standard version or the big boy app at £4.99. I’m currently debating whether or not to ‘splash out’ by bring over a favourite mind mapping tool of mine that I use on the laptop called MindManager (made by MindJet and weighing in at a hefty $349). The scaled back, stripped back iPhone app version of the product is on my UK iPhone at £4.99.

The MindJet approach above illustrates the typical approach adopted by companies who usually discount (or give away free) a reduced feature set of their product on the app store. Possibly to help introduce their product to a new audience or to consolidate their brand in the market place but either way, the thing about the app store, aside from taking a punt on various frivolous games or utilities, its not the place where you go to get more the more serious and weighty software apps. There’s no reason why it shouldn’t be but at the moment that is not how it is generally used. Sales of this particular app will be keenly watched over the next 12 months. Apple have always maintained that they don’t really make much out of the app store, like its a loss-leader but maybe they are starting to look at taking their app store to the next level. Good luck Wolfram, let’s see what you can do.

As a little aside, how about this article which says that Apple are soon to allow free apps to themselves offer ‘In-app purchases.’ That means you can download an app that itself can bill customers.  Might the likes of Ebay, Skype and PayPal be the first to lead the way here with iPhone billing.

Whilst here talking around iPhone apps and the app store, I was quite excited to learn of a new developers kit that can be downloaded to help you make your own iPhone apps. It comes from a company called Tap Lynx and here’s an article on the product/company.

Anyone there like to comment on their iPhone app ‘buying’ or downloading strategy, are you a freebees only type of person? What are the apps that you don’t mind paying £5 or over for? Has anyone had to configure an app pricing strategy? I’d be interested to hear any thoughts or comments on any of this.

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About Aristos Peters
I work rest and play in the digital space, with particular interest in digital startup companies and their need for seed, angel and VC investment. As a NED, I have worked with several start-ups, taking them through funding rounds and also work on investment acceleration and business growth helping companies to become investment ready. Currently about to launch the startup fundraising app D RISK IT (www.drisk.it).

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