AppStore Subscriptions

[AngriBuddhist]

Apple just announced a whole new subscription model for the AppStore.

http://daringfireball.net/2016/06/the_new_app_store

Whatever your opinion, this will cause a huge change.

I personally think that most consumers are unwilling to pay a reasonable price for quality software already and that this won’t chase away potential purchases. However, it could possibly convert an amount of them into subscribers, depending on what those 200 different price points are.

This just happened today. I’m not saying that TF should or shouldn’t go the subscription route. These are just my thoughts while I try to digest what it means for me, using Tap Forms as an example.

Tap Forms for iPhone (6S) is something that I use in my personal life. I don’t use it for work all day every day. Tap Forms for iPad, while I love the larger canvas, doesn’t perform well on my Air 1, which is 2 years and 8 months old.

Of course, if I use TF for light personal use, on iPhone only, I wouldn’t ever pay $4.99 a month. Even Apple’s current lowest price of $.99 a month might be too high for my TF usage and it’s current features.

That doesn’t rule out the possibility of me being willing to pay a subscription for TF.

What could be added to TF to justify a higher cost to me? What would it take for me to be willing to pay even $.99 a month? I don’t know. Maybe that will be answered in TF2.

The main question I have when thinking about the AppStore and new subscription model is, are there any monthly price points below $.99? If I can’t be convinced at $.99, is there a $.69 or $.79?

You want to be fair to the developer but also think about what makes sense for yourself financially. Do I want to pay $60 over 5 years for an iPhone app? Will I if I’m convinced of it’s value?

What happens when you unsubscribe? Do you no longer receive updates? Or do you lose all functionality?

Beyond today, will developers be able to fund and make a living off more ambitious pro apps? Or new types of services? Whatever the answers, this will be an interesting next couple of years.

[Brendan]

I think we’ll find more about this when WWDC gets going. For now there are a lot of unanswered questions. I don’t know if the subscription system works by limiting access to the entire app if you’ve unsubscribed or if it’s just that certain features will be limited. I haven’t found out about that yet. If it’s that you subscribe to just using the software and keep paying while you still want to use it, then Apple will probably have some fairly inexpensive price tiers. In that scenario a developer probably doesn’t even need to write very much code or any at all to enable this. It would be something built-in to iOS. If it’s a feature subscription, then I don’t see it as being any different than a recurring in-app purchase. You pay for just those features that you want to keep using. Maybe it reverts back to a form of a Lite version if you don’t keep your subscription active.

Lots of questions, so few answers.

[AngriBuddhist]

Yeah, the Subscription session videos will probably be the most watched of all time. I’m not a developer and I’ll be checking them out.

[Steve Cross]

FWIW, I’m all in favor of app developers being able to make enough to sustain (and improve) apps that I use and like. Having said that, some apps (and categories of apps) will inevitably be worth more to me than others. If Apple sticks with a $0.99 per month minimum, a lot will not make the cut. BTW, that is not meant as a warning. Database and other “full-time” productivity apps can and should be worth at least that much. I’m thinking more of occasional usage utility apps, games, etc.

The announcement isn’t very clear (at least to me anyway), but I hope that it is possible to get annual subscriptions instead of just monthly. To me anyway, the psychology is different. I don’t mind paying an annual fee if I’m sure I’m going to use a service at least several times during the year. OTOH, it annoys me to pay monthly during those times that I may not use the service at all.

For example, I still subscribe to a few dead tree magazines even though I know that not all of the monthly issues are likely to appeal to me — but the overall convenience of not missing the good issues makes it worthwhile.

With software, I think the issues are similar. For better or worse, most of us have grown up with the concept of “purchasing” software for a one time fee (in spite of the near ubiquitous “licensed not sold” verbiage in the fine print). Even though the iOS and Mac OS app stores have confused the issue with their “free re-downloads for life” policies, I think most people can understand (and agree with, perhaps grudgingly) the need to pay upgrade fees for additional functionality.

I think an annual fee / annual upgrade cycle makes a lot of sense for software. NO ONE really likes the idea of “software as a service”. Paying a monthly fee simply to “maintain access” is too similar to paying your cable or cell phone bill. Prices seem to creep up, service gets worse, and there is a strong tendency to get “locked-in” because switching is expensive and/or difficult.

OTOH, most software should be upgraded annually — for security at least. For a lot of reasons, it is impractical to add new features on a monthly basis. End-user learning curve issues alone make it a bad idea. In addition, any really significant new functionality (not to mention security issues) often require a non-trivial architecture change — not something that can be safely done every month. There are good reasons that virtually all significant software products have carefully defined release cycles.

Like I said, I don’t have any idea what Apple is going to allow, but I hope they do permit annual billing. If you happen to be attending WWDC, please suggest it if you can. While it is clearly not as “developer-friendly” (or Apple friendly) as a predictable monthly income, I do feel that annual billing will be much more palatable to end-users and thus more successful overall.

[Steve Cross]

Did a little more research and it appears that Apple will allow you to offer 1 year subscriptions. With that in mind, I would vote for annual billing for the reasons mentioned above. However, it seems as if you can also offer monthly subscriptions at the same time with perhaps a discount for a 12 month commitment.

Good luck with adjusting to the new changes in the app store. It always seems to take a while for Apple to get all the kinks worked out of new systems.

[AngriBuddhist]

I fully believe that the drive to the bottom of App Store prices has helped to re-enforce the notion that non-physical items have little to no value. The financial well being of people who make non-physical items then, of course, is taken into little or no consideration.

I pay subscriptions to Netflix, Hulu, HBO, mobile phone service, electrical service, etc. and when I unsubscribe it’s completely understandable that I have nothing to show for it. I paid for access to something that I value and have now stopped paying.

I have no use for, and therefore ascribe little value to, SaaS such as Office 365 or Adobe Suite but I understand that some do and are willing to pay a subscription fee even though they’ll lose access once they unsubscribe.

I wonder, though, if there’ll be a be way to offer an app as both a purchase and a subscription? I’ll use Tap Forms as an example although I’m unsure whether this would be possible.

Currently, Brendan has TF ($9.99 as of today) and TF Lite in the App Store.

Could there instead be Tap Forms 1 ($19.99) and Tap Forms Subscription ($.99 per month)? On Day 1 they’d both be the same.

TF1 would be usable forever, or until Brendan stopped updating for OS compatible, and only get bug fixes. However, TF Sub would get both bug fixes and new updates/features.

Then at a certain point down the line, Brendan could cease offering TF1, fork off TF Sub ($.99 per month) into TF2 ($19.99) and start again with them both being the same.

There’d be no need for TF Lite as TF Sub can offer one month free. After that “trial” period, the user could continue subscribing, simply stop subscribing and using TF, or stop and purchase TF1 (or 2) because, in it’s current state, it’s good enough for them.

[Brendan]

Those are all good points. I guess we’ll have to wait until next week to find out what Apple can tell us more about subscriptions. I currently pay for Adobe Photoshop CC for $120 USD per year. I think that’s fair for what I get, even though I’m not a graphic artist and don’t use it as much as an artist would. I use it mostly for tweaking icons and making graphics for Tap Forms. But I also use Sketch for that and they’ve just recently announced they’re moving to a subscription model. In fact, they announced that a day before Apple announced their subscription model. But they sell exclusively outside of the Mac App Store. They used to sell in the MAS but they left. I sell both in the MAS and direct. I will have no problems paying an annual subscription fee for Sketch since it’s a really useful app for developers. It’s my go-to app when I need to make an icon.

Paddle.com is the provider I use for direct downloads. They have a Subscription module with a yearly option, but I don’t know how that works as I haven’t investigate it yet. I don’t know if it’s for downloadable content or just for access to the app and all upgrades. I’ll probably have to look into it now though.

Also, I’m close enough with my next upgrade that I don’t want to wait to release it to turn it into a subscription model. But hopefully Apple will have some guidelines on how to migrate an app to a subscription model.

I agree, a yearly option is much more preferable than a monthly option for software. Although strangely enough I find it just fine to pay a monthly fee for Netflix. I guess it’s because you’re not paying for the app, but you’re paying for the content and that’s always updated and changing every month.

Lots to think about.

[AngriBuddhist]

As far as I’ve read, App Store subscriptions can be for 1, 3, 6 or 12 months. I wonder if a dev can have all four for just one app?

[Brendan]

I think you can seamlessly change between them. Not sure if it’s something a developer can decide upon.

[Steve Cross]

AngriB,

I had to laugh/cry at your comment about non-physical items having little to no value. Sadly, it does seem to be true, but I really believe that we, as a society, need to get past that attitude. It seems to me that as automation inevitably is responsible for producing a greater percentage of physical goods, then more and more jobs will have to migrate to service industries of one kind or another.

Not to get all political, but I think we are seeing that already. As more and more manufacturing is either automated or moved over-seas, people have to take lower-paying service industry jobs leaving them less money to buy stuff with in the first place. Personally, I’m very afraid that this vicious cycle will cause our overall economy to shrink.

Which is why I’m glad to see that Apple is at least trying to address the issue of developers being able to make a living wage on an ongoing basis. I hope it works well and doesn’t have too many growing pains.

Sadly, I’m probably in a small minority, but I think that most app pricing is way too low. I’ve been around since the days of 300 baud modems, and many of my favorite and most used applications have been from indy developers. I really want to have a continuing supply of clever, useful (sometimes niche) products to pick from in the future.

Unfortunately, very few of the $0.99 apps are worth even a nickel. And finding the ones that are worth the price is extremely difficult. OTOH, some of the $5 or $10 apps are equal to or better than stuff I willingly paid $40 – $70 for in the case of games (or even hundreds for productivity apps) not too many years ago. It’s crazy.

It infuriates me when people refuse to pay the price of a cup of coffee or a fast-food meal for an application that could be MUCH more useful and long-lasting than a Starbucks or BigMac. Great apps don’t come from nowhere — developers need to be able to make a living wage to be able to continue to create them.

BTW, my reasoning is entirely selfish, but only because I want to have a good selection of indy apps in the future. I’d like to think that I “could” write a good iOS or Mac app, but I’ve never had a sufficiently good/unique idea for one that could stand a chance of not getting lost in the app stores. Besides, I’m retired and fully intend to dedicate my spare time to fun — programming for money is hard work.

[AngriBuddhist]

@Steve

The iPhone app I use the most is called Feedly. It’s an RSS reader that I use for about an hour every day. I bought it about 3 years ago for, I think, $4.99.

That’s currently less than 1/2 a penny a day and it’s still going down by the minute.

I use Apple’s Numbers every few days for less than 5 minutes. I bought it for $9.99, before it was free, and it has brought financial stability to my life and marriage. Indispensable!

We all place value on different things. It’s not always based on what went into a thing but instead what we get out of that thing.

My immediate hope for these App Store changes is simple. In a couple of years everyone has at least 1 app that they value enough to subscribe to and that this slowly starts to change the overall opinion of the value of software.

[Steve Cross]

AngriB,

“We all place value on different things. It’s not always based on what went into a thing but instead what we get out of that thing.”

Fair enough — I didn’t mean to imply otherwise. Life isn’t fair. There is no reason to believe that any particular customer will (or should) place the same value on a product that it took to create the product to begin with. Lots of businesses have failed because they couldn’t produce a product at a price customers were willing to pay. I have no problem with that.

Nope. I was simply expressing my surprise at HOW people value different items/products. It never fails to amaze me when people balk at spending a buck or two (or even five or ten) on a product that will provide hours, weeks or months of entertainment or time-savings. Yet those same people often spend far more money on beverages or meals that have literally a few dollars or less worth of ingredients. I bet the average person spends thousands per year on entertainment and convenience products or services, yet is unable to see the same value in software.

I think a lot of this was caused by the race to the bottom in the iOS app store. Unfortunately, now that the genie is out of the bottle, I’m not sure if we can ever get it back in. I really hope that the new pricing schemes can do something to restore the value/price relationship to something that will make it easier for good developers to have a sustainable business model.

[Brendan]

I think sometimes people more closely scrutinize the purchase of a $0.99 or $2.99 app than they do a $50 app. I think this is because the perceived value of the app vs. the amount of time they’re going to have to spend to learn the app plays a factor in it. If a $0.99 or $2.99 takes a lot of time to learn and use, they think it wasn’t worth their time because it was a cheap app anyway. But even a more complex and more expensive productivity app can be an easier buy for them because they feel they’re getting more value out of it because of the price they paid for it.

Perception goes a long way toward justifying whether or not a price is reasonable, so it’s beneficial to create a compelling narrative around a product.

The above quote is from this interesting article on the psychology of product pricing:

https://www.helpscout.net/blog/pricing-strategies/

I charge more for the Mac app than I do for the iOS apps because there is more value in the Mac app. There are way more features in the Mac app than the iOS apps. I’ve only ever had a few people complain about the price of Tap Forms. I think for good reason. It’s not a “cheap” app and those people who are price sensitive for apps wouldn’t buy it. Those who are willing to pay more for apps see the value and are generally happy with Tap Forms.

This is a really interesting discussion. Keep it up!

[AngriBuddhist]

@Steve

Either I chose the wrong words or you perceived a tone that I didn’t intend. Either way, I agree with everything you’ve said.

When it comes to Feedly, I use it an hour or more a day. It’s a simple app but I get so much value from it that I’d pay a subscription.

On the other hand, it takes about 45 days for me to use the way more complicated app Numbers for a total of an hour. Yet, it also provides me so much value that I’d pay a subscription for it too.

Someone else may get little to no value from either of those apps.

[AngriBuddhist]

Just finished watching the WWDC Introducing Expanded Subscriptions in iTunes Connect session video.
https://developer.apple.com/videos/play/wwdc2016/301/

I had read that the durations for subscriptions could be 1, 3, 6 and 12 months. This video didn’t cover that so I’m assuming that’s still true.

The presentation that did show prices was in U.S. dollars, the lowest being $.99 and steadily increasing by a dollar. From here on out I’ll just round up to the nearest U.S. dollar.

A developer could combine these durations and prices to come up with a variety of subscriptions.

At the $1 subscription
$1/year (12 month subscription)
$2/year (6 month subscription)
$4/year (3 month subscription)
$12/year (1 month subscription)

At the $2 subscription
$2/year (12 month subscription)
$4/year (6 month subscription)
$8/year (3 month subscription)
$24/year (1 month subscription)

At the $3 subscription
$3/year (12 month subscription)
$6/year (6 month subscription)
$12/year (3 month subscription)
$36/year (1 month subscription)

And on and on.

I was originally hoping that Apple would allow subscriptions below $1 as some apps might not justify $12 a year indefinitely. Obviously, though, I hadn’t thought through the implications of the duration options.

Then there’s the ability to offer different prices for the different durations. A developer could set the subscriptions as follows.

$1 every 1 month
$5 every 6 months
$9 every 12 months

Or…

$1 every 3 months
$3 every 12 months

All together, it means that developers can find a reasonable subscription price for their app.

[Brendan]

I saw a tweet today that productivity apps are good candidates for subscriptions, even if the productivity app goes into a read-only mode if the subscription ends.

I still haven’t decided if I would entertain even going down that route. It didn’t seem to be a good move for TextExpander. They got lots of flak for it. I think people will just take a little time to get used to the idea, especially if more apps go that way.

[AngriBuddhist]

Yeah.

I’m not suggesting you go this route. I am, however, interested in what a developer and users of a very cool and useful productivity app think of the whole thing. The fact that there are new possibilities is fascinating.

The first few well known developers who switch their productivity apps to subscriptions will be self selected canaries in the coal mine for all the rest. While, however slight, there’s a chance that just good enough apps (that would gain features over time) could disrupt the more established ones with the right subscription price.

Or, hopefully, it’s just that we get some new cool types of apps. I don’t know if it’s even possible, but, I’ve had an idea for an app/service that, if available, I’d personally pay more than $10 a month for.

Here’s my first App Store Subscription Model prediction.

Marco Arment will make one of the first big splashes with a subscription only app for the total creation, recording, editing and publishing of podcasts. It’ll be his first Mac app and, if iOS 10 doesn’t have the needed changes, he’ll bring it to the iPad once the system is opened up further.

[Author]

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