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Doug Nebeker ("Doug")
I'm finishing a small niche app for Windows that scratches an itch for a lot of people, ie. when I Google for "how do I <function>", there's a lot of results on how to do it manually (several long steps, starting with clicking the "Start" button), and it's probably difficult for PC novices to understand. So, there seems to be a market for it, and no software products come up for the Google phrase, indicating an untapped opportunity.
I'm thinking of selling it for either $4.95 or $9.95, but not sure. The lower price may make it look cheap and nasty, so the users might just use the longer manual method. On the other hand, the higher price may convince them it's worth their investment for a solid app to save their time? I doubt it would sell for any higher, ie. $19.95 or more.
Anyway, let's say it sells nicely for $9.95, but later I add more features to it. Currently, it scratches the basic immediate itch, but I know how it can scratch other itches directly related to it. I intend to release updates later to incorporate those scratches, but would people expect free updates, or would they pay (say) $2.95 if they paid $9.95 initially? I don't know how to set the price point for upgrades, or even if I should at all.
Other areas of these forums say to always charge for updates or your product is doomed, so that's the approach I'd like to take.
It depends on things that we don't yet know the answer to.
It can take a long time to develop a customer base if you don't get a lucky break of being a "featured app" somewhere, or decide to be part of a bundle.
Let's say after 2 years working half time on marketing you have 50 customers.
So you've made $500 selling it at $10.
Your upgrade is $2.
10 people upgrade and you earn $20. Of the rest, two post angry remarks that you are nickle and diming them for bugfixes. Your rate of sales goes flat.
Alternatively your upgrade is $0.
40 people upgrade and three post "great customer service" and "developer keeps app updated". Your rate of sales goes up.
This is all hypothetical, but the key here is that if you have a small number of customers, you have an upside of a very tiny amount of money to be gained, and the downside of sabotaging your growth rate.
If on the other hand you have 100,000 customers, and half upgrade, those $2 upgrades are now worth $100,000 and it's at least worth the risk.
Overall I'd say that until you have a substantial customer base consider upgrades as marketing expenses, or premiums for those who were early adopters.
It's also worth considering the Apple route - for small programs don't even allow for upgrade pricing.
SuperWare - Only $4.99
SuperWare Plus - Only $5.99
What happened to SuperWare?
Superware is no longer available for sale.
What is the upgrade pricing from version 1.0 to 2.0?
Unfortunately the App Store does not support upgrade pricing, this is part of why we chose to make SuperWare so very affordable, at only $5.99, the full price is less than the price of upgrading competing products, ones with fewer features.
One might say, hey wait a minute, you just said that customers will complain about a $2 upgrade but not for a $6 upgrade?
Yeah, exactly. The $2 is an upgrade for a small number of features you might not want.
But the $6 is for a brand new program.
Psychologically they feel different to people.
By not allowing upgrade pricing, the App Store allows you to blame Apple.
For in-app purchases, that's a lot of engineering work that doesn't add features that users actually need to do their tasks. Worth the trouble for a small customer base? Probably not.
I wouldn't worry about trying to do a paid upgrade until you have a decent amount of customers, especially at the low price point your are discussing.
Major upgrades are typically around 40% of the new purchase price (e.g. 60% discount).
But make you you leave the option for paid upgrades open. E.g. mention it in your licensing now.
Sunday, September 08, 2013
"if you have a small number of customers, you have an upside of a very tiny amount of money to be gained, and the downside of sabotaging your growth rate."
"I wouldn't worry about trying to do a paid upgrade until you have a decent amount of customers, especially at the low price point your are discussing."
"When you have a product with 10k users you can try and figure out a way to get more money out of them. "
All of the above is true, except increase the number of users until you have a few million in revenue from first time buyers. Until you have exhausted your entire target market, if giving away updates produces any new sales for the full product, you are further ahead. And, no matter what your market penetration is, if your customers have to make a buying decision that is more complicated than vanilla or chocolate, keep the transaction value above $10 (or local equivalent).
It's one thing to give a street vendor $2 for a cold drink, it's a whole different story when you want someone to go through an online checkout for $1.99. What's the smallest denomination of an iTunes gift card? Buying those are much less work than buying software updates online.
"Do your potential customers kn0w that they have this problem and - more important - do they look for solutions?"
Yes, as Google proves.
"You should sell a reasonable number of copies first before you start thinking about updates."
It's always good to plan ahead and think of the big picture, though. That's how I operate: if you fail to plan, you plan to fail, et al.
Well the other quote is "paralysis through analysis". Instead of shipping a product you are worried about some hypothetical future. I totally understand that it is a lot more fun than squashing those last bugs, shipping the product, and trying to acquire customers. It just isn't valuable.
Think about it what is the absolute worst thing that can happen if you don't make this decision until 6 months after you ship version 1? Unless you are doing something like promising lifetime free upgrades, pretty much nothing. About the only thing about future versions that you need to worry about now is having a mechanism to let users know a new version is available. You can worry about the rest after you a success.
It's always good to plan ahead and think of the big picture, though. That's how I operate: if you fail to plan, you plan to fail, et a
"Think about it what is the absolute worst thing that can happen if you don't make this decision until 6 months after you ship version 1? Unless you are doing something like promising lifetime free upgrades, pretty much nothing."
On that note, I offered all my early first-year adopters lifetime updates. Not from the start, but after a few years I contacted them (we are not talking many people) and told them they could have that if they wanted.
None of them accepted the offer. All of them are still customers, and have paid for upgrades.
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