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High-Quality Indie Apps and the iOS App Store

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January 12, 2015

Last week Carlos Ribas published a refreshing take on making it as an indie developer in the App Store:

There’s been a lot of talk about how indie developers can’t make any money on the App Store. It’s been said that being indie is just working extra hours for no pay. That we are better off working a regular job.

Well, I think a lot of us are out there, quietly doing just fine. HoursTracker had its best year ever in 2014, and five years of best ever years before that. If you can solve an important problem in a way that resonates with a sizable group of people, you can find success. There’s always room for a fresh take on an already well-served problem, too.

This is an interesting juxtaposition to the recent 2014 Panic Report, in which the much loved independent studio revealed some dismaying data:

This is the biggest problem we’ve been grappling with all year: we simply don’t make enough money from our iOS apps. We’re building apps that are, if I may say so, world-class and desktop-quality. They are packed with features, they look stunning, we offer excellent support for them, and development is constant. I’m deeply proud of our iOS apps. But… they’re hard to justify working on.

51% of Panic's sales in November 2014 were iOS apps, yet that only converted to 17% of their total revenue that month. Even producing amazing, desktop-quality apps, Panic is not making enough money on the iOS App Store to justify the time they're spending on it.

Ribas' story seems to be at odds with this testimony. According to him, the iOS App Store is still a great place to make money. Maybe Panic just isn't using the right business model, but I think it has mostly to do with the unfortunate race-to-the-bottom pricing culture in the iOS App Store.

Panic made its name producing high caliber Mac applications, and on the Mac they're able to sell those applications at whatever price they see fit. On iOS, Panic sells the same apps, built to the same degree of quality, but they're forced to mark their prices down by huge margins to avoid an uproar.

Ribas makes the argument, which seems to be widely accepted these days, that the best way to make money in this environment is by offering apps for free, then getting people to pay to unlock more advanced features through in-app purchases:

Users prefer to download an app for free, and maybe spend money when they are sure it is worth it to them. As developers, we often bemoan the low prices of apps. We say “Come on! It costs less than a cup of coffee!” But, if we’re being honest, that’s a false comparison. People spend their money on coffee every morning knowing what they are getting. The fact is, people don’t buy unproven goods with no guarantees. It’s not about the price.

I agree with his position here, and it does seem likely that Panic could find a way to get more revenue by adopting this type of model (▼)(▲)I'm not saying this would be a simple change. If Panic switched to a free with in-app purchase business model they would have to do a ton of thinking to determine the proper balance of free versus paid features. That said, I think they could figure it out, and I would be surprised if it didn't make them somewhat more revenue overall., but even if they did I highly doubt it would make enough extra to significantly change their revenue distribution. The most obvious option then is to raise their prices closer to those of their Mac apps, but prices like that are simply not accepted in the iOS App Store, in-app purchase or not.

So how is HoursTracker doing it? Ignoring the fact that HoursTracker is just a one person business (▼)(▲)Jared Sinclair's Unread was a single app supporting a single person as well, but he couldn't make it work either despite a lot of media attention from the tech press on launch and throughout updates., its success comes from the fact that the market it is selling to is an order of magnitude larger than the one Panic is selling to. Professionals trying to edit their web pages or use FTP or SSL from an iPad are simply not a huge market. Tracking hours, while not something that everyone needs to do, is still a significantly broader use case than that of the Panic apps. This leads to a market big enough to compensate for a low price tag through shear volume of sales. HoursTracker is the kind of app built to thrive in the race-to-the-bottom pricing culture of the iOS App Store.

Panic is selling high-quality apps to a niche market in an environment tailored for apps being sold to a mass market, regardless of quality. There's no easy solution to this problem because the problem is with the marketplace, not the apps being sold there. If nothing is able to shift this mentality and make the idea of high priced apps (where high prices are warranted) in the iOS App Store more acceptable, I think the number of developers building high-quality iOS apps targeted at a small market of professionals is going to remain sadly low. We're finally at a point in which iOS devices are powerful enough to run desktop-quality professional apps, but in the time it's taken to get there, the market for such apps has all but disappeared.