Reacting to user complaints about App Store's lack of a try-before-you-buy feature, App Cubby reduced its prices across the board to $0.99 and created a donation page where satisfied users were urged to donate the difference between the $0.99 and the actual value of the software. The company set up a donation page where users could download apps for their phones and set their own price points. Developers were encouraged to submit apps and gain a strong following with the customers. After only a few months, the experiment has been ruled a failure:
"During the week App Cubby ran the experiment, the company received a grand total of $75 in donations. Yes, the sales volume of the company's re-priced offerings did increase, but not enough to offset the lack of donations and increased support responsibilities.
"In a blog post titled "The Experiment," CEO David Barnard lays out the cold, harsh facts about App Store development. It's a lot easier to charge too little on the App Store than you might think.
"In the rush to win the App Store lottery, developers have been pushing their prices to the bottom in order to get noticed and earn a place on the top 100 rankings lists. The problem is that revenues from an underpriced application simply will not let the developer sustain a business over the long term. Even if you can pull in more users to try the app, you aren't generating enough revenue to cover the real costs of doing business."
Read the full article, "App Store Lessons: Set a sustainable price." This is a great example of the kinds of considerations that need to go into a pricing strategy: are you going to fight for market share by cutting prices or are you going to focus on the value of your brand? In this instance, we can see that consumers are fickle with software and apps, especially with all of the open source options available online, and cutting prices to nil will mostly get you nil.
The company has returned to a $10 price point across the board and is offering lite versions so that consumers will still have the opportunity to try before they by, thus developing a middle ground solution that addresses customer concerns and also drives a profit. Cheers to App Cubby for trying creative approaches and for not letting the experiment run for to long. Warmly, EM
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