How an app with 200,000 downloads led to developer homelessness

You know what makes me sick to the stomach? Developers starving themselves to death because of a complete disregard to basic business sense and a misguided sense of righteousness.

5 easy steps to homelessness:

1. Spend years building products for a platform, where $1.99 is a high price.

2. Avoid doing even the most basic mental arithmetic to figure out how many units you need to sell at $1.99 to be able to pay rent.

3. Then set the price to zero, because you're a nice guy.

4. Sell in-app purchases for the super duper high price of $2.99, thus raising your customer's LTV to a magnificent $2.99. But, don't be an asshole. Ask for the upgrade politely and quietly, in the third screen of the settings. Remember, you don't work for $ZNGA!

5. Make it up in volume

"We really want to stick to the ‘free and pay 2.99 to unlock’ model, but if only .5% of users buy our game, we’re going to have to figure something else out. It’s very malleable at this point. Perhaps we’re giving too much away for free, it’s really hard to say until we see more data.”

6. Look a bonus step no.6! If after following steps 1-5 you're still not quite homeless, then it's time for some more data collection. Spend another year or so A/B testing the gradients of your upgrade button. And oh maybe, your upgrade price is too high? Yeah, test that.

Excuse me while I relieve myself of the agony of watching people do this over and over again.

AAAAAAAAAARGHH!!! FOR FUCK'S SAKE, STOP IT!!!!!

Why do developers worship Apple, but absolutely refuse to take the slightest hint from them on how to do business?

Read this - http://www.joelonsoftware.com/articles/StrategyLetterV.html

And repeat after me:

"Commoditize your complements."

"Commoditize your complements."

The app store is the most brilliant and brutal execution of this strategy. Apple is selling $500 phones - the most expensive phones - while simultaneously making developers fall over each other and well, go homeless, to make software for their platform to give away for free.

As if that's not tragic enough, the celebration of the lottery winners has the public and developers believe that making apps is a great business to be in!

patio11 has been trying to drill these things into people's heads for ages. But, all he seems to get is upvotes and not enough people getting his point.

You don't have to suddenly go all Zynga on your users. There's a vast chasm between selling virtual sheep to addicted grandmas and giving away the farm for less than the price of a toilet roll. You can charge a good price, which does not depend on huge scale to pay the rent.

Edited to add: Lest I sound like some smug business know-it-all on a high horse, I've made the same mistakes. Most of us are like this. We need to make a conscious effort to be good at business.

The very first thing I concluded is that, to make a sustainable business, the app has to be seen as a marketing expense and the actual business needs to be somewhere else. Trying to make it with an app alone, especially in a niche market, is not going to happen.

Games are even worse, because, by their very nature, they are a boom/bust industry. You survive in one of two ways as an indie: making incredible games and marketing the crap out of them or making a lot of OK games to flatten the boom/bust curves. It sounds like these guys want to do the former, which is awesome, but they've fallen for what I call "arrogant developer syndrome", which is simply that they believe "If you build it great, they will come and throw money at you." Marketing is as important to product development as writing software. You can build software without marketing, but you won't build a product.

(As a side note related to said app/business, if you are in any way involved in startups [including wanting to start one someday], I'm trying find that actual business. I've got a very short survey that I could use feedback on: http://www.surveymonkey.com/s/F7W9P5P )

In fact, they say normal IAP is exploitative, but the fact is, they can still learn from the technique to make money without violating their ethics. The question they should have asked is "at what point are we crossing the line?"

The accurate title should be 'developers bankrupted by their own incompetence'.

http://appshopper.com/games/gasketball

http://www.appannie.com/app/ios/gasketball/ranking/history/#...

That's a less than ideal launch if you've failed to monetize it properly, but obviously that was nowhere near the cause of homelessness.