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Underscore Price Dynamics

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Re: Underscore Price Dynamics

#61

Post by gdubs »

ruswick wrote: post #45
gdubs wrote: post #4

I think one of the main reasons it's so hard for new developers to make money is that -- as has been said so often -- discovery is broken on the App Store. The "new" category basically doesn't exist anymore, and even if it did there are a ton of new apps being released _daily_. For everyone's complaints about Apple's stringent review process, there's a ton of crapware on there, which makes customers really hesitant t…

I disagree. The issue is not exposure to customers, it is the mindset of customers. The market has matured as smartphones have become ubiquitous and free apps have come to dominate the market. Direct sales have simply faded because they are less lucrative at the highest level, and users have re-based their perceptions around that. Even if you could get your paid app to the top of the charts and attain maximum exposur…

Free apps that target massive volume are unquestionably the heavy hitters, but a point I was making was that there can be a value in targeting a niche market with a paid app.

A moderately profitable app can give an independent developer the runway they need to bootstrap and follow up with more mainstream ideas.

Re: Underscore Price Dynamics

#63

Post by tomrod »

pbreit wrote: post #60
spolsky wrote: post #15

The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component. The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Tre…

Zero-marginal cost offerings practically require such a thing.

This is what I thought too. It's a losing proposition for developers that have expensive fixed costs of development.

I think Angry Birds priced it right -- here is a complete product for free, here is an _expanded_ complete product for a buck.

Re: Underscore Price Dynamics

#65

Post by smackfu »

kristianp wrote: post #64

I apologise in advance, but what is the significance of the "Underscore" in the article title?

The podcast he references is by David Smith, who uses _davidsmith as a twitter handle, and then gets called "underscore david smith" on podcasts.

Re: Underscore Price Dynamics

#66

Post by mesozoic »

berzniz wrote: post #43

There is one hack that seems to work. Keeping the app free for its first week on the store. This gets the app in the hands of the right people, the "early adopters". If the app is good, they'll use it and recommended it to friends long after the promotion week is over. People are not afraid to pay when the trial was confirmed as a success by their friend (who is an iPhone genius).

Do you have any case studies of this you can refer us to?

Re: Underscore Price Dynamics

#67

Post by jm3 »

markkanof wrote: post #26
spolsky wrote: post #15

The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component. The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Tre…

Demonstratively, you are right, as you have shown with Stack Overflow and Trello. But, I think it will take a while for developer mindset to adapt to this new idea. While in reality it may be more difficult to execute on the "old-fashioned" model, in concept it seems much easier to approach. I build something, and then people pay me for it, simple. The new model of I build something, give it away for free, and then c…

Agreed, it's completely unintuitive to a lot of software developers. I run a revenue API company for app developers to help them monetize free apps, and in three years, of all the paid app developers I've spoken with, exactly zero have initially believed me that free App Store apps can generate revenue to even approach the revenue they think they'll capture with a for-pay app. They don't realize that the avalanche of free apps is going to crush them like a Mack truck.

Common sense, creator's optimism, and B-school economics all suggest that paid beats free, I get it. But, sh-t's changed. Chris Anderson wrote Free: The Future of a Radical Price five YEARS ago, but I wish more creators and developers on HN took the ideas described there to heart.

Re: Underscore Price Dynamics

#68

Post by wensing »

spolsky wrote: post #15

The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component. The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Tre…

That's an exciting model when it works.

But it's worth warning founders that choosing where to draw the line between free and paid is the life-or-death tricky part, and it's not always obvious.

I wrote a fairly popular article about this: http://wensing.tumblr.com/post/25167979206/the-anatomy-of-pr...

Re: Underscore Price Dynamics

#69

Post by patio11 »

cs702 wrote: post #46
spolsky wrote: post #15

The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component. The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Tre…

Insightful. On the other hand, many self-funded businesses are doing quite well charging for services targeted to non-mass markets -- for example, SmugMug (for professional photographers), FreshBooks (for invoicing & accounting), 37 Signals (for team productivity), etc. Some of these businesses are essentially one-person operations -- e.g., AppointmentReminder.org. I would include FogBugz in this list. "Make somethin…

n.b. I'm honored to be included in that august company, but just to avoid people getting the wrong impression, Appointment Reminder is quite a bit smaller than every product on that list.

With regards to the larger point: there are many, many ways to successfully take money from customers.

If you want to build a business mostly on the $20 to $50 per month low-touch SaaS model, you can do that, quite successfully. (ConstantContact, 37signals, SmugMug, etc)

If you want to build a business which addresses customers with low-to-medium touch sales and costs between $25 and $X,000 per month, you can do that.

If you want to build a business which dogfights for $75k to $250k a year enterprise deals, you can do that. (Welcome to the world of boring enterprise software, where there exists surprisingly little visibility since the relevant people don't blog so often, but it basically makes the world go round.)

If you want to do a hybrid low-touch model in the $20 to $50 space, mid-touch in the $X00 to $X,000 a month space, and high-touch in the Enterprise space, you can do that, too. (Some companies move there after discovering that the mathematics of the low-end model are a bit painful if you happen to hit constraints on e.g. market size.)

Re: Underscore Price Dynamics

#70

Post by patio11 »

ghshephard wrote: post #36
krmmalik wrote: post #31

Earlier quoted context omitted.

Yes, the brand value approach I understand. Thing is, I don't really want to upsell to events and I agree regards consulting not being scalable, but i have a dilemma regards pricing for my course. I guess I need to give it more thought.

You know best - but don't overlook the possibility of in-person training for groups. It's halfway between an event and a training course. I just spent a couple weeks with 7 other people learning about Cisco Routers from a single instructor - Total cost was $7300 each - so, $50K for a two-week class. There's really good money in in-person class training.

True online as well, by the way.

The kicker is that this plays really really well with established companies. Pretend you're hypothetically a Cisco Routers consultancy. Parachuting into a random company and solving their Cisco Routers problems requires a very experienced consultant, both in terms of technical mastery and in terms of soft skills like interfacing well with clients' technical staff, dealing with political problems where you have imperfect background of who the key players/concerns are, and generic client relations.

Presenting about Cisco Routers (after the presentation has been substantially pre-written) and talking about them intelligently in response to audience questions requires a more limited, and far less expensive, skill-set.

This allows operating consultancies to do training offerings using more junior staff than they use for their consulting offerings, but to sell them at rates and quantities pegged to their consulting reputation rather than at the rate/quantity suggested by the person who will be tasked with delivery. And customers will often be quite thrilled, because training existing employees is often far, far cheaper than hiring pre-existing experts on the open market.

(There exist many other ways to do it. Pure-play training companies exist, for example, and there are companies which focus on synchronous online training, asynchronous online training, hybridized models, etc etc.)

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