A business proposal:

[ArGiEs]

Dave,
I just read a piece by Alex Kak, the the developer of a scheduling app I use, Pocket Informant. In short, he pointed out the in iOS app "economy", there is no more income from volume sales in apps, and that developers are looking for alternative ways to receive income from their apps. There's more to it, but I'll get straight to my point. I propose that you move HanDBase to a subscription-based fee. I myself would gladly pay some sort of yearly subscription fee. I use HB to run my business; it works well, is very crucial, and would be well worth it. Charge enough to, at the least, enable you to to keep the bug fixes, tweaks, updates, support, and significant overhauls flowing at a steady pace. I've seen this coming with desktop software, and there's no reason why HB shouldn't be distributed the same way, in my opinion. What do you think?


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[Brian_Houghton]

Hi Bob,

Thanks for posting this idea! It is definitely true that the economy of developing and selling apps is a tough area to compete and doesn't always come with lots of profit. Internally we have talked about something similar to what Alex has written about and is definitely a model we may seriously consider in the future. I can't say for sure that it will be the direction we go, time will tell on that one. Rest assured we have no plans of going anywhere, however.

[dhaupert]

Hey Bob,

Thanks for your post and especially your continued loyalty as a customer! Read Alex's blog post as well and it's oddly comforting to find us all thinking through the same scenarios. It's something on my mind quite often and it seems to be on a lot of long time developer's minds lately as well.

I read an article about the new VR developer ecosystem already struggling with pricing their way to the bottom before there is even a large enough market to 'make it up in volume' and found it sad- that's a brand new dev ecosystem, one in which users are paying upwards of 1500.00 just to get a system to use it and the developers are feeling pressure when charging 20 dollars for their work. So it's not just a mobile or iOS problem.

Here's my thought on where everything has gone wrong- apps, games, and software in general are not considered a success unless they chart/rank high in sales charts, sell a million copies, etc. Since there are hundreds of millions of phones out there, selling a million or more is definitely possible for mainstream apps and games. It's even possible to have 10M downloads of an app if the app appeals to a wide enough audience. In those cases, charging 99 cents for it makes a lot of sense, as does showing ads, since the volume allows for a big profit even at that small price.

But the vast majority of apps don't appeal to everyone, or even a large percentage of users. They may have a lifetime potential market of tens of thousands of users over many years. These smaller niches just can't be profitable at the 99 cents or ad supported price. But developers feel pressure or just want to follow the rest of the market in pricing their apps the same way and they discover quickly that they will make a better living doing something else entirely, as a result!

The ones that priced their apps in the 5-20.00 range (like HanDBase) found they could make a living and keep a company profitable for a limited number of years despite the fact that they'd never be featured or rank high in the charts enough to be visible to the casual user, just off of word of mouth and some advertising alone. But they eventually hit a saturation point and things stall, as they have for HanDBase after many years of success.

So now developers like Alex and I have to decide whether to:
- Come up with new apps
- taking on contract work
- get a full time job working elsewhere
or
- charging a subscription or upgrade price to their existing user base to keep income coming in so they can continue to improve and invest time into their apps.

I have to admit- I've always resisted the last option because as a customer it just feels wrong when apps charge me a subscription to keep using it. And DDH is too small to handle the logistics of supporting users working with different versions of the app, which makes paid upgrades a challenge. And thus I've been recently forced to explore the top three as ways to keep my home and feed my family!

The model I personally feel best about is one where you can buy the app and continue using it without paying, but to get upgrades you get on a subscription or pay an upgrade fee. That is, if you pay for HanDBase it's yours to continue using as long as the version you purchased runs on your device. And if you want the version with the latest features, you can either purchase it or an upgrade to it, or you can pay a subscription which guarantees you always get the latest. The subscription also gets you cloud syncing as well and generates a (more) steady income for the developers which would be very attractive to many.

The reality is that only a smaller subset of customers would ever pay for the subscription and assuming there aren't many new customers coming to the ecosystem, it's still going to suffer attrition over time, so in essence, this is not a permanent fix to the problem of not enough new customers entering the funnel/ecosystem. It's just kicking the can down the road further.

Would love to hear your thoughts on this (that is, all of you)!

[ArGiEs]

Dave,
Thanks for your reply. I have to admit, that deep down I realize that I'm one of the few few that would actually not mind paying a subscription for your app. Also, other than what I just said before, I can't give you any help at all whatsoever, so I wish you the best and success in your endeavors!


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[mjhanna]

Dave,

I have been in the computer software field for over fifty years, and have encountered this issue continuously. I have no easy solutions, but can share some observations. (Not sure if your more limited iPhone and iPod forum has a wide enough readership, but since it started here I will reply here.)

Most any academic Business Administration or Marketing program will make the point that if a company chooses to market to the mass consumer, they must match the cost of the product to the extremely low price they will be forced to charge. Lowering cost generally means providing much "less" of something: lower quality, fewer features, less functionality, less support, etc. In my opinion the free or 99 cent products focus on providing the easy "low hanging fruit" functionality at low cost to the company. But such products will not provide solutions for the "niche" of customers who want "more" than what these mass market products will provide, whether that is a pair of pants with high quality fabric which fit me, or a truly relational database product with more capabilities than a "flat file" sorting package. The cost is higher for producing and maintaining those "niche" products with "more" for a smaller market, so the price must be higher, but how much higher? Too high and it is priced out of the market, too low and the costs will not be covered.

After basic price comes your issue of a reliable revenue stream. If one "sells" rather than "rents" the product, for the company there must be an expectation that there will be a continuing stream of sales to provide that revenue. That stream gets produced either with continuing new customers, or with ultimate obsolescence which requires it to be constantly replaced. That obsolescence can either be caused by changing fashion/fad or by the product ceasing to function for some reason. (Example- Fully functional software no longer works because the automatically upgraded new operating system requires changes in application software, so the company has to sell either an upgrade or a new application.)

I agree with your recognition, Dave, that subscription provides a revenue stream but can be a temporary fix. However lately many software companies are choosing to no longer "sell" their product, but instead host it on their own server in the "cloud" and require "renting" time on their server to use it. But even the rental price needs to cover the continuing costs of maintenance and customer expectations of upgrades. As you have noted, for the customer the continuing subscription fee is annoying, is subject to price increase at any time, and invariably incurs a significant bother/cost/penalty to change from that subscription to something else. There is an actual disincentive for the company to provide an easy way for a captured customer to move from their rental system to a competitor's system.

But I do not feel it is a coincidence that low income people often are forced to rent rather than buy something of higher value or functionality. That is generally because they could not afford (or are unwilling to pay) a full purchase price. That is a fact of life even though the accumulation of the subscription fees over time will often become more than any reasonable full purchase price. In my opinion the increase in consumer income inequality I have observed just over my lifetime, not only in our country but world wide, has increased the market pressure to offer products for rent rather than to buy, because those lower income customers are an increasing share of the marketplace.

That leads to a recognition of the "law of the excluded middle". I think the "niche" market mentioned above generally is the middle. The high-end customer can afford to purchase an expensive full-featured product, to pay for development of a custom solution, and to hire maintenance of their solution. The "niche" customer recognizes the need to develop and maintain their own solution because they need "more" than the mass market products provide, but cannot afford either the high-end product or maintenance. But as recent news programs have pronounced, the number of people who qualify as middle class (who I think are generally the "niche" customers) has and continues to drastically shrink, which means your market is shrinking.

Final Thoughts
So what to do. I believe if a company wishes to produce a product that is "more" than a mass-market product, they should first not market it to the masses. They should not advertise it as a mass-market "lesser" product by selling in that marketplace. It cannot compete. Second they should not under price it. For example, I think HanDBase probably should cost at least $100 and maybe more to whatever the "niche" market will bear. The fewer the number of expected sales, the more the price needs to be. The company must cover its costs. Next, for a continued revenue stream I believe a company selling a "niche" product also needs to sell or rent some additional product or service which can produce that stream. Either they also sell a popular "lesser" mass market product which will need constant replacement, or also provide some kind of continuing service based on subscription. In general I don't think most companies survive solely on marketing one product to a middle "niche". However, it does seem a few companies do manage to survive if they produce a "niche" product which is uniquely desirable in a big enough "niche" market that those customers will bear the higher price necessary to cover all costs.

Just the musings of an old computer guy,

[ArGiEs]

I clearly remember, back in my Palm Pilot days, paying $30~$50 dollars for apps that in iOS sold/would sell for a third of that price. $100 for HB? Well, I guess so.... People would give me this "What? You *paid* for that app?" When I would tell of a quality app I'd just purchased for $1.99. I've always been a believer in the saying "You get what you pay for" and have applied that to my business purchasing - I found out first hand that using cheap products/tools can wind up costing you two or three times over because of poor results! I'm def in the "niche", so I guess bring on the price adjustment(s)[WINKING FACE]


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[patrickwest]

Folks,

A number of apps I use have switched to releasing new versions as separate apps. For example PDFExpert by Readdle
https://appsto.re/us/nGcwS.i

I purchased it back at version 2 or 3, then as version 4 and next as 5.

If it kept Handbase alive I would have no trouble purchasing a "new" app every year.

[dhaupert]

Folks,

A number of apps I use have switched to releasing new versions as separate apps. For example PDFExpert by Readdle
https://appsto.re/us/nGcwS.i

I purchased it back at version 2 or 3, then as version 4 and next as 5.

If it kept Handbase alive I would have no trouble purchasing a "new" app every year.

Thanks for posting this- along the same subject, I saw an interesting workaround to the lack of support for paid upgrades. Apple has a bundled software option where you can bundle two packages of software together at a discount. So if you have productA and productB, and each were 4.99, you could sell the bundle for 9.99, but offer the bundle to paid users of either productA or productB at a discount. So instead of charging full price to upgraders from v4 to v5 of your app, you could offer the two versions in a bundle with a discounted price. Then users of v4 could buy v5 at a discount and voila- upgrade pricing support!

Thinking about this as a possible solution for releasing a version 5 as a paid upgrade. Still have to create said 'version 5', but just brainstorming ideas right now on how to best do this!

[patrickwest]

It might be time to revisit this topic. Informant5 just shipped using a subscription model.

https://itunes.apple.com/us/app/informa ... 40577?mt=8

================================================
#2) Subscribe
• Full features Access including: Full Calendaring, Tasks, Contacts, Notes with Access to Apple Events and Reminders
• Free Updates
• Connect Bundle (Email Integration, Sync & Weather)
• Choose:
-Monthly: $2.99/Month (30 days)
-Reverts back to Free version after subscription ends
-Quarterly:$6.99/Qtr (90 days)
-Reverts back to Free version after subscription ends
-Year: $24.99/Year (365 days)
-Keep the full app (minus the Connect Bundle) if you cancel your subscription

#3) Prefer to “Own It”?
If you don’t like subscriptions or you just want to own the app: choose the Year subscription and then immediately turn “off” your auto-renew. You will still get 1 year of the Connect Bundle AND you will own the app in FULL Feature mode (minus the Connect Bundle), forever.

==========================

[chungfoulds]

Being a long time user of the old fogey type, I like updates, but don't want constant upgrades catering to every whim as the products would bloat. I too feel a little guilty having paid so little for a product I have used so much. I like to buy a big upgrade as it gives me the choice to refuse and stay with an earlier simpler version. The pinformant model gives me that option as I probably won't use the connected add on. If I did use it I would view the payment as paying for an active service rather than for unspecified upgrades that I might not like anyway.