12 Pricing Models for Apps and Getting Paid for your Work
A friend of mine said, “Designers are like the car mechanics of the internet.” When you get your car fixed, you want the work done and done well, but you don’t want it to take long and it shouldn’t be expensive. I mean, you paid thousands for your car, right?
Apps (and software in general) are apparently treated the same way. You’ll drop 1000 bucks on a shiny new iPad Pro (and you should), and maybe 200 more for insurance, and another 150 on accessories, but paying for apps is like pulling teeth.
In the infallible words of Spock, that is most illogical. For you designers, would you dream of selling your best creative work for pennies on the dollar?
Well, it depends on the app…
If we break the app market apart by segment, it consists of Consumer, Professional, and Enterprise apps (in which I’m lumping Education as well). Consumer apps seem to have found a footing, with 95% freemium on iOS, while Enterprise has used ad-hoc distribution and back monetization channels to accommodate their needs.
Until recently though, tablets had a hard time being seen as professional tools. They were intended for consumption over creation. So despite apps like ours being available before the rise of the iPad Pro, professional apps were considered toys and not worthy of the price befitting their development.
That’s frustrating to us. Four years redesigning design from the ground up, to take advantage of the ipad’s inherent enabling capabilities — ones that could allow even the untrained ideator to contribute to the future — and it’s worth pennies. Luckily for us, we’re creative and have too many ideas for how to improve design… and we’re just too stubborn (dogged!) to die as many promising apps have.
The bottom line is: professional software needs pricing that sustains development.
So, while chewing through revenue models like gumballs, we came up with this list and thought we’d share what we’ve considered and — if you’re thinking of making an app — ways you might earn a dime, too.
- Free. If we had all the money in the world and could do this just to be philanthropic, that would be great. But we have ambitions beyond Concepts and they require a (paid) team.
- Freemium (one-time in-app purchase). Our Pro Pack works this way, and people love this option. No recurring strings attached. You can test things out first and see if you like them. It’s easy to attract people so there’s lots of volume, and it’s by far the most popular option with 95% of worldwide revenues coming through this method. But every day you start over with new customers, and we don’t have the profit margins to compete on advertising with the big guys.
- Paid App. Another great option. Traditional. Payment up front. But then you wouldn’t get to try it before you buy it, and we like giving you that flexibility.
- Ad Supported. With enough people, and ads in the right places, for the right things… no, never mind. Yuck.
- Subscription. For a business, there’s no better place to be. But in your eyes, we’re not ready for it yet.
- Marketplace. Handmade goods, bought and sold. As old as time itself. There’s value in helping people solve problems for others, and Concepts is “Designed to Make”. More on this later.
- A-la-carte. Different from Marketplace in that it’s based on specific features or capabilities (not content), and available at low cost to anyone that needs it. That’s a big win for people worldwide that can’t afford or don’t need every feature.
- Hardware (like a Stylus). Apple is doing a great job at this. Go buy one. :)
- Charging for Version Updates (Yearly). There are some business models that — like dinosaurs — eventually go extinct. You just want your software to work, and you want new features more than once a year.
- Multiple Apps. We’d love to build more than one, and eventually we will. But spreading our attention across many eggs doesn’t seem like the best way to build this one, deep, professional app.
- Donations. There’s a good amount of data out there showing this works for lone developers and large encyclopedias, but not growing teams.
- Licensing. Our drawing engine is head and shoulders above anyone else, so theoretically we could license it. Probably for lots of money. But it would require a team to maintain it, and there’s a long, expensive sales cycle that we’re not any good at. Sorry, competitors… ahem, friends.
There’s the breakdown. Which model makes sense — and cents — for your app? How will it help you to sustain and grow it?
What works for us…
We think our Pro Pack (the freemium model) is the best way to dive into Concepts and enjoy its inexpensive-yet-powerful flexibility. And you like it, too — more than 25% of iPad Pro owners who download Concepts purchase the Pro Pack. As we’ve always done, we’ll continue adding value (we’ve got some doozies coming, in addition to the desktop-class Advanced Transforms we just added) and you’ll continue to get the best experience we can make on your increasingly powerful mobile devices.
But for our team to continue growing and giving you what you want, as fast as you want it, we need to branch out a bit. There’s a limit on our planetary design population, but there is no limit to the time we could spend perfecting the app, or the food we’ll eat to do so.
Some are features that only a minority of people want, but they’re important to their workflows and we want to enable that even if it takes months of work (PDF anyone?). Those features will be a-la-carte going forward, so those that want it get the options they need, and we get a return on the effort that goes into building a deep feature.
Then there’s the marketplace with its quality wares and time-saving options. We’re starting with content lovingly made by us — then hopefully someday by you. This is where the Object Library comes in. To make your life easier and your design work faster than it’s ever been. Early results show our revenue up by 30%, that means we can hire another developer onto the team!
We believe everyone should have access to professional design tools, and we’re in this for the long haul. We’re grateful for your love and support, and hopefully, your encouraging reviews. You’re the best!
Ben Merrill, Founder / TopHatch