David Frampton, the creator of the popular iPhone game ‘Chopper’, has an extremely enlightening blog entry about his experiences with App Store pricing and marketing in iTunes.
Frampton on the trend of lowering prices in order to boost sales volume:
But the biggest problem with setting an app price at the lowest possible value is that there is no room to move. Dropping the price may seem a good revenue increase initially, but sales will tail off. Then what can you do? Nothing. You’re selling two copies a day at 99c.
Frampton also points out that the cheaper you price an app, the more likely you are to get negative reviews. While somewhat counter-intuitive, it makes perfect sense. An app priced at $3.99 will by nature attract downloaders with an already strong interest in that program. A free app, however, attracts everyone, and you’ll inevitably end up with reviews from users who had no interest to even download or use your application in the first place.
Lastly, Frampton sums up his experience in the App Store as follows:
The App Store tail is getting fatter. 6 months ago if you weren’t featured, you made nothing. 4 months ago, if you weren’t in the top 100 you made nothing. Now… it’s getting better… I think it will get better still… #500 at >$2.99 is probably making a living. The App Store is still attractive, it’s just getting harder to get noticed. At Roughly # 300, at $4.99, Chopper is making $500US+ a day right now. Thats OK in my book.
Check out the full article over here, it’s well worth a read.