Dan Wineman answers a whine about the “high price” of the iA Writer app - a laughable $20:
You can’t compare the price of Pages with that of iA Writer directly, because the two pricing strategies have vastly different goals. Information Architects (the company that makes Writer) is trying to profit from the sale of software. Apple, however, is trying to profit from the sale of hardware. Software is a complement of hardware, and in any market, one of the best ways to make more money is to commoditize your complements.
I am, of course, in full agreement with Dan. But it’s even deeper than hardware - here are some other ways Apple makes money:
- Share of wireless carriers’ plan fees
- Sales of media within the ecosystem, which subsidize all other products
- Sales of the third-party apps themselves.
I mean, if nothing else, consider that Apple gets $6 of that $20 you pay for iA Writer.
Additionally, consider that Apple is an enormous company at the absolute peak of their game, and on a seemingly unstoppable roll. The fact that iCloud will be offered for free indicates just how ready Apple is today to give things out for free if it gains them a wider and more loyal user base.
Consider that given the cash Apple is currently sitting on, they could simply announce that starting today, all their software will be free forever. (My back of the envelope guessculation shows that they’d start feeling the financial heat around 2120. And that’s if they didn’t keep growing, which is currently unimaginable.) Unless the argument is that only gigantic, industry-leading companies should even exist, clearly software prices aren’t directly comparable.
Pricing intangible products sold in (hopefully) high volume is pure black magic. As the seller, you have to assume that you’ll sell, say, 20,000 copies, which multiplied by 20 gives you $400,000, which will pay four good employees for a year, maybe (assuming you have no other expenses.) You could try going for 100,000 copies at $4, but are there 100,000 potential customers for a specialized writing app? Maybe, maybe not!
In conclusion: pay $20 if you think you’ll get $20 of use out of the app. That is the only meaningful criterion to use.