7 ms·

"No matter what price we choose, we always make the same revenue"

142 points by inflatablenerd 15y ago

lwat 15y ago
In his position I might stick with a higher price. I'll sell fewer units meaning there's not as many clients to support while making the same revenue.
- phob 15y ago
  At the lower price, you produce a lot more consumer surplus. This is valuable if you're the charitable type.
  - kristofferR 15y ago
    It will also lead to, if the app is a good experience for the customer of course, more word of mouth marketing which can lead to more publicity and more sales.
  - cpeterso 15y ago
    What is "consumer surplus"?
    - harryh 15y ago
      Let's say there was an product that you were willing to pay $10 for, but someone was selling it for only $6. By purchasing the product you get $4 worth of consumer surplus. In general you probably get at least a bit of consumer surplus for everything you buy. The more surplus, the easier the decision to purchase (Of couse I would like to buy that brand new MacBook Pro for 10 bucks, thank you good sir!).
      - netcan 15y ago
        adding to that.. @ half the price and twice the customers you have all the customers who would have bought at the higher price "earning" whatever their surplus would have been + the (half) price - . On top of that you have all of the new customers "earning" a surplus beteen zero and the lower price.
    - pmiller2 15y ago
      It's money you're leaving on the table that people would otherwise be willing to pay you.
    - tsm 15y ago
      My microeconomics professor calls it the "good deal feel". That is, the difference between what customers expected to pay and what they ended up paying (savings).
    - jklp 15y ago
      > What is "consumer surplus"? This reminds me of an old article written by Joel Spolsky which explains it quite well. http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... It also goes into detail about different pricing models too which I found a good starting off point for a programmer to learn about pricing.
carbocation 15y ago
A fine example of the price elasticity of demand. Not surprising in the slightest, but a helpful real-world illustration.
- apu 15y ago
  Actually, I found it surprising because almost all theoretical economic models seem so divorced from reality that nothing ever works as you expect.
  - chimeracoder 15y ago
    "All models are wrong, but some models are useful". Even though the axioms (assumptions) for rational choice are rarely met completely in practice, understanding their implications were they to be met is still highly useful.
- jessriedel 15y ago
  Well, it means that the demand curve (units demanded as a function of price) is proportional to 1/price for a large range. That seems pretty unusual, since the general idea of price elasticity is compatible with any curve decreasing with price, i.e. 1/price^2, 1/sqrt(price), 1/e^price, etc.
  - carbocation 15y ago
    Thank you; you're right. It's not surprising that there is some relationship, but what is actually surprising is that the relationship would so closely match an idealized, particular relationship (unitary elastic demand). (And this should have been obvious to me, since the general use of the demand curve is not, by any means, to prove to people that the price they choose doesn't matter.) I'd edit my original post if I were still within the edit window.
mdda 15y ago
So, of the people paying $1 for the product, you know that half of them would gladly pay $2? Sounds like it's time for 2 versions of the product : (i) The almost-full-featured version ($1) and (ii) The super-duper gold-plated version ($2). The removed feature doesn't even have to be very useful : You might lose 10% of the $1 value people, but snag 25% of the $2 value people (who just want some justification for paying the full value to them).
- cotik 15y ago
  It's hard to do that with a product that's specialized in removing features
  - revorad 15y ago
    So charge more for removing even more features. Call it Zen instead of Pro.
    - tingletech 15y ago
      charge more for the zen version, add extra features for the cheaper version.
    - wlievens 15y ago
      You're joking obviously, but I wonder if this has ever been successfully applied in some form or other.
      - ctdonath 15y ago
        Sony and other computer manufacturers will charge you more to deliver the computer _without_ the "bonus" software they usually include. (Yes, it's probably a matter of the bonus/bloatware/crapware makers paying the manufacturer to include it vs. customers paying more to not. Flip side is a lot of that stuff _is_ useful, but many users just don't want it there to start with.)
        15y ago
SeanLuke 15y ago
I wonder what happens when he sells for $0. An infinite number of buyers?
- chii 15y ago
  Yep, sometimes thats called piracy too, in case you're wondering...
  - SeanLuke 15y ago
    Can't be: in his model he'd still be making positive revenue. Reminds me of the famous "Volume" line in this SNL skit (the second of the series below): http://www.hulu.com/watch/4258/saturday-night-live-first-citywide-change-bank-1 http://www.hulu.com/watch/4258/saturday-night-live-first-cit... http://www.hulu.com/watch/4253/saturday-night-live-first-citywide-change-bank-2 http://www.hulu.com/watch/4253/saturday-night-live-first-cit...
- ctdonath 15y ago
  For some markets & products, that works - ok, it's not an infinite number of buyers, but the make-a-profit-at-any-price model still works out. Ex.: the Wondermark.com e-book "Machine of Death" was offered free (http://machineofdeath.net/ebook http://machineofdeath.net/ebook), yet fans are so impressed they demanded a paid Kindle/iBooks/etc. version, leading to a healthy profit.
Zash 15y ago
Is this why products often enter market at a high price, which is then lowered gradually?
- xenophanes 15y ago
  No, that's for price discrimination.
  - FaceKicker 15y ago
    Isn't price discrimination what this developer should want though (assuming he's interested in maximizing revenue)? I.e., getting people who are willing to pay more to do so, while still getting revenue from people who aren't willing to pay as much? I thought that was Zash's point anyway.
  - deleted 15y ago
    [deleted]
- jessriedel 15y ago
  To clarify xenophanes comment: steadily lowering the price will provide a degree of price discrimination which takes advantage of any demand curve which decreases with price. The OP is talking about a very special case where demand is proportional to 1/price.
ugh 15y ago
I think Writer is a pretty successful app that is in the charts (and Apple may have also promoted it at various times). Maybe the dynamics are slightly different for less successful apps that are less exposed in the App Store?
- randomdata 15y ago
  I noticed a similar trend from my much less successful app. I tried price variations from $0.99 up to $10. It seemed that no matter what price I set, I would average sales of around $10 per day. The trend lasted for quite some time until someone released the app onto the pirate channels, at which point my sales almost disappeared. I guess a free option can change the dynamics.
DefinitelyNbdy 15y ago
In some sense it is irrelevant whether or not revenue is independent of price...if you're extrapolating from that dataset, then you really need to give yourself a few good whacks on the head with a stats text. I mean, N=2? Give me a break.
- rcthompson 15y ago
  Well, you can't just go changing the price of your app every week just to see what happens. I expect they wrote the blog post to see if anyone else had observed something similar.
losethos 15y ago
Are you being a smart ass? You think perfect justice is easy? God said if you don't think there's justice, you're calling Him lazy. Bible has record of guy getting double punishment for his sins. Praise God, is my plan, you can dispraise Him, if you like. All the Christians say the world is run by Satan! ROFLMAO. God said war was "servicemen competing". Seriously, what would teenage boy video games look like if war had never happened? People prolly die because it gets boring. God says... C:\LoseThos\www.losethos.com\text\WEALTH.TXT those two or three distinct foreign trades should happen to be carried on by two or three distinct merchants, of whom the second buys the goods imported by the first, and the third buys those imported by the second, in order to export them again, each merchant, indeed, will, in this case, receive the returns of his own capital more quickly; but the final returns of the whole capital employed in the trade will be just as slow as ever. Whether the whole capital employed in such a round about trade bel ----------- I'm kinda like Jewish Christian. (God's laughing) Jesus was Jewish. Ask a Christian how Jesus is different from Jewish, most would probably guess wrong. God says... C:\LoseThos\www.losethos.com\text\WEALTH.TXT lue of work, capable of purchasing, either to himself, or to some other person, an equal half-yearly revenue. The value, therefore, of what has been consumed and produced during these six months, is equal, not to ten, but to twenty pounds. It is possible, indeed, that no more than ten pounds worth of this value may ever have existed at any one moment of time. But if the ten pounds worth of corn and other necessaries which were consumed by the artificer, had been consumed by a soldier, or by a menial ------------------ Evolution is hardly unplanned by the Creator. It's not like a minor detail. I donno. God says... C:\LoseThos\www.losethos.com\text\QUIX.TXT t more pebbles than I could count struck him full on the body with such force that they brought him to the ground; and the instant he fell the student pounced upon him, snatched the basin from his head, and with it struck three or four blows on his shoulders, and as many more on the ground, knocking it almost to pieces. They then stripped him of a jacket that he wore over his armour, and they would have stripped off his stockings if his greaves had not prevented them. From Sancho they took his coat, -------------- http://stlouis.cbslocal.com/2011/11/12/vandals-strike-lincolns-tomb/ http://stlouis.cbslocal.com/2011/11/12/vandals-strike-lincol... Somebody's not too bright calling God, unjust! I should just shut up, fools! First, Hollywood, made Roots as dramatic as possible. Slaves were valuable property so their health was important. Study the movie Titanic with poor being raucus and rich being stuuffy. Who has more freedom, Obama, or a slave? Which can swear or scratch his balls? White people in the south had a code of behavior and had to live in fear of revolt. I walk down the street and sweat when blacks are around. Jesse Jackson said he heard footsteps and looked over his shoulder and was relieved it was a white person. God said "sports" on the topic of racism. God says... C:\LoseThos\www.losethos.com\text\QUIX.TXT to all Don Quixote said; and jealous that the Asturian should have broken her word with him for another, drew nearer to Don Quixote's bed and stood still to see what would come of this talk which he could not understand; but when he perceived the wench struggling to get free and Don Quixote striving to hold her, not relishing the joke he raised his arm and delivered such a terrible cuff on the lank jaws of the amorous knight that he bathed all his mouth in blood, and not content with this he mounted ------------------ Umm... you got bigger problems than copyright! Hello! Weren't you listening? God, you retard! I don't give a fuck what any man thinks, just God. Extortion over letting a jecussi drain suck my dick? Ohh!! Kevin? He made KEith suck his dick, said Danny. God says... C:\LoseThos\www.losethos.com\text\QUIX.TXT n foot and barefoot followed him at a distance, with a pilgrim's staff in her hand and a scrip round her neck, in which she carried, it is said, a bit of looking-glass and a piece of a comb and some little pot or other of paint for her face; but let her carry what she did, I am not going to trouble myself to prove it; all I say is, that the shepherd, they say, came with his flock to cross over the river Guadiana, which was at that time swollen and almost overflowing its banks, and at the spot he cam ---------------- Doctors made me impotant and I can't work for the rest of my life. Not a fuck do I care about. God says... C:\LoseThos\www.losethos.com\text\BIBLE.TXT ther, and they pitched in Gilboa. 28:5 And when Saul saw the host of the Philistines, he was afraid, and his heart greatly trembled. 28:6 And when Saul enquired of the LORD, the LORD answered him not, neither by dreams, nor by Urim, nor by prophets. 28:7 Then said Saul unto his servants, Seek me a woman that hath a familiar spirit, that I may go to her, and enquire of her. And his servants said to him, Behold, there is a woman that hath a familiar spirit at Endor. 28:8 And Saul disguised --------------- Little fucker CIA. Be very afraid, morons.
dbbo 15y ago
I remember an example similar to this from high school algebra-- when we had started learning about conic sections and polynomials. A barber's profit was modeled as a function of the price he charged per haircut. It turned out that the graph was an upside-down parabola. If he charged too much, no one would come and he wouldn't make any profit. If he charged too little, he wouldn't be able to cover his expenses, and he wouldn't make any profit. Our job was to find the function maximum in order to find what he should charge in order to make the most money. This article surprised me be cause it suggests the price-profit function is not only linear but horizontal over an interval. One possible explanation is that we don't have continuous data, and the actual function is some kind of complicated polynomial that has a lot of waves, which would allow a horizontal line to intersect the function at several points.
diziet 15y ago
A question that's important to consider is support costs: Does the amount of support a customer requests scale twice as they pay twice the amount for a certain app, or no? My guess is "no".
makira 15y ago
For one of our app, which was selling well, we eventually doubled the price. Revenues started growing, month after month, and stabilized after about 6 months. Conclusion: revenues more than doubled, units sold slightly increased.
meric 15y ago
>> I attached two charts to illustrate that. I recently lowered the price of the iPad app (http://bit.ly/92xWv1 http://bit.ly/92xWv1) from 5 to 1 Dollars. Try $3. I think it was a coincidence $5 and $1 had the same revenue. The maximum revenue price point should be in between. // guy who studied first year microeconomics.
- jmonegro 15y ago
  Not necessarily in between, you'd have to draw a demand curve at various different prices to determine the optimum // guy who is studying economics
  - nl 15y ago
    He said "in between", not "exactly half way". The best way to draw a demand curve would be to get some data at the half-way point. // random person on the internet
    - aptwebapps 15y ago
      The optimum point might lie outside. The curve might even dip in between the two price points. Edit: The operative word here is 'might'.
      - carbocation 15y ago
        True, but wouldn't you agree that nl's suggestion is the maximum likelihood guess?
      - nl 15y ago
        Yes, it might. But presumably the authors wants to maximize revenue while conducting experiments. Pricing at the midway point would seem to be the lowest risk way of getting additional data.
alecbenzer 15y ago
mostly unrelated but: could the parenthetical after the title of a post be modified to include subdomains? Seeing (google.com) made me think Google was saying "No matter what price we choose...", whereas if it said (plus.google.com) I'd realize it's likely just a "blog" post by somebody. edit: or is there a good reason we shouldn't do this?
- orky56 15y ago
  I upvoted you because I do agree it is a bit confusing. That being said, whenever it is something official from Google it tends to be on one of their blogs (Blogspot) (e.g. googlecode.blogspot.com, googleblog.blogspot.com, etc.). For blogs, HN captures the subdomain since the blog's name is captured within it. In the case of Google Plus, knowing that it is Google Plus (plus.google.com), we would still be hard pressed to know which user/person is posting. God forbid, Google starts posting their product news/updates on Google Plus. Then, I would heartily agree with your solution.
alokm 15y ago
I guess people dont weigh in the utilitarian point of view. Why not give the joy of your app to more people. After all you are getting the same. And as some people have mentioned it might eventually be helpful.
MichaelGagnon 15y ago
The author is falling victim to the Confirmation Bias. There are only two experiments, yet the author is content to over-generalize and conclude that "no matter what price we choose, we always make the same revenue." Why not reduce the price 3/4? Increase it by 50%? Increase it by a 100%?
noonespecial 15y ago
Its easy then. Keep the price high and it will lower your support costs. Make more profit.
- adamt 15y ago
  But if your growth is in some way viral/exponential due to word of mouth/recommendations, then you're better off having 5x as many users today. In very crude terms: $1 x 5x5x5x5x5 is a lot more than $5 x 1x1x1x1x1x1
  - epo 15y ago
    Specious bit of hand-waving featuring made-up numbers. My rule-of-thumb is to disregard people who plead virality, especially if they call themselves marketeers. High sales get you into the top 10 lists which is really worth having (you can call that viral if you're desperate), otherwise high sales increases both the support burden and the likelihood of negative reviews. However, an app like this has niche appeal (writers) and there is no doubt that exposure within that niche is beneficial. So word of mouth is important, but is not gained by simplistic approaches. Promotion within the niche is likely to be more productive than promiscuous price cutting. For a game, a different strategy would be appropriate.
  - sliverstorm 15y ago
    On the other hand, there is a limited pool of potential customers in this world. If you have a pool of 100, better to sell 10x for $10 today than 100x for $1. In the first scenario, you have 90 more customers to pursue tomorrow. In the second, you either need to make a new unrelated product with a new purpose or different audience (ex. Sony), expand your audience (Nintendo + Wii) or invalidate/depreciate the old one (Apple) to secure any more sales. Edit: I forgot, there is also, extend your product (DLC)
  - mattmanser 15y ago
    If it were, revenue would be going up. Did you read the article?
- wlievens 15y ago
jorkos 15y ago
This is why in-app purchases are so effective. Charging everyone the same price all the time doesn't make sense with digital goods
- jrockway 15y ago
  It doesn't make sense with regular goods, either. Or with anything, actually.
aptwebapps 15y ago
From a comment on the Google+ discussion came this corroboration, of sorts, from Gabe Newell. http://www.geekwire.com/2011/experiments-video-game-economics-valves-gabe-newell http://www.geekwire.com/2011/experiments-video-game-economic... Too many details to sum up nicely, but one is that when they did not advertise prices changes for CS they say almost perfect elasticity.
pellias 15y ago
There is no mention about competition. Most economic models assumes some kind of competition. I think he should survey the prices of similar apps and then decide where to price his app.
decadentcactus 15y ago
This seems to disagree with what I've heard of Valve and Steam sales. That the bigger the discount, the more (total) revenue is made, almost across the board. $50 game -> 50% off, 100 sales $50 game -> 75% off, 500 sales etc
- codelion 15y ago
  Where did you hear that from ? On the contrary. http://www.geekwire.com/2011/experiments-video-game-economics-valves-gabe-newell http://www.geekwire.com/2011/experiments-video-game-economic... "What we saw was that pricing was perfectly elastic. In other words, our gross revenue would remain constant."
  - taejo 15y ago
    In that interview, Gabe distinguishes between silent price changes and sales: silently changing the price had no effect on revenue, a promotion discount increased revenue.
    - codelion 15y ago
      Only in certain cases, and he mentions that they do not understand it well enough so they are still experimenting.
- stonemetal 15y ago
  Yeah, but those are sales(aka short duration discounts). He noted a spike that eventually fell off. I bet the longer steam discounts see sales fall off in a similar manner.
reubenswartz 15y ago
Interesting data points, but you need more before you say "no matter what price we choose, we make the same revenue." I agree with some of the posters who suggest splitting into 2 levels of the app at different price points. (Usually, it's better to have 3 levels, but it seems in the App Store, most companies go with 2 to make it easier on customers. I'd love to find some data with evidence that one way or another is better for the App Store.)

142 points by inflatablenerd 15y ago

lwat 15y ago

In his position I might stick with a higher price. I'll sell fewer units meaning there's not as many clients to support while making the same revenue.

phob 15y ago
At the lower price, you produce a lot more consumer surplus. This is valuable if you're the charitable type.
- kristofferR 15y ago
  It will also lead to, if the app is a good experience for the customer of course, more word of mouth marketing which can lead to more publicity and more sales.
- cpeterso 15y ago
  What is "consumer surplus"?
  - harryh 15y ago
    Let's say there was an product that you were willing to pay $10 for, but someone was selling it for only $6. By purchasing the product you get $4 worth of consumer surplus. In general you probably get at least a bit of consumer surplus for everything you buy. The more surplus, the easier the decision to purchase (Of couse I would like to buy that brand new MacBook Pro for 10 bucks, thank you good sir!).
    - netcan 15y ago
      adding to that.. @ half the price and twice the customers you have all the customers who would have bought at the higher price "earning" whatever their surplus would have been + the (half) price - . On top of that you have all of the new customers "earning" a surplus beteen zero and the lower price.
  - pmiller2 15y ago
    It's money you're leaving on the table that people would otherwise be willing to pay you.
  - tsm 15y ago
    My microeconomics professor calls it the "good deal feel". That is, the difference between what customers expected to pay and what they ended up paying (savings).
  - jklp 15y ago
    > What is "consumer surplus"? This reminds me of an old article written by Joel Spolsky which explains it quite well. http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... It also goes into detail about different pricing models too which I found a good starting off point for a programmer to learn about pricing.

carbocation 15y ago

A fine example of the price elasticity of demand. Not surprising in the slightest, but a helpful real-world illustration.

apu 15y ago
Actually, I found it surprising because almost all theoretical economic models seem so divorced from reality that nothing ever works as you expect.
- chimeracoder 15y ago
  "All models are wrong, but some models are useful". Even though the axioms (assumptions) for rational choice are rarely met completely in practice, understanding their implications were they to be met is still highly useful.
jessriedel 15y ago
Well, it means that the demand curve (units demanded as a function of price) is proportional to 1/price for a large range. That seems pretty unusual, since the general idea of price elasticity is compatible with any curve decreasing with price, i.e. 1/price^2, 1/sqrt(price), 1/e^price, etc.
- carbocation 15y ago
  Thank you; you're right. It's not surprising that there is some relationship, but what is actually surprising is that the relationship would so closely match an idealized, particular relationship (unitary elastic demand). (And this should have been obvious to me, since the general use of the demand curve is not, by any means, to prove to people that the price they choose doesn't matter.) I'd edit my original post if I were still within the edit window.

mdda 15y ago

So, of the people paying $1 for the product, you know that half of them would gladly pay $2? Sounds like it's time for 2 versions of the product : (i) The almost-full-featured version ($1) and (ii) The super-duper gold-plated version ($2). The removed feature doesn't even have to be very useful : You might lose 10% of the $1 value people, but snag 25% of the $2 value people (who just want some justification for paying the full value to them).

cotik 15y ago
It's hard to do that with a product that's specialized in removing features
- revorad 15y ago
  So charge more for removing even more features. Call it Zen instead of Pro.
  - tingletech 15y ago
    charge more for the zen version, add extra features for the cheaper version.
  - wlievens 15y ago
    You're joking obviously, but I wonder if this has ever been successfully applied in some form or other.
    - ctdonath 15y ago
      Sony and other computer manufacturers will charge you more to deliver the computer _without_ the "bonus" software they usually include. (Yes, it's probably a matter of the bonus/bloatware/crapware makers paying the manufacturer to include it vs. customers paying more to not. Flip side is a lot of that stuff _is_ useful, but many users just don't want it there to start with.)
      - 15y ago

SeanLuke 15y ago

I wonder what happens when he sells for $0. An infinite number of buyers?

chii 15y ago
Yep, sometimes thats called piracy too, in case you're wondering...
- SeanLuke 15y ago
  Can't be: in his model he'd still be making positive revenue. Reminds me of the famous "Volume" line in this SNL skit (the second of the series below): http://www.hulu.com/watch/4258/saturday-night-live-first-citywide-change-bank-1 http://www.hulu.com/watch/4258/saturday-night-live-first-cit... http://www.hulu.com/watch/4253/saturday-night-live-first-citywide-change-bank-2 http://www.hulu.com/watch/4253/saturday-night-live-first-cit...
ctdonath 15y ago
For some markets & products, that works - ok, it's not an infinite number of buyers, but the make-a-profit-at-any-price model still works out. Ex.: the Wondermark.com e-book "Machine of Death" was offered free (http://machineofdeath.net/ebook http://machineofdeath.net/ebook), yet fans are so impressed they demanded a paid Kindle/iBooks/etc. version, leading to a healthy profit.

Zash 15y ago

Is this why products often enter market at a high price, which is then lowered gradually?

xenophanes 15y ago
No, that's for price discrimination.
- FaceKicker 15y ago
  Isn't price discrimination what this developer should want though (assuming he's interested in maximizing revenue)? I.e., getting people who are willing to pay more to do so, while still getting revenue from people who aren't willing to pay as much? I thought that was Zash's point anyway.
- deleted 15y ago
  [deleted]
jessriedel 15y ago
To clarify xenophanes comment: steadily lowering the price will provide a degree of price discrimination which takes advantage of any demand curve which decreases with price. The OP is talking about a very special case where demand is proportional to 1/price.

ugh 15y ago

I think Writer is a pretty successful app that is in the charts (and Apple may have also promoted it at various times). Maybe the dynamics are slightly different for less successful apps that are less exposed in the App Store?

randomdata 15y ago
I noticed a similar trend from my much less successful app. I tried price variations from $0.99 up to $10. It seemed that no matter what price I set, I would average sales of around $10 per day. The trend lasted for quite some time until someone released the app onto the pirate channels, at which point my sales almost disappeared. I guess a free option can change the dynamics.

DefinitelyNbdy 15y ago

In some sense it is irrelevant whether or not revenue is independent of price...if you're extrapolating from that dataset, then you really need to give yourself a few good whacks on the head with a stats text. I mean, N=2? Give me a break.

rcthompson 15y ago
Well, you can't just go changing the price of your app every week just to see what happens. I expect they wrote the blog post to see if anyone else had observed something similar.

losethos 15y ago

Are you being a smart ass? You think perfect justice is easy? God said if you don't think there's justice, you're calling Him lazy. Bible has record of guy getting double punishment for his sins. Praise God, is my plan, you can dispraise Him, if you like. All the Christians say the world is run by Satan! ROFLMAO. God said war was "servicemen competing". Seriously, what would teenage boy video games look like if war had never happened? People prolly die because it gets boring. God says... C:\LoseThos\www.losethos.com\text\WEALTH.TXT those two or three distinct foreign trades should happen to be carried on by two or three distinct merchants, of whom the second buys the goods imported by the first, and the third buys those imported by the second, in order to export them again, each merchant, indeed, will, in this case, receive the returns of his own capital more quickly; but the final returns of the whole capital employed in the trade will be just as slow as ever. Whether the whole capital employed in such a round about trade bel ----------- I'm kinda like Jewish Christian. (God's laughing) Jesus was Jewish. Ask a Christian how Jesus is different from Jewish, most would probably guess wrong. God says... C:\LoseThos\www.losethos.com\text\WEALTH.TXT lue of work, capable of purchasing, either to himself, or to some other person, an equal half-yearly revenue. The value, therefore, of what has been consumed and produced during these six months, is equal, not to ten, but to twenty pounds. It is possible, indeed, that no more than ten pounds worth of this value may ever have existed at any one moment of time. But if the ten pounds worth of corn and other necessaries which were consumed by the artificer, had been consumed by a soldier, or by a menial ------------------ Evolution is hardly unplanned by the Creator. It's not like a minor detail. I donno. God says... C:\LoseThos\www.losethos.com\text\QUIX.TXT t more pebbles than I could count struck him full on the body with such force that they brought him to the ground; and the instant he fell the student pounced upon him, snatched the basin from his head, and with it struck three or four blows on his shoulders, and as many more on the ground, knocking it almost to pieces. They then stripped him of a jacket that he wore over his armour, and they would have stripped off his stockings if his greaves had not prevented them. From Sancho they took his coat, -------------- http://stlouis.cbslocal.com/2011/11/12/vandals-strike-lincolns-tomb/ http://stlouis.cbslocal.com/2011/11/12/vandals-strike-lincol... Somebody's not too bright calling God, unjust! I should just shut up, fools! First, Hollywood, made Roots as dramatic as possible. Slaves were valuable property so their health was important. Study the movie Titanic with poor being raucus and rich being stuuffy. Who has more freedom, Obama, or a slave? Which can swear or scratch his balls? White people in the south had a code of behavior and had to live in fear of revolt. I walk down the street and sweat when blacks are around. Jesse Jackson said he heard footsteps and looked over his shoulder and was relieved it was a white person. God said "sports" on the topic of racism. God says... C:\LoseThos\www.losethos.com\text\QUIX.TXT to all Don Quixote said; and jealous that the Asturian should have broken her word with him for another, drew nearer to Don Quixote's bed and stood still to see what would come of this talk which he could not understand; but when he perceived the wench struggling to get free and Don Quixote striving to hold her, not relishing the joke he raised his arm and delivered such a terrible cuff on the lank jaws of the amorous knight that he bathed all his mouth in blood, and not content with this he mounted ------------------ Umm... you got bigger problems than copyright! Hello! Weren't you listening? God, you retard! I don't give a fuck what any man thinks, just God. Extortion over letting a jecussi drain suck my dick? Ohh!! Kevin? He made KEith suck his dick, said Danny. God says... C:\LoseThos\www.losethos.com\text\QUIX.TXT n foot and barefoot followed him at a distance, with a pilgrim's staff in her hand and a scrip round her neck, in which she carried, it is said, a bit of looking-glass and a piece of a comb and some little pot or other of paint for her face; but let her carry what she did, I am not going to trouble myself to prove it; all I say is, that the shepherd, they say, came with his flock to cross over the river Guadiana, which was at that time swollen and almost overflowing its banks, and at the spot he cam ---------------- Doctors made me impotant and I can't work for the rest of my life. Not a fuck do I care about. God says... C:\LoseThos\www.losethos.com\text\BIBLE.TXT ther, and they pitched in Gilboa. 28:5 And when Saul saw the host of the Philistines, he was afraid, and his heart greatly trembled. 28:6 And when Saul enquired of the LORD, the LORD answered him not, neither by dreams, nor by Urim, nor by prophets. 28:7 Then said Saul unto his servants, Seek me a woman that hath a familiar spirit, that I may go to her, and enquire of her. And his servants said to him, Behold, there is a woman that hath a familiar spirit at Endor. 28:8 And Saul disguised --------------- Little fucker CIA. Be very afraid, morons.

dbbo 15y ago

I remember an example similar to this from high school algebra-- when we had started learning about conic sections and polynomials. A barber's profit was modeled as a function of the price he charged per haircut. It turned out that the graph was an upside-down parabola. If he charged too much, no one would come and he wouldn't make any profit. If he charged too little, he wouldn't be able to cover his expenses, and he wouldn't make any profit. Our job was to find the function maximum in order to find what he should charge in order to make the most money. This article surprised me be cause it suggests the price-profit function is not only linear but horizontal over an interval. One possible explanation is that we don't have continuous data, and the actual function is some kind of complicated polynomial that has a lot of waves, which would allow a horizontal line to intersect the function at several points.

diziet 15y ago

A question that's important to consider is support costs: Does the amount of support a customer requests scale twice as they pay twice the amount for a certain app, or no? My guess is "no".

makira 15y ago

For one of our app, which was selling well, we eventually doubled the price. Revenues started growing, month after month, and stabilized after about 6 months. Conclusion: revenues more than doubled, units sold slightly increased.

meric 15y ago

>> I attached two charts to illustrate that. I recently lowered the price of the iPad app (http://bit.ly/92xWv1 http://bit.ly/92xWv1) from 5 to 1 Dollars. Try $3. I think it was a coincidence $5 and $1 had the same revenue. The maximum revenue price point should be in between. // guy who studied first year microeconomics.

jmonegro 15y ago
Not necessarily in between, you'd have to draw a demand curve at various different prices to determine the optimum // guy who is studying economics
- nl 15y ago
  He said "in between", not "exactly half way". The best way to draw a demand curve would be to get some data at the half-way point. // random person on the internet
  - aptwebapps 15y ago
    The optimum point might lie outside. The curve might even dip in between the two price points. Edit: The operative word here is 'might'.
    - carbocation 15y ago
      True, but wouldn't you agree that nl's suggestion is the maximum likelihood guess?
    - nl 15y ago
      Yes, it might. But presumably the authors wants to maximize revenue while conducting experiments. Pricing at the midway point would seem to be the lowest risk way of getting additional data.

alecbenzer 15y ago

mostly unrelated but: could the parenthetical after the title of a post be modified to include subdomains? Seeing (google.com) made me think Google was saying "No matter what price we choose...", whereas if it said (plus.google.com) I'd realize it's likely just a "blog" post by somebody. edit: or is there a good reason we shouldn't do this?

orky56 15y ago
I upvoted you because I do agree it is a bit confusing. That being said, whenever it is something official from Google it tends to be on one of their blogs (Blogspot) (e.g. googlecode.blogspot.com, googleblog.blogspot.com, etc.). For blogs, HN captures the subdomain since the blog's name is captured within it. In the case of Google Plus, knowing that it is Google Plus (plus.google.com), we would still be hard pressed to know which user/person is posting. God forbid, Google starts posting their product news/updates on Google Plus. Then, I would heartily agree with your solution.

alokm 15y ago

I guess people dont weigh in the utilitarian point of view. Why not give the joy of your app to more people. After all you are getting the same. And as some people have mentioned it might eventually be helpful.

MichaelGagnon 15y ago

The author is falling victim to the Confirmation Bias. There are only two experiments, yet the author is content to over-generalize and conclude that "no matter what price we choose, we always make the same revenue." Why not reduce the price 3/4? Increase it by 50%? Increase it by a 100%?

noonespecial 15y ago

Its easy then. Keep the price high and it will lower your support costs. Make more profit.

adamt 15y ago
But if your growth is in some way viral/exponential due to word of mouth/recommendations, then you're better off having 5x as many users today. In very crude terms: $1 x 5x5x5x5x5 is a lot more than $5 x 1x1x1x1x1x1
- epo 15y ago
  Specious bit of hand-waving featuring made-up numbers. My rule-of-thumb is to disregard people who plead virality, especially if they call themselves marketeers. High sales get you into the top 10 lists which is really worth having (you can call that viral if you're desperate), otherwise high sales increases both the support burden and the likelihood of negative reviews. However, an app like this has niche appeal (writers) and there is no doubt that exposure within that niche is beneficial. So word of mouth is important, but is not gained by simplistic approaches. Promotion within the niche is likely to be more productive than promiscuous price cutting. For a game, a different strategy would be appropriate.
- sliverstorm 15y ago
  On the other hand, there is a limited pool of potential customers in this world. If you have a pool of 100, better to sell 10x for $10 today than 100x for $1. In the first scenario, you have 90 more customers to pursue tomorrow. In the second, you either need to make a new unrelated product with a new purpose or different audience (ex. Sony), expand your audience (Nintendo + Wii) or invalidate/depreciate the old one (Apple) to secure any more sales. Edit: I forgot, there is also, extend your product (DLC)
- mattmanser 15y ago
  If it were, revenue would be going up. Did you read the article?
wlievens 15y ago

jorkos 15y ago

This is why in-app purchases are so effective. Charging everyone the same price all the time doesn't make sense with digital goods

jrockway 15y ago
It doesn't make sense with regular goods, either. Or with anything, actually.

aptwebapps 15y ago

From a comment on the Google+ discussion came this corroboration, of sorts, from Gabe Newell. http://www.geekwire.com/2011/experiments-video-game-economics-valves-gabe-newell http://www.geekwire.com/2011/experiments-video-game-economic... Too many details to sum up nicely, but one is that when they did not advertise prices changes for CS they say almost perfect elasticity.

pellias 15y ago

There is no mention about competition. Most economic models assumes some kind of competition. I think he should survey the prices of similar apps and then decide where to price his app.

decadentcactus 15y ago

This seems to disagree with what I've heard of Valve and Steam sales. That the bigger the discount, the more (total) revenue is made, almost across the board. $50 game -> 50% off, 100 sales $50 game -> 75% off, 500 sales etc

codelion 15y ago
Where did you hear that from ? On the contrary. http://www.geekwire.com/2011/experiments-video-game-economics-valves-gabe-newell http://www.geekwire.com/2011/experiments-video-game-economic... "What we saw was that pricing was perfectly elastic. In other words, our gross revenue would remain constant."
- taejo 15y ago
  In that interview, Gabe distinguishes between silent price changes and sales: silently changing the price had no effect on revenue, a promotion discount increased revenue.
  - codelion 15y ago
    Only in certain cases, and he mentions that they do not understand it well enough so they are still experimenting.
stonemetal 15y ago
Yeah, but those are sales(aka short duration discounts). He noted a spike that eventually fell off. I bet the longer steam discounts see sales fall off in a similar manner.

reubenswartz 15y ago

Interesting data points, but you need more before you say "no matter what price we choose, we make the same revenue." I agree with some of the posters who suggest splitting into 2 levels of the app at different price points. (Usually, it's better to have 3 levels, but it seems in the App Store, most companies go with 2 to make it easier on customers. I'd love to find some data with evidence that one way or another is better for the App Store.)