Pragmatic App Pricing
When Big Money comes for podcasting, I’ll be ready.
When Overcast 1.0 launched last year, I expected some pushback for its pricing model (free with limits, $5 to unlock everything). I knew there was a chance I’d be perceived by some indie-development commentators as a rich, popular bully aggressively taking the podcast market from other indie developers.
I decided to proceed with that pricing model anyway, because:
- I wasn’t doing anything they couldn’t do.
- The market was never exclusively “ours” or “theirs” to begin with.
- I knew there would eventually be other free-up-front podcast apps, even if I didn’t do one.
It turned out that nobody complained, and everything’s fine.
In fact, based on rankings, there’s a pretty good chance the top paid-up-front podcast apps — Pocket Casts, Downcast, and PodCruncher — made more money than I did. And all three probably have far more users, each, than Overcast.
This year, with 2.0, I decided, for various reasons, to replace the “free with paid unlock” model with an “everything’s free, pay what you want” model.
And I finally got the pushback I expected last year: Michael Anderson saysthis is “not quite” predatory pricing. Michael’s narrative is dramatic, but untrue. No first-world iOS developer will “starve” if their app doesn’t sell, and I can’t spend years on an app that makes no money.
Similar reasoning as last year guided me on this year’s model:
- I’m not doing anything that other developers can’t do.
- Nobody is entitled to keep their market share, including me. It’s a constant battle to get and keep customers in a crowded market, and I need to ensure that I don’t fall behind.
- My previous headlining features are being implemented by more competitors, and this will only increase over time.
I wasn’t very competitive against Pocket with Instapaper, and Pocket “won” (at least in the sense of having far more users, although if I had to choose either company to be running today, I’d definitely pick Instapaper).
I’m trying not to repeat my mistakes, and one of the biggest mistakes I made was putting short-term gain from paid-app sales above long-term growth. I watched my biggest competitor clone all of my features, raise VC money, and hire a staff. I knew he’d go completely free months before he did. He wasn’t doing anything I couldn’t do, but I wasn’t doing it. I knew I was vastly outgunned, but I just sat back and let it happen.
This time, I’m not too worried about Pocket Casts and Castro. Well, a little — that instinct never fully leaves a person. But even after Pocket Casts ships their silence skipper and volume booster shortly on iOS and Castro 2 comes out with a far nicer UI than I could ever imagine, they have their users, I have mine, and we’ll all be fine. We have much bigger problems than each other.
Podcasts are hot right now. Big Money is coming.
Big Money isn’t going to sell nicely designed, hand-crafted, RSS-backed podcast players for $2.99 or ask you to pay what you want to support them, because that doesn’t make Big Money.
They’re coming with shitty apps and fantastic business deals to dominate the market, lock down this open medium into proprietary “technology”, and build empires of middlemen to control distribution and take a cut of everyone’s revenue.
That’s how you make Big Money. And it usually works.
With those challenges on the horizon, this is the worst time for the indie-podcast world to put up any unnecessary barriers. I don’t know if Overcast stands a chance of preventing the Facebookization of podcasting, but I know I’m increasing the odds if my app is free without restrictions. As long as I can make money some other way, I’m fine.
Predatory pricing is setting the price so low that competitors can’t match it, by making yourself lose money until they all go out of business. It’s usually not illegal, although most people consider it fairly rude (except when VC-funded companies do it and call it “disruption”).
But I don’t need to do that. Patronage works. I may be taking a pay cut for a while, but it’s still very profitable for an individual. As long as I can keep the lights on and the virtual servers running, I’m making enough, and I’m not doing anything that anyone else can’t do.
And this time, as Big Money comes, I’m ready.