An Open Letter to Entrepreneurs & Investors about Premium Apps
It’s quite contrarian but I believe that a premium app revenue model can work. It only works, however, if the customer can trust that the App Maker is going to deliver something amazing. This only happens when the App Maker makes truly exceptional products. And not just once (that’s hard enough), but you must do this repeatedly. This is how products become a brand. This is why people pay hundreds of dollars for an Apple product before they’ve seen it or touched it or really even know much about it. They simply trust that it’s going to be amazing. And when Apple delivers on that promise, we call it “good branding.”
This is incredibly difficult to pull off. Only a handful ever really do. A brand like this does not yet exist in the App world but I absolutely believe that it can be done.
How?
First the App Maker must believe that this could be a viable business model and that may be the hardest part. You have to believe that it is possible for customers in the future to pay $5, $10, $25 for a phone or tablet app. That certainly does not exist at any kind of meaningful scale in our current reality. It’s always difficult for any of us to imagine a world that does not exist yet but it is the only path to innovation.
I hope that our future reality includes premium apps. It will be difficult for customers at first because they won’t be used to paying for apps. Once they start to experience what a premium app can be, customers will appreciate them, and that is what is most important. They will essentially be opened up to an entirely new reality and it will be good.
A premium app revenue model will undoubtedly result in better apps and more finely crafted user experiences because it inherently puts the customer first. The customer pays the App Maker a reasonably small amount of money and in exchange the App Maker puts all of its resources towards making the very best product possible. It’s a simple transaction, built on trust (and only successful once trust is established).
It’s a bit old school, I suppose.
I’ve been eyeing a pair of $300 Red Wing boots for years now. I could just as easily buy $30 boots but I trust Red Wing and I’m willing to pay a little (or in this case 10x) more. My grandpa wore Red Wings. I somehow know and trust that I am getting a product of high quality. That’s what we all want right? Highest quality at the lowest price. Unfortunately right now, even the highest quality apps are anywhere from $0-2 dollars.
What’s more, Red Wing does not currently offer a $30 pair of boots with a FedEx logo instead of the Red Wing logo ingrained in the leather as an option.
Once you believe in the business model, the App Maker will have to start executing on it by taking a stab at that first exceptional product. The App Maker will have to invest more time and money than what is typically required to bring an app to App Store reality. Quality is expensive and you have to take a different approach if you are going to make something exceptional.
The App Maker will need to put 100% (or as close as possible) of its company’s precious energy towards making the product exceptional since the ultimate success of the company completely hinges on it.
I don’t want to spend my own time or someone else’s time selling our product to advertisers. Instead I want to focus that time on selling our product directly to the very people who love and use our apps every day. Even one day spent selling ads to companies is a day not spent on directly making the product better. One might argue that advertisers make money and that in turn makes the product better. While I understand and appreciate this as a proven, viable approach, I simply believe it can also be done a different way.
Making a product of extremely high quality can not be done over a weekend but I also don’t believe there is any real secret to it. It just takes time and dedication. It’s a bit like learning to play guitar. Do you want to be decent? Play for a few months. Do you want to be good? Play for a year. Great? 5 years. Legendary? Get back to me in 25 years.
There are dozens of valid reasons why charging a premium price for apps would never, ever work. It is 100% dependent on how well the team can execute and build an exceptional product and do so repeatedly. You must invest more time and money upfront, which is always going to be risky. You have to have a clear vision and a team that is able to focus without distraction on that arduous task of crafting something exceptional. Anyone can do it. Most won’t be willing to invest enough time and energy and will give up.
But if it does work it will change everything and I want to be a part of changing everything.
