Sparrow Acquisition and Mobile App Pricing Models

Sparrow

Sparrow, the much loved email client for iOS has been acquihired by Google. Congrats to the Sparrow team. Bad news is there will be no enhancements to the Sparrow app itself. The team will work on other projects at Google.

Sparrow Acquihire Reactions

Reactions from the internet ranged from how Google might have wanted to get Sparrow’s design skill to lend a hand on a Gmail client perhaps, or wanted Sparrow like app for Android and so on.

The reaction that I liked was from Nilay Patel, he talks about how Apple should support In-App subscription pricing models for apps.

An app developer can only charge a one time price BEFORE the user has experienced the app. This price must be low enough not to scare away users, yet high enough to pay for the operations of the business. In the productivity app space, we are seeing more of the former, not the later. (a) I only paid $9.99 for Sparrow years ago and yet it has added a lot of value to my life.

Subscription pricing for apps is an important point and am surprised its not getting much support from iOS developer community.

Popular Mobile App Pricing Models

One-time payment is the second most popular mobile app pricing model. Free is obviously the first approach. The monetization strategy for free apps are i)in-app purchases for additional features ii) Advertisement supported iii) Monetize through a primary app, on say PC or elsewhere, and subsidize mobile app.

Of course am not accounting for apps that are supported by factors other than revenue. Social media apps fall under this bucket, they use our collective attention to determine our interests and use these signals to serve advertisements etc.

Why subscription pricing for mobile apps?

Most pre-iOS mobile platforms were quite lame to build professional apps on. The iOS platform and then Android, and perhaps Windows Phone, changed all that. It is possible to write games on these platforms, leave alone business apps. Most functionality like email clients, games or simple productivity tools, requires minimal server infrastructure to keep running. So its possible to build a decent mobile product by adopting an one-time pricing model for these apps. Start with 0.99 cents to whatever $$ you can charge and be done with it. Assuming the app did sufficient numbers, developers can sustain themselves and perhaps even be profitable.

Some Problems Need Processing Power!

But the one-time pricing model does not always work. Especially if there is a server component that supports the mobile app functionality, and server components are not cheap to build, monitor and maintain. Why bother with a server at all? Well, if you are doing any significant feature that involves large data processing, it has to be done on the server rather than a mobile client. Without a server component you are limited by the kind of problems you can solve. Let me reiterate

This is not about pricing models but about the class of problems you can go after sustainably.

This would be no big deal if the iPad and its Android clones had not been around. With tablets you could do much more but the pricing model constraints are a serious roadblock. AppStore pricing restrictions are artificial constraints on the tablet ecosystem.

Options for Subscription Pricing

And if you want to focus on a purely mobile app then you have few options i) Charge heavily one time, and hope you do enough volumes ii) Adopt in-app purchases for new features, might not fly because of first point, which Nilay has pointed out too iii) iii) Adopt in-app advertising, might not work for non-consumer apps because of volumes iv) Or hope you get VC funding to subsidize the whole thing and look for exit via an acquisition!

Obviously none of the above options are desirable.

Web + Mobile Combo

Before you say anything, I know a web + mobile app combination will let you out of this conundrum, since pricing model on the web-end of the equation can be controlled. Issue here is your development costs just shot up. There are two apps to design, build, test, deploy and maintain for! Let us not even get into whether the product would be relevant on a non-mobile scenario.

With subscription pricing enabled for apps, Apple can truly realize its vision of a post-PC world. Right now, developers need to straddle PC and Post-PC worlds!

Why do I care?

Why am I getting all worked up about Sparrow and in-app pricing models? Well, for CollabLayer, the first product being developed by my startup Tataatsu, we have struggled with this question a lot. While CollabLayer will be on all platforms eventually, we could have gone to market with an iPad app first. But pricing model restrictions force us to build the web-app too, which of course delays everything.

Apple, help us realize your, and our, vision of  a Post-PC world, enable in-app subscription pricing!

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