Sorry but I don't think this is a good case-study about perceived value -- more likely user error and a deceiving app description that states the app costs "a friggin' dollar?"
I'm going to go out on a limb and say that a lot of people will be demanding (and getting) refunds.
Sorry, I don't believe anyone would intentionally buy this game for $299. Sure, a high price can cause a perception of value, but that is ridiculous. I think it's more likely that these people thought it was $2.99.
It's the trick luxury brands have been playing for years. Walk into a Tiffany's store and you see the same silver that was poured to make the jewelry at the department store, but the blue box costs you a 2000% premium.
I've always wanted to go into the luxury goods business for this exact reason. I just never thought there was such a thing as luxury software goods..
The craftsmanship really is superior at Tiffany's though, and they also have a lot of 'not-found-elsewhere' items because of their uniqueness.
I view Tiffany akin to the way I view art, which is to say yes, if you melted it down, it would lose significant value, but you weren't buying it for the raw materials were you?
The real trick is to figure out a way to both charge $350 to the people who are willing to pay $350 for it, while also collecting 99 cents from the people who won't pay more than that. I wonder if a viral $349 off coupon would do the job...
I did something like this with job ads on my main site. I was charging $199 for 30 days, but wanted to get out of the contract with the people who ran the board by stopping new ads. So I put the price up to $499 but I still got a few sales. So I put it up to $899. A day later, I got a sale.. at $899!
Since then, the board has had better traffic so I've stuck with the provider and now charge $249 for 60 days. Seems a good middle point between quantity and money.
The $249 for 60 days is less than your original price of $199 for 30 days ($4.15/day vs $6.63/day). Does that mean that you've in fact seen more success at your lowest price point?
i don't mean to doubt the experiment, but 14 people paid $299 for this game? my understanding is that sales of any app over $5 are quite hard to come by. looking at this game in itunes, it really shows nothing that i imagine would convince someone to pay any more that a few dollars for.
my understanding is that sales of any app over $5 are quite hard to come by
Do you know of any data to back this up? It was my impression too, but thinking critically about it, that impression is founded only on seeing lots of apps competing on price. Eg, it is based on what developers sell apps for, not what $800 phone owning people are willing to spend.
I can cut the price on a set of products for several days and boost the sales of products that are not on sale - while not even selling any of the items that are discounted.
Just the increased awareness combined with the desire to be more luxurious (with a hint of the awesomeness of a $150 vibrator) sells it.
Well, sure. But look at the screenshot of the game. This is clearly a 99c game, and while I can see the perceived value argument working for a sale price of $15, I struggle to believe he made any sales at $299.
It works for the first person who tries it, because of curiosity. People were probably curious about what could possibly make a silly iPhone app worth $299. The joke (and a hilarious one) was on them.
After a few people do this, the app store will be pushed to allow returns, adding headaches for developers.
The first person who tried it did it years ago, remember the I'm Rich app? The app store also already has returns, you get 90 days (which caused a stir as developers get their money sooner than that so it's theoretically possible to owe Apple money at the end of the month).
[+] [-] BRadmin|16 years ago|reply
I'm going to go out on a limb and say that a lot of people will be demanding (and getting) refunds.
[+] [-] makeee|16 years ago|reply
[+] [-] xelfer|16 years ago|reply
[+] [-] unknown|16 years ago|reply
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[+] [-] eob|16 years ago|reply
I've always wanted to go into the luxury goods business for this exact reason. I just never thought there was such a thing as luxury software goods..
[+] [-] ars|16 years ago|reply
There is. That's why educational pricing for software exists (non-luxury), and why Microsoft sells eight different versions of Vista http://en.wikipedia.org/wiki/Windows_Vista_editions and six versions of Windows 7 http://en.wikipedia.org/wiki/Windows_7_editions (I provided the links so you can see a sampling of changes to make a luxury software item.)
That's why both movies and games sell in collectors editions.
The profit on the "plus/premium" editions is far far far more than the extra expense of making them.
This whole science is called http://en.wikipedia.org/wiki/Price_discrimination
And if you are going to sell anything you MUST learn it. (Although maybe not from wikipedia :)
[+] [-] jacquesm|16 years ago|reply
[+] [-] bmelton|16 years ago|reply
I view Tiffany akin to the way I view art, which is to say yes, if you melted it down, it would lose significant value, but you weren't buying it for the raw materials were you?
[+] [-] CoreDumpling|16 years ago|reply
[+] [-] scotty79|16 years ago|reply
[+] [-] petercooper|16 years ago|reply
Since then, the board has had better traffic so I've stuck with the provider and now charge $249 for 60 days. Seems a good middle point between quantity and money.
[+] [-] bombs|16 years ago|reply
The $249 for 60 days is less than your original price of $199 for 30 days ($4.15/day vs $6.63/day). Does that mean that you've in fact seen more success at your lowest price point?
[+] [-] tdm911|16 years ago|reply
itunes link: http://itunes.apple.com/au/app/zits-giggles/id309069413?mt=8
[+] [-] DougBTX|16 years ago|reply
Do you know of any data to back this up? It was my impression too, but thinking critically about it, that impression is founded only on seeing lots of apps competing on price. Eg, it is based on what developers sell apps for, not what $800 phone owning people are willing to spend.
[+] [-] credo|16 years ago|reply
As Jacquesm notes below, remember the $999 "I am rich" app
[+] [-] mattblalock|16 years ago|reply
I can cut the price on a set of products for several days and boost the sales of products that are not on sale - while not even selling any of the items that are discounted.
Just the increased awareness combined with the desire to be more luxurious (with a hint of the awesomeness of a $150 vibrator) sells it.
[+] [-] aresant|16 years ago|reply
Years ago I advertised a "Wholesalers Secrets" handbook on Google to help people find discounted wholesale goods to sell on EBAY.
When priced at $9.95 I sold an average of 10 copies a day against ~$50 ad spend.
When I upped the price to $99.95 I sold an average of 5 copies a day against ~$50 ad spend.
That was a big lesson, imagine my surprise when I discovered that there’s a whole science behind this ->
http://en.wikipedia.org/wiki/Price_elasticity_of_demand
[+] [-] maukdaddy|16 years ago|reply
[+] [-] nreece|16 years ago|reply
[+] [-] scotty79|16 years ago|reply
Some of this people own iPhone. They don't really care what the price is.
Apart from their richness they are normal people who like to buy dumb toys.
By pricing your fart app at 300$ you tap exactly into this market.
What's interesting that despite rarity of rich dumb people you may be well off with targeting them.
[+] [-] batiudrami|16 years ago|reply
[+] [-] unknown|16 years ago|reply
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[+] [-] ledger123|16 years ago|reply
Any thing sufficiently complicated or with steep learning curve is not going to be purchased by deep-pocket people.
[+] [-] scotty79|16 years ago|reply
That's a clever and funny insult. Gamers as in game players but also gamers as people who have any wit at all.
[+] [-] pw0ncakes|16 years ago|reply
It works for the first person who tries it, because of curiosity. People were probably curious about what could possibly make a silly iPhone app worth $299. The joke (and a hilarious one) was on them.
After a few people do this, the app store will be pushed to allow returns, adding headaches for developers.
[+] [-] jonknee|16 years ago|reply
http://gizmodo.com/5034122/guy-buys-999-im-rich-app-discover...