Marco.org

In nearly every critique of the App Store, developers and journalists cite the “race to the bottom”: the supposedly inevitable price drops until an app reaches $0.99. They make it sound like you can’t sell an app in any reasonable volume at any higher prices, and you’re forced by the market to lower your price until you’ve hit the bare minimum that you’re able to charge.

Fortunately, it’s bullshit.

You usually need to have a $1-3 price if you intend to rank very highly on the storewide Top 25 list, and being on that list will generate a lot of sales. But that’s not the only way to conduct your business.

You can easily sell an app for more than $3 if you simply recognize that you probably won’t be on the Top 25 list. In reality, this might already be decided for you: if your app isn’t likely to appeal to an extremely wide audience, you probably won’t make the Top 25 at any price. And even if you do target a wide audience, there’s a lot of competition for those spots — statistically, you probably won’t get one.

The root of this problematic race-to-the-bottom thinking is the assumption that you can rely on the App Store to do all of your promotion for you. This simply isn’t the case. The App Store can promote you in three main ways:

• You can be on the main Top 25 list. This is unlikely.
• You can be on a subcategory’s Top 25 list. These are much easier to reach but receive much less attention.
• You can be editorially featured (e.g. Staff Picks, What’s Hot). This generates a big sales boost, but after your featured week, sales usually return to their previous levels.

These are all fleeting, unreliable, and completely out of your control. They’re all gambles. Any gain you receive from App Store promotion is a nice bonus, but you can’t depend on it to sustain your business.

You need to do your own promotion.

Yes, the old-fashioned way, just like any other product launch. Blog about your app. Try to convince influential people to write about it. Buy ads on relevant sites. Spread the word: the App Store probably won’t do it for you.

This shouldn’t be difficult if your app is good. You’ll need to get the ball rolling, but once enough people try it, they’ll spread the word for you — just like any other product.

Visibility is more important than price.

You can try to gain visibility by lowering the price, and that sometimes works a bit. A much better method is to increase visibility externally. Lower pricing generally only help your chances of getting in the the Top 25 rankings, and once you’re in the list, you can drop your price to manipulate your position within it. But if you’re nowhere near that Top 25, it’s not because you’re charging too much money: it’s because nobody’s seeing your app.

Here’s where that $0.99-inevitability myth comes back into the story: it’s only relevant if you’re completely dependent on the App Store for visibility. If you’re doing your own promotion effectively, you can charge a higher price*, sell in a reasonable volume, and build a much more sustainable business.

* Keep in mind that “a higher price” for the App Store still means, generally, less than $8. But there’s a big difference in profitability between selling something for $5 and selling it in not-much-higher volume for $1.