Pricing, Branding & Funding your App
This section is all about positioning your app for the right kind of attention. We will be talking about pricing strategies, your App’s brand, and how you can connect with the type of funding you need to make your app a reality!
We’ll use the following outline to guide our discussion:
- App pricing strategy
- Your Place, Their Perspective
- Funding what needs funding
App Pricing Strategy
Market Comparable pricing is usually the first place that App Developers look to figure out how they will price their own apps. And this is no coincidence. Pricing your app is difficult, pricing software is difficult. In fact, pricing anything that is intangible and easy to duplicate is difficult to price.
You’re probably wondering why most people price their app based on the price of other apps. The answer is obvious once you hear it, but not so easy to arrive at when you first think about it.
The whole world is still struggling with the whole intangible asset situation. You might recall the days of Napster, where you could download any song in the world for free. You weren’t able to download it for free because the creators of the song were giving it away – you were able to download it for free because it could be duplicated for $0 and anyone with a digital version could give it away to you for $0.
Many people were convinced that downloading these songs for free was perfectly ok, and aligned with any legal or moral obligation they might have toward the creators of the music.
However, despite people convincing themselves that Napster was above-board, the users and the platform were in all reality stealing. Despite the nature of the goods, in the case of music – intangible – acquiring goods without payment to the owner/seller is stealing.
But, why did so many people think it wasn’t stealing?
Simply put, people believe the price they should pay for goods should closely mirror the cost of creating those goods. If copying a song can be done for $0, the person who receives a copy of that song will assign a price of $0 for the song.
This idea of how the price of things should be based on the cost to make it is called cost-based pricing.
In the world of physical goods, this pricing model is universally accepted as the best way to insure you are paying a fair price. If a baker of bread paid $2.50 for the ingredients of a loaf of bread, plus $.50 for the labor to bake it and ship it, then charging a price of $4.00 for that loaf is typically acceptable to a customer. This cost and pricing structure would give the baker a $1.00 profit for each loaf he sold. After all, businesses need to be profitable if they want to pay employees and grow.
This cost and pricing model will be identical for every individual loaf of bread that the baker makes and sells – with slight cost savings over time as more loafs are made (the concept of ‘economies of scale’ applies to physical but not digital goods).
The world of digital products that are intangible and require no physical ingredients, is vastly different from the world of physical products. As such, the price we are willing to pay for such intangible goods should – arguable – follow a vastly different pricing process.
A few things to keep in mind about intangible goods vs physical goods.
- Intangible goods (in western countries) are protected by federal copyright, trademark, or patent law
- Physical goods are protected by criminal laws related theft
- Enforcing violations against physical goods can be remedied by reclaiming they physical items
- Enforcing violations against intangible goods cannot reasonably be remedied by returning the items. As such, monetary penalties are applied to the violators instead – with increased penalties for intentional violations (3x penalty for knowingly violating a patent)
- Cost-based pricing
- Value-based pricing
- Super Power Pricing
- Strangely Free Pricing
Your Place, Their Perspective
- Who are you
- Who is your App
- What type of relationship does your app provide
- Your app’s authentic self
Funding what needs Funding
- What needs funding
- Everyone does it, right?
- Where to find it
- The Devil is in the Details