October 25, 2015

Predatory pricing and a humbler Marco

(Originally posted on 2015-10-14)

This is the first attack on the Overcast: Podcast Player pricing model Building Twenty — Overcast’s not-quite-predatory pricing by Michael Anderson.

This is Marco Arment’s defense of his pricing model Pragmatic App Pricing — Medium.

This is the second attack on Marco, Overcast, and his pricing model The Elephant in the Room — Samantha Bielefeld by Samantha Bielefeld.

I must admit that I am not interested in the podcast player category. Podcasts just doesn’t interest me. But it is still software and a competitive space, so I am intrigued. I don’t know any of these people. I have followed Marco’s blog for a while, but these two other folks are new to me.

Does Michael Anderson expect any of his competitors to care for the following?

Where, now, is the market for those apps? How can you possibly expect to gain any traction against high-quality, entirely free alternatives?

So a competitor in a space is expected to make the environment lucrative for other competitors? His pricing strategy has to leave a window for his other competitors to make money in the market he is in? Why? There is an independent developer rules of conduct at work here? Really? What is this? We are all going to agree on a price and then the best icon will win?

Frankly, whether Marco is a millionaire or a pauper is irrelevant to the argument. He is playing in the podcast player field, he has the right to try to restrict competition. He has the right to try to dominate that market. If he is afraid that there are going to be bigger competitors coming into the market with free offerings, he has the right to get there first. Build a customer base and a revenue stream any way he can. What is the problem? Oh, I forgot. The independent developers rules of conduct. What are those exactly? Where are they available? Because it smells to me like price-fixing and I want to see it.

When Marco first unveiled Overcast, he made clear that one of his prime objectives was to safeguard the third-party podcast app market from proprietary takeover by the likes of Stitcher.

If the marketplace is going to rush to free, and Marco gets there first with his loyal users, his podcast user base and his blog readers along with him, that will effect both the big players and the small ones. He is allowed to do that. In fact, every one of his competitors would do the same thing if they could.

Samantha Bielefeld states:

What he is most certainly doing is increasing the odds that no other third party podcast app will feel viable in the market by charging up front for their offering.

Really? Twitter is a free app. Tweetbot is still making money. There are a lot of examples of categories where there is competition from free products and there is a market for paid products too. Isn’t Podcasts from Apple a free product in the podcast category?

If you look at the marketplace of apps, there seems to be a mix of free and paid apps in almost every category. The paid apps are surely facing problems with adoption if there is a free product in that category, but they can still thrive. If you do it right, if you provide value, if you can get the word out, you are going to be able to find your niche. And if you are lucky, it is going to be a profitable niche.

Samantha Bielefeld goes on to state:

In an attempt at increasing market share for his app, he is helping to reaffirm the incorrect thinking that software should be free to the end user.

Really? A niche product in a tiny product category is going to achieve that? I keep a close watch on the topic #nvALT on Twitter. It is free software. It has always been free software, it’s antecedent, Notational Velocity, was free software. Every few days, I see a host of people begging Brett Terpstra for a paid version of nvALT, they can support. I think the causation that free software makes people expect all software to be free is hogwash. There are people who given a choice between free and any sum of money will always choose free. There are also people who are grateful for free but if you provide them a compelling reason to switch to a paid alternative, they will do that with aplomb.

Samantha Bielefeld goes on to say:

The argument that paying for Tweetbot provides for a much more enjoyable Twitter experience over the free alternative holds a lot of ground for many people. There isn't much of a case to be made when comparing the completely free Overcast to paid apps in the same category.

And that is Overcast’s fault? If you cannot differentiate your product offering from the free ones in the marketplace, it is the fault of the free offering? I don’t have any nice way of saying this, “Stop whingeing, and get to work. Make your product better than Overcast. Add features that it doesn’t have. And get the word out.” If you can’t do that, you are going to be toast in the marketplace, and it is not Overcast’s fault. If you can’t beat Overcast on features and functions, then, Overcast is the category leading product in both price and features. You just have to accept that and move on to a different category.

Overcast is doing what it can to survive. Marco is entitled to do that.

Samantha Bielefeld adds:

Few app developers are able to enjoy the launch day success that comes from having major sites like iMore, Macworld, MacStories, and 9to5Mac all launch reviews of their app in unison on the day of release. The result is a chart topping, traffic driving experience that results in even more downloads than the people who follow his work would provide.

This is just marketing. This has nothing to do with feature sets, with Marco’s popularity, software design, coolness of the icon. This is just marketing. The problem is that some independent software folks don’t seem to understand the process, or the utility of marketing. You are in the business of doing business and if you don’t know how to do that get someone who does. You do the coding, they do the marketing. If you cannot get the top outlets to cover your product make sure you get the next level of outlets to cover you. There is always the blogger looking to write a review of a product.

I have been following this debate over pricing of software for a while and it makes my blood boil. There will always be the asshole customer who will complain every opportunity they get irrespective of what you charge for your product. Ignore them. Decide on your price and go to market. Make sure that your product has managed to differentiate itself from the competition and don’t worry about the free products in the marketplace. If you manage differentiation and can convey that to the customer, you will have provided enough reason for the initial group of customers to adopt your product. Look after these people. Be on twitter, correspond through email, give the customers an opportunity to enhance your product either through feedback or through enhancements (themes in SublimeText, workflows in Alfred, Scripts in BBEdit, you get the idea). Churn. Fix bugs. Get to version 2.0. Look at the landscape and improve the product with every iteration. Market the hell out of it. Do that. You might find that you will not need to whinge at what your competitors pricing strategy is.

Update: I am obviously out of the loop. I read this article by John Welch after publishing my piece. I am disgusted by the response of the cool kids to the Samantha Bielefeld article. I think my criticisms are valid, so, I will keep it posted.

macosxguru at the gmail thingie


Pricing Strategy


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