Off to CES

We are off to CES this morning. Industry buzz has been around thin TVs and Windows phone... It is time to see how real everything is.

Day one we'll arrive early in order to beat the crowds.

Mobile software - all about Price for your app (2nd of the 4 'P's)

This is the second of our four part series discussing the 4 'P's of the mobile software business. 

Price

How will you price your product?  Pricing is a thorny issue, with many different strategies.  For this post we'll again address two different business models, advertising and direct sales.

Advertising model

The good news is, there are a number of good services that provide references for advertising pricing models. You may look at AdMob, Consumption Junction, or affiliate marketing with companies like Amazon.  One thing you can know for sure is that when you're working with massive advertising companies, you are competing with a vast group of other advertisers.  As we learned in Marketing 101, competition drives prices down. Turning to these affiliates provides an easy route to many, many advertisers, but you may not get top dollar for your advertising product.

If you sell advertising directly to an advertiser, you have an opportunity to establish the value of your advertising and set your pricing based on that value. Let's explore a concrete example: If your app has specific value to a geographic area (say, a walking tour of Las Vegas), then a local restaurant (like Diablo's on the strip) may find advertising on your app to be incredibly valuable.  If you are providing that local restaurant with an average of $300/day in extra business, then you're in a position to charge your customer (Diablo's, in this case) a price directly related to the value of your app to his business.

Direct sales model

If you're selling your app in the App Store/iTunes, then you have a plethora of options for pricing strategies. We'll discuss a few here.  All of these merit some thought before committing to a price for your app

Competition-based pricing - Take a look at your competition and what they're doing.  First look at how your product differs from theirs, and then look at their pricing models. If you have a much better product, make sure you charge more for it, and let the buyers know why!  

Cost-plus pricing - Think about how much you've invested in your app, and then make a nice, conservative estimtae about how many apps you think you can sell (this can be really, really hard if this is the first time you've released an app).  Perhaps you'll choose to take it a little further and set aside some budget for promotion.  From your projected sales numbers, you can derive a price that you require to make a reasonable profit.  This is a great time for a sanity check - is your app going to sell in the volume you require to make a profit?

Variable pricing over time - If your particular product must 'gain momentum' in order to be valuable, consider giving it away for free to a quantity of users. You can then slowly increase your price in order to profit from the network you've built.  This is sometimes known as "penetration pricing".

Value-based pricing - If you can help quantify the value that your app will bring to each particular buyer, then you can set your price to make a "win/win" for both you and the customer. Here's a concrete example - if your app is an excellent TI-73 calculator emulator, you could choose to set your price at some fraction of the going rate for such a calculator.  You create a win/win situation for your customer, where he saves money on buying another gadget, and you recoup your own costs.

How have you priced your app?  What about apps you have purchased - how did you decide that they were a good value?

Mobile software - all about designing the Product (1st of the 4 'P's)

This is the first of our four part series discussing the 4 'P's of the mobile software business.   

Product

The product you're selling is not always obvious.  Let's take as examples two wildly different business models:

Selling apps in the market

If you're selling apps, your product is the app itself.  There are two parts to having a successful app offering in the market:

Selling the app

For your app to sell well, you're going to need to make an excellent first impression in the market.  Here are some tips:

1. Give your app a compelling name - it's the first thing that your customers see when they look at the app
2. Make sure the icon is very attractive - after all, if the graphics pop then you'll make a great first impression
3. Show only the best screenshots of the app in the market - let people know that you've built a quality product
4. Make app store descriptions as verbose and compelling as possible - remember, this is what's convincing people to shell out their hard-earned money on your app.
5. Pay attention to categorizing your app - you're competing against other app makers in your category. Consider picking a category where your app will really pop.

Making happy paid customers

For your app to sell well, you're going to need to make an excellent first impression in the market.  Here are some tips:

1. Maintaining the value of the app - you want your users to tell their friends.  Patron saint of mobile software development Steve Jobs famously said “Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.”
2. Encourage people to share about the app - definitely include in your product links to social media and app rating tools into your app. This will make it easy for your happy users to share their good experience.

Selling advertising

If your business model is to sell advertising on your app, then your product offering is not as obvious... people, and getting their eyeballs on their ads, is your real product.  Consider this as you design your app to sell.

All the tips above about selling the app in the store are even more important, as your revenue is even more highly tied to getting people to download your app.  The good news is that people are MUCH more likely to download free apps, so the bar is not quite so high.

Since your revenue is tied to advertising, consider these points:

1. It's to your benefit to select advertising that is relevant to your users.  Be careful who you select as a mobile advertising partner.
2. Your yardstick for success is "eyeballs on ads". You'll want to design your mobile software such that people are using it often, and that they have an opportunity to view the offerings of your advertising partners, but are still getting good value from your product.
3. Users are selfish. They're using a free product, and they STILL don't want to look at too much advetising. Be careful not to over-advertise, they'll notice.

What is your app's business model? How have you designed your product to maximize your own revenue?

Which screen size should I support on Android?

The Android operating system is much more fragmented than Apple's iPhone. There are roughly 4 active iPhone/iPad platforms that you can support at any given time, while Android lists 16 different screen size and resolutions that are officially supported.

The good news is that the Android developers forum does an excellent job of tracking the size of deployed screens (you can see the current statistics here).  While there are a large quantity of devices out there, your app can support most (88% at the writing of this article) of the users by choosing a much smaller subset of the existing devices.

One Million Apps!

According to BGR, as of last week there were ~989,000 apps across the top 4 platforms last week. The world is on a pace to break 1 million this year.

Apple has the most apps at nearly 600,000, and Google/Android has just a little over half of that amount.  Windows mobile and Blackberry boast enough to register on the scale, but their existence just illustrates even better how huge the ecosystem is around the Android and iPhone offerings.

One thing is certain... we've seen the app space grow, and grow, and grow.  While it started with ephemeral, lightheared, but very popular early apps, today we see real business-oriented computing applications that are designed with productivity and take fuller advantage of the incredible power of mobile computing platforms.

As a footnote - we're seeing the term 'app' itself changing in definition.  In the early days of smartphones, I had 'programs' on my computer and 'apps' on my smartphone.  As the usage of apps become more ubiquitous (and as smartphones themselves become better recognized as computers), it's common to hear non-technical folk call programs on their desktop or server computers 'apps'. This usage is definitely semantically correct but probably not within the original intended usage in the early smartphone days of yore.