We're not paying enough for apps
CNET's Rafe Needleman tries to convince a developer he's charging too much for his utility and ends up convincing himself that a lot of software is underpriced.
If you use more than one computer at a time, as I do, maybe you know of the utility called Synergy. It allows you to use one keyboard and mouse on multiple computers: as you drag your mouse pointer off the side of one screen, it appears on the neighboring computer's screen, and keyboard focus changes too.
For years, I used Synergy to allow the keyboard and mouse on the Windows PC that my employer owns to control my personal Macbook when I parked it on my desk at work..
But all good things come to an end. Especially the free ones.
I have had to stop using Synergy. Setting up this free, open-source app is a black art, and when CBS replaced my PC with a MacBook, giving me two-Mac setup (which, I admit, is extravagant), I couldn't get Synergy to work anymore. Fortunately, I discovered an alternative, ShareMouse. It was in beta when I found it. I installed it on my machines and had it running in moments, with no tears. It is beautiful. It does more than Synergy, it's much easier to set up, and is better in every way.
Except for the price.
The ShareMouse beta period ended a few days after I started using the app. My app upgraded to the shipping version, and I got a message that I need to pay to use it in my "professional" setting. ShareMouse had detected a domain controller on my network, decided I was a corporate dude, and chucked me into the "pay up or get lost" category. "Home" users can get ShareMouse for free.
Well, ShareMouse is great, I thought. I'll pay. How much?
$24.95. Per computer.
Remember, you need two licenses to use the app. Now, one can easily argue that $49.90 is a fair price for this software. It's really elegant, it's price-competitive with competing solutions and other "KVM" (keyboard, video, mouse) switchers, and its developers do deserve to eat.
But I could not get my head around the $50 price of admission, not after flying free for so long with Synergy.
I e-mailed Gunnar Bartels, the general manager of ShareMouse in Germany. I was convinced that he had overpriced his product, not just for me but for everyone, and prepared to do battle with Bartels until he dropped his price. I was pretty sure that he'd make a lot more money by pricing the utility "fairly," as I said, and making it an impulse purchase.
My thinking was conventional: if incremental cost for each unit sold is zero, one can make more money by getting as many people as possible to buy a product, by removing price as a barrier to sales. I thought, "making it up in volume" was a sound tactic.
Bartels was not convinced. Our argument proceeded along two tracks. First, the sales pitch. He peppered me with reasons that ShareMouse is better than any other paid or free mouse-sharing solution. It's easy to set up, it runs on Mac, Windows, and Linux together, there's a portable version, you can drag files across machines, etc. All true. But I still wasn't ready to part with my $50 for this little utility when the price point in my head was $0. And when there's so much great stuff in the App Store for $4.99.
I would have been happy to pay something for ShareMouse, because it really is good. Maybe $9.99. Even $14.99. But at $50 for my setup, even though the app is good, I balked. People who responded to a tweet about this topic agreed with me, too.
Then Bartels took a different tack. He told me that he had a limited market (how many dual-wield laptop users are there?) and that he really liked to pay his developers. Also, that at a low price, the economics were not going to work out. At first, I was annoyed. His payroll is not my problem, nor the market's. But this is also where the argument began to get traction and I, reluctantly, began to see the wisdom of the high price for ShareMouse.
As Bartels explained, at a low price, you sell a lot of units, but you have to support all these users. More users, more support costs.
I also got the impression, from talking with other developers, that the cheaper the app, the more ridiculous the support questions get. (Until you go to free apps and can get away with not offering support.) Also cheap apps tend to encourage people to leave bad reviews. There may be a psychological effect at work where people who pay more are actually more invested in their purchase and less likely to slam it in public.
The most interesting part of the pricing argument did not come from Bartels, actually, but from an interview with Steam CEO Gabe Newell on GeekWire, in which he said, "We varied the price of one of our products. What we saw was that pricing was perfectly elastic. In other words, our gross revenue would remain constant...There's no way to use price to increase or decrease the size of your business."
The developer of iA Writer, Oliver Reichenstein, said on Google+: "No matter what price we choose, we always make the same revenue." In other words, "by cutting the price by factor 5, I am selling exactly 5 x more apps. What I expected was that at a certain point the price change would impact the sales profit positively or negatively but it never did."
Since arguing with Bartels, I have discovered Teleport, a newer, free, Mac-only keyboard-and-mouse sharing app. Its existence made me think, briefly, that I had won the argument. But Teleport has issues (the mouse gets stuck on target machines) and I've found it, for me, unworkable.
For a while during my back-and-forth with Bartels, I think I had almost convinced him to drop the price of ShareMouse. Now I'm kind of glad I didn't.
I still won't pay $50 for a nice-to-have utility that I don't really need. But if I did actually need it, I'd pay the money. And ShareMouse would be worth it.
Bartels may eventually be forced to drop the price, if a real competitor comes along. Until then, he may be doing the right thing: providing a high-value product to a smallish set of customers who take the app and its purchase seriously.
Freeloaders and cheapskates like me, it turns out, can be a lot more trouble than we are worth.
See also: Go Ahead, Raise Your Business's Prices