Amazon, Not Developers, Will Set New App Store's Prices 294
Trebortech writes "Looks like Amazon is changing the rules of the game for developers with their new Android App store. I'm curious how Amazon will determine the value of your app and if having control of your prices really matters."
The core of the linked article: "Here's how it works: When developers submit apps to Amazon's app store, they will be able to set a suggested retail price ('MSRP'). It can be free, it can be $50, whatever.
Then Amazon -- not the developer -- will set the retail price. It can be full price, it can be a sale price, or it can be free.
Developers will get to take home the standard 70% of the app's retail price (what the app sells for) or 20% of the MSRP (what the developer thinks it should sell for), whichever is greater."
Re:Pricing tactics (Score:5, Interesting)
>>It'll be interesting to see how this plays in different countries - for instance the UK has no great respect for recommended prices and insists that items on sale are actually sold at full price for some (small, admittedly) proportion of the time. I imagine the rules vary by country,
By contrast, here in California, we apparently get to pay full sales tax on the imaginary MSRP dreamed up by some marketing guy smoking crack. Even if you get it for free, or with a discount, or whatever. I was mildly interested in taking up Verizon on a 2-for-1 Blackberry sale, before they told me I'd have to pay $70 in tax for the "free" phone, since the MSRP on a free phone was apparently around 700 dollars. I don't know if that's just cell phones or what, but it's just ridiculous.
>>Amazon will then have it almost permanently on sale at $2.85, "70% off!" - which is coincidentally the 70% return mark.
Which, all things considered, isn't too bad a situation. Customers get cheap-ish apps, developers get 70% of the sale, and Amazon gets lots of people buying because they're constantly on "sale".
Re:Didn't do the math (Score:5, Interesting)
That's OK. They'll just set the price at $1,000,000,000 so you can enjoy your lack of sales.
That reminds me of old Dutch anti-contraband law - a skipper could set any price of his goods and pay duties based on that price. However, Dutch government reserved a right to buy all skipper's cargo at whatever price he declared.
Re:If only the world worked like this.... (Score:4, Interesting)
It's whichever is greater, so if Amazon sells for $1, they pay you $2. This means that, aside from loss-leaders, they won't sell for under $2 - even at that price you're taking the entire sale price. At $3, they're paying you $2.10.
If it's implemented well, then developers may make more from this than from a fixed price. The advantage is that it lets Amazon dynamically adjust the prices quickly based on changes in the market. If 20% of people who buy something else are buying your app, then they may try offering a bundle where you buy both together for 50% off. If now 50% of people buy the bundle, then you get more money in total. With fixed pricing, they can't do this.
Re:the golden rule at work (Score:3, Interesting)
Live Free, Learn Breathwork [vivation.com].
It's actually quite simple... (Score:5, Interesting)
If you think about it, the 20% of MSRP thing is good for developers; Amazon is going to maximize their return, at the same time they're maximizing the developer's return, which is *at least* 70% of whatever Amazon is getting. If Amazon lowers or raises the price, it's because they expect a greater return (which means you'll get a greater return) and to be fair, they're probably better at setting a price to make the maximum amount of money than your average Indie developer. This means the 20% MSRP just means you'll get a larger cut than 70% if Amazon thinks they can make a killing slashing the price.
The only way you're going to get screwed is that if Amazon decides having your application priced in an uncompetitive way is going to maximize their return on another app. This is more of a danger than anything, because they might raise the prices of all competing apps to make one in particular seem like a "bargain" at the same time they advertise the hell out of it.
Interesting idea (Score:5, Interesting)
It's interesting and could somewhat work, with Amazon's experience in finding the perfect price point.
However, developers have some experience here too, and regularly adjust prices in the search for the perfect price point themselves.
All in all, I don't really get why we, the developers, should submit our apps to yet another app store. Aren't these things meant to make everything easier for everyone ? The consumer has yet another app store to visit, the developer another one to maintain. How will people even get the Amazon app store ? Why would people install it, seeing their phones already come with Google Market, which is of course a bigger store than Amazon's ? Even if Amazons store is pre-installed, would it actually be used ?
Take for example the Samsung app store for Android. It's pre-installed on all Samsung Android devices. There's only a handful of apps in it, and sales through this store are abysmal - so bad it's not worth the effort to have your apps available in there. And we sell quite some apps across various platforms!
Not to mention it's one more app store to track sales through, which is actually a lot of work for some of us. If you sell a lot of copies, you need to have your taxes in order, so you need to get the right reports from the app store. This will differ per country, but in our country (inside the EU), we need to charge 19% VAT for all sales made to European customers, and then hand this money over to the taxman. That sounds pretty straightforward, and it is, as long as you have the information about how much is sold (and for how much) inside and outside the EU. You can imagine this can be quite some work ( = money) for some of these app stores as their reporting is generally terrible (Google has the reports you want only if you are from the US or UK, or make less than 500 sales a day). The app store needs enough users and sales to warrant even bothering with the extra work, or it's a net loss to publish apps there. I don't see Amazon getting there any time soon.
Re:Pricing tactics (Score:4, Interesting)
So what Amazon is doing, IMHO, is to make sure they never sell at a loss. I don't suppose this is any different from what they do with any other product. There is the cost of the product from the manufacturer, the costs associated with the sale, the profit, which leads to the final price. The final price, as we all knows, varies and is set by Amazon. So a developer wants a dollar, so sets the MSRP at five. As long as Amazon sells it for more than a $1.42 the developers get more, so it is win win. If I were an Android eveloper, I would prefer this model where sales are actively managed rather than a site where Apps were just plunked down.
I think this is a reasonable mode for a private App store that is not subsidized by the hardware the Apps. Developers are guaranteed a certain amount per sale, and Amazon is free to adjust the price to meet market conditions. Amazon is not cheating developers out of profits from the sale. It does allow them to sell free Apps, but, as mentioned, Amazon is not doing this to promote other products, so it makes little sense to offer free apps the way they offer free books for the Kindle.