Is Amazon's variable pricing the solution to developer income woes?

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While not yet directly relevant to Symbian developers, it looks like Amazon are going to address the issue of mobile app pricing with the launch of their Android App Store (reports Technologizer). Along with the fragmentation of the “Android app story” and leveraging their recommendation engine, Amazon are going to introduce variable pricing of applications. And while that’s the biggest gamble, I’d love to see this on more platforms including Symbian and Meego.

Of course I’ll cover all this by saying that I am not a developer (but I used to be, I even wrote a book to prove it). While Amazon may have many weaknesses, maximising turnover from stock is not one of them. So their approach of making the price of an application a constantly shifting variable, much like in their retail store, makes sense to me. They want to maximise profit, so they need to constantly find the upper limits of what the audience will pay.

Would I like to see this in the Ovi Store? In the future, yes, but not quite yet, because I think for this variable pricing to work, developers need to implicitly trust the merchant that they are getting the best value. Nokia, with all the best intentions, are not at that point yet.

I’d also argue that Amazon isn’t quite there either (and the online reaction to this is a good illustration of this), but by starting off as they mean to go on, the chances are they will have (a) a smaller store and (b) a bit less crud, simply down to the barrier of entry that they have put up alongside their approvals process.

But if this does deliver (and I’d give it a better than evens chance of Amazon managing this) then one of the major problems for smaller developers is going to go away – how much to charge for an application. I remember as Gravity launched, the perceived high price (of around £8) was a bigger debating point than you would expect. The arguments swung between “the developer needs to be paid” to “well, most people think apps should be 59p”).

With the Amazon solution, Android developers can nominate a starting price, but after that the software methodology that has taken the online store to the top of the pile will get to work on the price to maximise the revenue for all sides. Income for the devs is either the (by now standard) 70% cut, or 20% off the nominated starting price, whichever is greater.

So there is a safety net in here, but handing over the pricing control to a third party is going to cause a lot of knee jerk reactions, before people realise that Amazon want to make money just as much as a developer, and they want to make money over a long period.

The landscape is constantly changing. There was a time when software “stores” were looked down upon as everyone kept everything on their personal websites. Now they are not only the norm, but a default part of any smartphone ecosystem. I hope this experiment does take off, because the pricing of applications is a major issue. How can you spend time developing an application when everyone is in a price race to the bottom?

Technologizer suggests Amazon “should nix this idea... It shouldn’t decide the value of somebody else’s work.” I think that’s the wrong way of looking at it. The developer suggests a price that they think something is worth, and then the market will decide what it is really worth.

This method of pricing could put more money in developers' pockets (although over a longer timescale and likely with more unit sales) and that’s a good thing. If Amazon can crack this on one platform, I’d look forward to seeing their store arrive on Symbian.

-- Ewan Spence Jan 2011.