Why We Agonize Over Buying $1 Apps

theodp writes "When it comes to explaining decision making and behavioral economics, Dan Ariely is the man. In his latest blog post, Ariely tackles the irrationality of app buying, explaining why the thought of paying even $1 for an app turns into an agonizing decision for those perfectly willing to spend $4 on coffee, or $500 on devices that they arguably don't really need. Had Apple created a really low minimum price for apps — say $0.15 — instead of offering free apps on day one, Ariely suggests, we would be anchored to the idea that apps should cost something. 'Then paying more (maybe even $2) for an app would be a simpler step,' he concludes, 'maybe one that we could take as easily as paying $4 for a latte.'"

Comments

SHOULD "Apps" Cost Something?

[bky1701]

As a long-time Linux user, one of the best points is that everything comes without strings attached. I would say "the idea that apps should cost something" is questionable at best, but leave it to Apple and their users to advocate it.

Re:SHOULD "Apps" Cost Something?

[samkass]

As a long-time Linux user, one of the best points is that everything comes without strings attached. I would say "the idea that apps should cost something" is questionable at best, but leave it to Apple and their users to advocate it.

Not to rain on your troll, but I think the whole point of the article is that Apple and their users AREN'T advocating it.

Re:SHOULD "Apps" Cost Something?

[DJRumpy]

Agreed. I don't think this has anything to do with the cost directly, but rather buyers remorse. There is nothing more irritating than buying something only to find that it sucks not to put too fine a point on it. This does not apply to a cup of coffee, or a coke because you know and expect them to be the same every time you buy them, and they generally are.

Software is a different animal, and no different than anything else you buy and retain. It is not a common consumable that you know what it will taste like, or feel like. The other issue I believe has to do with choice. People agonize (if that's the proper word or not, as it seems a bit strong to me) over multiple choices where a simple coffee is nearly always the same brand, the same flavor, ect. If people choose the 'wrong' app, and that could have been used to buy the 'right' one, people get irritated.

I think they over thought this one by a long shot.

Re:SHOULD "Apps" Cost Something?

[Firehed]

You're mixing economics with idealism. Everyone likes the idea of free software, and most people rely on it even if they don't realize that's the case. But due to the way people's brains are typically wired, having a baseline of >0 is advantageous for the seller. For example, if there were two apps, one free and one $2.00, the free one will have massively more downloads even if the paid one is significantly better. But change the pricing to $0.99 and $2.99 and "better" will tend to win out (well, the ratio will be a lot more in line with what you'd expect given the quality of what's being purchased, even if it's not actually making more sales) over "free", despite the same $2.00 spread between the products.

As it turns out, people that don't want to pay for stuff tend to be lousy customers. So I don't feel bad if I don't gain a customer who thinks that my product is overpriced. If you think I'm not adding enough value for what I charge - that's fine, you're welcome to not use what I'm making (free market, etc). Other people are happy to pay, and they also tend to focus on the reasons my stuff is improving their lives rather than searching for flaws that would justify me offering a discount. I'm happy, my customers are happy, and my non-customers are no more or less whiny than they would be without me.

As you might have guessed, I don't believe that all software should be free just because. I feel it's perfectly reasonable to ask for compensation if you're providing value, even if that value is in the form of carefully-arranged ones and zeroes. I would prefer that more software is Free (as in speech) if only to encourage interoperability, but that's a completely separate and mostly unrelated discussion. Anything that I create for free (which may or may not also be Free; generally it is) is strictly unsupported - it needs to fulfill my needs alone, and if you don't have to duplicate my efforts, then have at it! But as a general rule, I don't take feature requests on anything for which I'm not charging. I just don't have the time or energy.

Re:SHOULD "Apps" Cost Something?

[vlm]

But the developer gets to choose whether their app is free or costs money, not Apple.

In a free commodity market situation, the developer doesn't get to select the sale price, the buyer has plenty of input, because if the price is too high, no sale. Go ahead, price your house at $10M and see what the sales price turns out to be. It'll be 0 because there will be no sale.

The app store is not a free market so its pointless to compare it to commodity free markets like coffee shops where there is intense competition for standardized products.

If the coffee shops were like the itunes app store, you'd pay $1 and most times you'd get a typical coffee but sometimes you'd get only half filled cup, and sometimes it would have a dead mouse floating in it, and sometimes it would turn out to be orange soda instead, but you'd have no real recourse and all you can do is hope it turns out better tomorrow, next time you shop at the world's ONE coffee shop.

Note that the itunes MUSIC store is a commodity experience unlike the app store, you'll get exactly what you think you're buying 99.9999% of the time plus or minus human error. Ditto the itunes books and movies. Only the apps are a complete crapshoot.

Re:SHOULD "Apps" Cost Something?

[jeffmeden]

If people choose the 'wrong' app, and that could have been used to buy the 'right' one, people get irritated.

I think they over thought this one by a long shot.

That's it in a nutshell. Nothing feels worse than being out $1, AND knowing that you were the dope that pulled the trigger on the wrong thing. Once this happens once or twice you start to get a real aversion toward app purchases in general. If there were a better remediation process than a 15 minute(!) window to claim a refund, or the ability to really stick it to the app dev by one-starring his app (out of 1,237,843 reviews) maybe people would feel more at ease about the purchase.

The way it is today, you feel like you are at a bazaar and you are being hocked a $10 Rollex; you think to yourself "if this thing breaks even 15 minutes from now I will never see this guy again." Low low prices, nonexistent "Brands", and a lousy return policy all add up to a lousy "marketplace". If Apple (or whoever) wants to turn the tide on the flood of shit apps, they need to find devs who are better at branding, and give them ways to promote themselves. But then again, they are making billions off of people who have no problem plonking down $1 here and there without thinking twice, so why should they even care?

Re:SHOULD "Apps" Cost Something?

[Anonymous Coward]

Before you spill ill-conceived hater vitriol, inform yourself to prevent to make you look stupid.

It's 30%. The developer gets 70% and most devs are quite happy with that. In fact there are devs/companies who moved completely to the App Store. Pixelmator is a shiny example. Previously available as boxed software and download managed by Pixelmator themselves, the graphic editor is now available only through the Mac App Store. It costs now 50% less and Pixelmator makes more money than they ever did. Why? Because it's a massive audience, it's easy and relatively secure, it's fast and you don't have the hassle with billing and handling. The credit card fees are paid by Apple, hosting is done by Apple, billing and accounting is done by Apple, etc. 30% angel share is quite fair, and in fact it is cheap.

Your reasoning is just rubbish.

Re:SHOULD "Apps" Cost Something?

[king neckbeard]

Creation of food inherently has a significant cost given current technology. If food could be copied as cheaply and efficiently as software, anybody that insists that food should be paid for is an idiot holding us back from having a Star Trek economy.

The thing that's actually irrational is assuming there should be a fixed cost for something that, practically speaking, costs nothing to reproduce.

Re:SHOULD "Apps" Cost Something?

[fahrbot-bot]

I've had many varieties of Starbucks fluids...

Insert Battlestar Galactica joke here...

Re:SHOULD "Apps" Cost Something?

[DigiShaman]

Which is why I prefer free apps to try before I purchase the ad-free, full, extended, HD version or whatever. The fear of buyers remorse is the real agony here, not blowing 1$ on an app that you know you will like. So yes, I'm in total agreement with you.

Re:SHOULD "Apps" Cost Something?

[bky1701]

It's also a big leap to go and say "volunteering should be illegal because it deprives the people who want to do the job for money."

Re:SHOULD "Apps" Cost Something?

[bky1701]

1. Food is a material thing. It costs money to create inherently, and because it is physical, it cannot (usually) be created in one's spare time. This does not apply to software, when can and is created for essentially free, and then distributed to the rest of the world at no cost. Unlike beverages, there is no cost to recoup, so it can be practically distributed for free. Any profit can be a gain.

2. Your analogy ignores that free options exist. Should I pay for water if there is a man handing out free water a block down? I doubt you would. This article says we should arrest the man down the street in order to protect the water industry; that there is something inherently wrong with getting water for free; that we should always expect to pay for something. I disagree with that and as I said, Linux proves it doesn't have to work that way.

Re:SHOULD "Apps" Cost Something?

[timeOday]

I agree, and it's not just remorse over the $1, it's the time wasted. When you need ONE good app and search results give you 20 hits, what do you do? Spend all weekend playing with 20 apps? Then you ask on a forum and some joker says, "what's wrong with you, I just googled and there are 20 hits!"

Re:SHOULD "Apps" Cost Something?

[hedwards]

So on what precise basis are you entitled to earn a living developing software? This isn't really that different from photography these days where there are so many highly qualified amateurs giving away their work that there's very few people that are able to make a living out of it, compared with in the past.

I'm not sure why we necessarily need a lot of people to be professionals when the volunteers are producing such quality work.

The cost is primarily in producing that first copy, all the others are basically free to create, support costs money, but people often times help each other out on the basis of karma and it tends to work well in most cases.

Re:SHOULD "Apps" Cost Something?

[Eli Gottlieb]

So could we agree that as capitalism produces enough abundance to slowly abolish scarcity and make many entire professions non-earners in the free marketplace, it also creates unpleasant levels of unemployment? Or, in short, that the increasing inability to earn a living from one of many high-skill professions (software, law, science, general-practice medicine, etc.) is a class contradiction of capitalism?

Re:SHOULD "Apps" Cost Something?

[green1]

Actually, I do work for free, I volunteer hundreds to thousands of hours a year to various causes and am quite happy to do so.

Why should software developers never do the same?

I understand that software developers should be allowed to ask money for their work. However the article implies we should prohibit others from volunteering their time to protect those unwilling to do so. I disagree. I should not be prohibited from volunteering my time just to protect someone who is unwilling to do the same.

Re:SHOULD "Apps" Cost Something?

[Swampash]

The money breakdown on a hypothetical $1 app purchase is:

Developer: 70c
Credit-card company: 16c
Apple: 13c
Storage/network costs: 1c

http://www.businessinsider.com/chart-of-the-day-cost-of-an-app-2011-7

Re:SHOULD "Apps" Cost Something?

[iamhassi]

The way it is today, you feel like you are at a bazaar and you are being hocked a $10 Rollex; you think to yourself "if this thing breaks even 15 minutes from now I will never see this guy again."

^----------- THIS. That's why apps live and die by their rating: I won't even bother downloading a FREE app if the rating is 2-stars or less.

This is also why I'd rather buy on eBay than Craigslist. Even though Craigslist means I get to go physically touch the item I'm purchasing, if it breaks 5 minutes after leaving then I'm out of luck. At least eBay I have feedback and Paypal that *might* support me.

I have a pretty good idea what my carmel latte will taste like. Movie previews are usually an accurate portrayal of what the movie will be like. I bought a used iPod Touch for $100 before being locked into a iPhone contract so I could see what the big deal was. But I've downloaded some truly horrible apps. Awful, disgusting, WTF apps. Apps I used for a minute and thought "Oh no! This isn't even close to the description!" It's the app equivalent of being rickrolled, and who likes to be rickrolled? Even though it takes only seconds out of your life, no one likes to think they were getting X and they're given Y instead. It comes down to this: no one likes to feel deceived. Lattes don't deceive. Movie previews don't deceive. iPhones/iPads don't deceive. App descriptions sometimes deceive and we don't like it.

I wish the blog post would have mentioned the author's credentials. If anyone else is wondering "Why should we listen to this maniac?" according to his About page he's "Professor of Psychology and Behavioral Economics at Duke University"

Re:SHOULD "Apps" Cost Something?

[mlts]

App stores/repos take a lot of work that a developer would have to do:

1: No dealing with DRM. No activation infrastructure, no CD keys to make and have cracked. At worst, you make a couple calls to LVL if on Android to check the license. This saves headaches and bad PR.

2: No need to have a download and patch infrastructure. Just upload patched versions to the market/store/repo, and let them deal with making sure the bandwidth to the end user is adequate.

3: No dealing with credit cards and that type of crap. Same with billing.

4: Relatively easy to have different editions of products. On iOS, one would have different apps, on Android, one app that is free, and a purchased license key.

5: Piracy isn't your problem. Both iOS and Android deal with piracy in different ways. Android's method can said to be better because you can patch your app every week or so, forcing it to have to be re-cracked and the LVL calls stripped in order for it to be usable by nonlicensed users. Even if the patch is just upping the version and running the code through an obfuscator, it will force it to be manually cracked, uploaded, and re-downloaded by IP infringers.

6: In-app purchases are easy to do.

7: No physical packaging needed. It makes advertising easy -- tell people to visit your website or the store/market/repo to grab your product.

8: You just found a nasty security hole? Push out an update. No having to E-mail every user to tell them to download a new copy and manually install this. Better PR.

Re:SHOULD "Apps" Cost Something?

[dissy]

This is spot on!

And this is why I "pirate" apps. But before you judge, I can make two statements with total honesty:
1) I have ZERO pirated apps on any of my devices. ALL paid apps I have, have been purchased paid for.
2) Every last app on my mobile devices has been "pirated" for 5-10 minutes.
Every last one (Excluding built-in and free apps of course)

My purchasing process goes like this:

1) Is there a free version? If so, get that and try it, then jump to step 5
2) No free trial/demo? Then I fire up installious and find the app in question.
3) App not in warez form yet? Then stop - This app is no longer an option.
4) Try warez version for 5-10 minutes or so, hitting 'deny all for session' in firewall, and then delete the app.

5a) Did I like the app? If so, I return to the app store and purchase it.
5b) Did I hate the app? It's already long deleted, so we are basically done here.

The developers that DO provide a demo/trial version, you guys rock. Makes it very easy to decide if your app is for me and buy it, with 2/5ths the steps and much less time involved.

The developers that don't, well, deal with it. If I can't demo it somehow, you are guaranteed to have lost a sale, and if I happen to have placed your company name in my memory, you have potentially lost all sales to me.

I've easily spent over $500 on the apple store, and $200 on the Cydia store, in apps alone over both of my devices. It isn't worth it to me to fuck around with managing pirated apps in the long term, and have no interest in that.

The first app I was ripped off from was a silly $1 game. It literally would not run on either of my devices. I was pissed but since it was only a dollar I let it slide.
The second app however was a $10 development tool that was literally NOTHING like the description.

BTW, the scam app was: App Designer HD, v1.2, Seller: Nate Chiger
I see he lowered it from $10 to $1, no doubt trying to rip off even more people than before.
If you read the description, that is not anything close to what the app really does.
You get ONE of each GUI widget type, and can move the icon around on the screen like they were cutout on paper.
Want two buttons or two switches on your screen? Too bad.
In fact it would be easier and have MORE features to just use pen and paper instead of this piece of crap app.

The developer nor Apple would refund the price. Ever since that day I won't even consider an app I can't try first, one way or the other.

I ended up trying two different apps that filled this roll.
iMockups (Also $10 but AWESOME) for doing GUI layout and design,
and Codea ($8) for rapid prototyping (In Lua no less.)
Both "pirated" for 10ish minutes each, and immediately purchased after deleting the warez copy.

I have no problems paying for software. I do have problems getting ripped off.

Re:SHOULD "Apps" Cost Something?

[slashgrim]

I agree, and it's not just remorse over the $1, it's the time wasted. When you need ONE good app and search results give you 20 hits, what do you do? Spend all weekend playing with 20 apps? Then you ask on a forum and some joker says, "what's wrong with you, I just googled and there are 20 hits!"

That's why I prefer WebOS...there's only those 5 apps, and you know which ones are good because they've been on iOS and Android for like 2 years longer. ;)

Re:SHOULD "Apps" Cost Something?

[thegarbz]

That's why apps live and die by their rating: I won't even bother downloading a FREE app if the rating is 2-stars or less.

Obligatory lesson on app ratings

Ultimately the 5 star rating system are useless. When a new version comes out an app retains all their previous ratings are kept. One would argue as they should, but then there have been cases of app creators doing a dirty and with an update changing permissions to read out data in the phone and spy on the users. If you're one of the first people to update it then there's no indication of this. Neither would there be an indication using the 2-stars or less system.

People tend to have centre point bias when asked personal questions, yet tend to bias to extremes when asked about experiences. If an app doesn't have more than 4 stars there's likely something very wrong with the app. Your typical "good" app, and in this sense good doesn't mean great, it simply means that it does what it says and works, would have something like >70% 5 stars. >90% >4 stars, and then a few 3 2 and 1 star posts from people who were too dumb to get it working, didn't read the description, or have it crash on their devices.

Clear signs of trouble on the other hand are apps with lots of 5 star ratings, a good percentage of 1 star ratings and nothing in between. This is an indicator that the most recent update has really screwed something over.

As always, the 1 star ratings are the ones we should be reading. They highlight the problems. Ebay buying should be done the same way. When I see a seller on ebay I check his reviews, I filter them by bad reviews and I see what kind of problems people have to judge if these are the kinds of issues I'm likely to face. Recently I found someone with a 98% positive review rate, filtering by negatives showed the sellers unwillingness to replace broken goods. So straight away I wouldn't have bought anything fragile off him despite his 98% score.

Stars are over simplified.

What does apple have to do with this?

[h4rr4r]

Free software has been around a lot longer than that. Even OSX and iOS are based on it.

eh

[jaymz666]

I agonise over paying for apps, thus locking me in to a platform even more with each successive purchase.

Would you pay a $1 for shit?

[EdIII]

I think what it really comes down too is that people have a feeling that software being sold at $1 might as well be free. Deep down they know their own time is worth more than that, so why would they even give a dollar for what should be free?

OTOH, software that has good features, seemingly good support, and solves a problem they have being sold at $20 actually seems like a more reasonable proposition.

The only exception being tiny games. Although I think even Angry Birds was more than $1. I wouldn't know, I purchased it for the PC. That game is damn addictive.

No recourse for bad apps

[superpete]

Perhaps it's because there is no recourse for me as a consumer if the app just doesn't work. At least with that $4 coffee I can send it back if it's bad, can't do that with an app.

Re:No recourse for bad apps

[vlm]

Perhaps it's because there is no recourse for me as a consumer if the app just doesn't work. At least with that $4 coffee I can send it back if it's bad, can't do that with an app.

On an iphone. In the android market you simply request a refund. Never had to try it, but supposedly it is possible.

Re:No recourse for bad apps

[rickb928]

But lots of people agonized over their *first* latte. When they tasted it, and it was good, they were over the price very quickly.

$1 apps are a risk. If it's no good, you've spent a buck for nothing, not even a lousy cup of coffee. If it's hohum, you'll probably use it, but the equation is $1certainty. In fact, a $1 app is something you either expect to suck, or will be surprised at how good it is. And since most apps suck (they do, get over it), you're rolling the dice. And you don't have winning odds.

Now if most apps were $1, then we could get into the habit of springing for an app at a dollar, and usually getting something useful.

But most apps suck. Even free is a loss, you've lost your time finding it, 'buying' it, and trying it out. 'Free' isn't even free.

There's an economic theory that shows kids will take a sure thing rather than the apparently better deal that is not so obvious. This persists into adulthood.

Re:No recourse for bad apps

[Tharsman]

In the Android Market you get 15 minutes to requst a refund.
In the iOS App Store, you can request a refund by reporting a problem, and writtng to Apple that you want a refund and the reasons for the refund. It's not as quick and automated, nor obvious, as the Android Market, but they give you up to 90 days to do this (or maybe 30 days... not 100% sure now.).

People don't understand technology

[Chemisor]

I think it's much simpler than that. People don't understand what software does and really see no difference between the device and the programs that run on it. From that point of view, when you buy an app you are paying for something that's "already there", since it was a device that ran apps before and it's a device that runs apps now. The only change is the new app, which is not a tangible thing, but a behaviour. Paying for behaviour seems kinda like paying someone to teach your dog a new trick, and that's just plain silly.

Well what do they do

[Riceballsan]

I think the biggest issue, is there are very few apps that do anything that isn't expected of free software in the PC world. 95% of the games are more or less repackaged flash games that we have been playing for years, most of the productivity apps are weaker than google docs or libre/open-office which we have had for ages, and most of what's left is basic generic things that have been free for years. Bottom line there just aren't many apps that aren't exact duplicates of programs that have been free on the PC for years, has nothing to do with apples management it is just the trend of the entire software market. Right now in software people will pay for on any platform

Top of the line office software, IE only Microsoft Office

Top of the line AAA games, IE Skyrim

Other then that... corporate users need security software, and gullible home users will also buy it (reason I say gullible is primarily because there are few to no features or increased reliability of free vs paid antivirus's that I've seen). Had nothing to do with how the tablet market was set on launch day, the phones were based on the market of software, and in the end phones and tablets do not currently support much in the way of software that people aren't used to having for free.

I cannot obtain coffee for free.

[Mr EdgEy]

You know, I used to think that if media had a decent price, that I would actually purchase more games.
More and more lately I'm coming to realise that I wouldn't buy most things at any price.

Why would I spend £10 on a DVD, when I can save that £10 towards a new car or a mortgage deposit?
Why would I spend £10 on a book or £1 on a newspaper, when £90 (9 books) buys me an e-reader which will give me free books until the thing breaks?
Why would I spend £anything on games, when I can simply play older ones?

When I was a schoolchild, money existed to be frittered away on the next shiny.
Now I'm (only a few years) older, I can see that in order to live any semblance of a decent life, I'm going to have to save, and save HARD.

Why should I feel sorry for artists? Are they in a worse position than me? In the vast majority of cases I would doubt it.

With regards to expensive coffee - I don't buy it, but I do buy coffee when I'm out, occasionally. Why? Because it is more convenient than making coffee at home, and I can get it instantly as opposed to waiting. Buying 'apps' generally works in reverse.

Re:Considering that...

[Anonymous Coward]

I actually develop and write software. I would pay $1000/yr to continue using software like Debian.

Frankly, you can download and use Debian for free because of charity of others. Because others said "we care more about feedback than leeches".

When you pay money for software, you give someone reason to continue to work on it. Or to work on new software. If you do not pay (like most of OSS), then you better be able to maintain your own mission critical software as there is absolutely no motivation for the maintainer or developer to continue to support you.

Things like Linux are not free-beer. Lots of people/companies pay lots of money to continue development of Linux. Without those sponsors, Linux would be where HURD is today.

First copies are scarce

[tepples]

Subsequent copies of computer programs are non-scarce, I'll grant. But without a first copy there are no subsequent copies, and first copies of computer programs are scarce. The typical publishing model to recover the cost of making this first copy involves spreading its cost across subsequent copies.

Re:The app store has over 500000 apps

[BasilBrush]

Why would you pay?

You can get unlimited water in the river or falling out of the sky. Why would you pay for a beverage to quench your thirst?

Not always a free market

[tepples]

If you think I'm not adding enough value for what I charge - that's fine, you're welcome to not use what I'm making (free market, etc).

Say I think your product is overpriced for what it does, and I make my own alternative product that's cheaper or free. To keep people from choosing my product over yours in a free market, you sue me on dubious grounds involving some sort of claimed infringement, on the basis that a settlement is cheaper than a competent legal defense. Is it still a free market?

Re:Not always a free market

[tepples]

Because this has already happened on multiple mobile app stores, and it represents a kink in Firehed's "free market" theory. Someone made a video game "T", someone else made a video game "M" using the same rules as "T" but original code and graphics, and the publisher of "T" filed a takedown on grounds that the copyright in "T" extends to the game's method of play. Despite that this is legally unsupported under U.S. law, the developer of "M" just accepted the takedown because it was cheaper than contesting it and running the risk of having to pay a lawyer to handle a legal defense.

$1 app vs. ad-supported $0 app

[tepples]

Google Search is ad-supported. People agonize over buying a $1 app because it could have been an ad-supported $0 app.

Re:Why $4 for a latte?

[Belial6]

The whole comparison is backwards. The fact that people 'agonize' over a $1 app isn't the odd thing. The fact that they don't over a $4 latte is the dysfunctional behavior. Many people who definitly cannot afford it are spending enough on lattes that they could afford to buy a brand new car if they would just redirect the funds. I 'agonize' over the $1 app because I am fully aware of the 'nickle and dimeing' system that they are working in. The point of the $1 app is to separate you from your money in small enough increments that you don't notice how much you are spending.