Making More Equal Less

By Don Reisinger  |  Posted 2009-08-21 Print this article Print


If demand in Apple's store has dictated a price of 99 cents, I simply don't see how Microsoft would be successful working with developers to get them to raise the price in its own store to $10. It doesn't make any sense.

The only way Microsoft's plan might work is with enterprise applications. Those programs that are either not available in Apple's store or are already expensive because they provide a real service to enterprise users, possibly making them worth a higher price. But Microsoft doesn't want it to end there. The company wants to make it clear that all of the applications in its store should be priced higher than they are in any other store on the market.

A numbers game

Microsoft's contention that apps should be priced higher sounds like a simple numbers game. It takes 30 percent of the revenue generated from the sale of each paid application. When an app is priced at 99 cents, Microsoft is taking about 30 cents. But if that same app is priced at $5, Microsoft will generate $1.50 per download. That's a big difference. And it could mean far more revenue.

Or it might not.

All these estimates presume that Microsoft and the developer will actually be successful in getting users to download the application. At a higher price, that's a tall order. Just because end users are willing to pay 99 cents for a particular app, it doesn't mean that they will be willing to pay $2. Maybe 99 cents is their limit. Microsoft doesn't know. And neither do developers.

There's something else to consider: at some point, the sheer quantity of apps a developer sells at the lower price could so easily eclipse the number of apps it sells at the higher price that Microsoft could actually generate more revenue off the lower-priced app. Evidently, it wants to squeeze every last dime out of each app developers sell with no worry about that simple economic fact.

Under the guise of making developers think their apps are worth more than users are willing to pay, Microsoft seems to be sabotaging its Skymarket mobile store. Apple has set the price (whether Microsoft likes it or not). To stray from that and ask developers to charge more in Microsoft's store for the same application is asking a bit too much. It might not realize it now, but as Apple's success in the space has shown, affordability brings users, which makes the app store more successful, which leads to more revenue for everyone.

Wake up, Microsoft. A higher price isn't best.


Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Since then, he has written extremely popular columns for, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at

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