Trouble in the (99-cent) App Store

$150-$200 per hour! come on I will develop software for you only $.99 per hour!

We run online iphone training classes at EDUmobile.ORG . This article totally misses the point. The truth is, today, you can get iPhone coders for less than $15 per hour. The talent is there. Just head over to Elance and see. Our students have dreams to setup and sell their own apps and games on the appstore – and this article is discouraging and completely missing the point. If you have an innovative app or game – you can still make a lot of cash.

i think there is alot of room for whatever people want. http://www.phodder.com makes websites into apps now. and i think why not. if the people want it let them have it. if not, they site in teh apple basement. no biggie

Will not a great application, that provides some unique utility that people desire, make itself known on its own, without needing to be featured by apple on any level? Why on earth do those who write programs make one to two hundred or more dollars per hour? Is the learning curve as steep and long as for a brain surgeon? Is real genius required for the programming of anything except the most massive and complex applications? Is there ANY good reason why, any of you would desire to deprive a poor indian person, the opportunity to rise in life by trading his programming skills for $10/hour, in order to protect some random american programmers right to make 100-200$? Is any business that does nothing of any real consequence, worth anything anyways? Does anyone know what specific IDEA is behind the coming internationally ubiquitous app-lication? Do you believe that it will simultaneously appear to be both supernatural, while positively obvious?

alexandergraham@mac.com

Dear John Holmdel NJ.

Please read my post carefully, I just suggest " Why developer not just start developing low-end apps, sell it for .99………etc."

So my point here is:

"Don't make high-end apps that cost so much money if they prefer high return, instead just make a low-end apps that required less resource so it required less money too (if they still want to building apps for App Store); otherwise just building your custom apps for another store or for your own store (so you could set up the price on your own comfort price

I don't even suggest selling apps at a loss at all. Coz I think building simple low-end apps doesn't cost so much money coz many developer do exactly that way. But if I had million t-shirts sold out at a nice profit, I would actually be very happy and start thinking investing a part of my profit for researching then manufacturing a better jackets and hope it would be best seller too..

So, are many developers out there selling low-end apps at a loss? I think not.

If many developers start loosing their money building cheap low-end apps maybe App Store not even growing big and bigger everyday, instead it will be growing down slow and slower everyday, shrink small and smaller every minutes coz there is no developer interested uploading their apps there.. and the Store completely CLOSED in a few months..

So my conclusion is : " No pain, no gain.. "

If a developer is taking a loss on an app do they qualify for a government bailout? Instead of charging more than .99 they should get a part of TARP! I would think the app business is "too big to fail".

Dear Mr. Hockenberry (and Chris the MBA):

The market sets the pricing. If you can't make a profit, don't develop it. If people won't pay you more than $0.99, then don't develop it.

It's the market, silly, not Apple.

Marketing 101.

I just downloaded MotionX and am surprised at the depth of the application. Surely the developer can't make a return. So my guess is that they are investing in their business for when there are 200 million iPhones.

Has anyone ever built a business, restaurant, computer store or other without making an investment?

Is it reasonable to expect profits to appear on day one or day seven?

I have dropped a note to MotionX and asked the question. They replied that "We are very happy with the opportunity". SO it probably means that they are losing money but that they are investing in the future?

I'm an MBA and the last time I checked, it takes investment upfront to build any business.

On reading all the posts and downloading many apps from free to $9.99. You definitely get more in the more expensive apps. I would happily pay for apps that are great!

However a lot of people here are comparing app design to electricians and doctors etc. Now heres the point they somehow miss. Your work is valued as a developer but in my opinion if you can make $70,000 off a simple app that would seem pretty good going no? Now a doctor cures a hell of a lot more than one person to earn that so in my opinion the software giants are so greedy, and it is good to see a challenge to that well done app store!

I'm am pretty good programmer (better than most based on my experience as developer and sysadmin) but can't get a job as a programmer because everybody trying to hire 'boy genius' for pennies on the dollar.

I've paid plenty for junk software from 'big genius SW houses' and now avoid paying for any SW as much as possible.

For that reason I love the app store and the predicament this Twit at twitteriffic finds himself in.

Hell, I'll even get around to writing iPhone SW myself.

Let's face it, U.S. programming jobs are continually moving offshore. For those that aren't, corporate America contantly lobbies Congress to increase the H1B limits so that they can import cheap offshore labor. If you want to be a programmer in the U.S., you have to open your own business and try to compete with people who are willing to develop and sell apps for nothing, both onshore and offshore. Your probably better off getting an MBA and moving into management, where you can at least make a living.

developers should create more 99 cents apps and provide 5-7days trial versions on other apps people are not buying so that customers can test run the apps before committing their money to it.

http://ifeoluwadotcom.typepad.com

Simple solution. Add new categories for most popular over one, two, three, four dollars etc. Then it is not just the cheap impulse purchase stuff rising to the top.

Ive always liked apple as an os system and for general techological use but i think even though theyre always advancing they need to think about the younger generations and middle class that cant always afford their products.

http://www.tycromedia.com/press%20release.php

Dear helmysty, purwokerto, indonesia. You are an idiot. Just because you sell a million t-shirts at a profit doesn't mean you can start selling suits at a loss.

I do agree that nothing actually needs to be done at this point. It's a free market and Hockenberry should move to another development platform if he is unhappy with the way Steve Jobs is operating. Apple is a horrible company that is driven by the hype of cultish fanboyism. He should just abandon it rather than begging Jobs to make it something it's not.

if you, developer, don't want that cheap money for your high-end apps, why you not just start with developing low-end apps, sell it for .99.. as you gain more revenue for your cheap apps of course you could start building more complex high-end apps with your big revenue. that's the way of bussiness.. if you don't want underpaid, don't make overpriced apps that cost much money, that's the way of bussiness,.. if you still make overpriced apps, high-end apps that cost too much for you and you know that apple not allow you to sell your apps at high-price, I don't know; maybe you are good developer or best programmer available in the world, but one-thing that I am sure is : you are a BAD bussinessman.

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Craig, take your salary and multiply it by 3 … that's what the company is paying to employ you. So a $150-$200 / hr range for the company's cost translates to a $50-$66.67 / hr salary.

Another thought to go with my viral marketing take: maybe software corporations won't ever make the nut in the app store. Their costs are bloated at $150-$200 per hour, of which they probably pay the developer $35-$50 per. A small shop or well disciplined Lone Wolf will kick their behinds every time, and twice on Sundays. If Hockenberry needs to move 115K units to cover costs, the small shop or Lone Wolf will make a profit at a much lower level and a killing at that one. If they work for Hock, they only get what he pays them. If they release themselves, they get 70% of sales. Yes, some of the 99 cent apps are crap, but some are not, and Hock is essentially saying he can't compete, and he's probably right. I'm not sure anything NEEDS to be done about that, other than a change to Hock's business model. I think the sweet spot for cashing at the app store is ALWAYS going to be decent volume at the 99 cent level.

"Why does he assume that everyone buys from Starbucks?!!! Just because Starbucks has overpriced coffee, doesn’t mean that people are stupid enough to pay for overpriced everything."

well you did buy a $500 phone that does almost the same crap that a $50 phone does.

“I see customers complaining about how ‘expensive’ a $4.99 app is and that it should cost less. (Do they do the same thing when they walk into Starbucks?)

Why does he assume that everyone buys from Starbucks?!!! Just because Starbucks has overpriced coffee, doesn't mean that people are stupid enough to pay for overpriced everything.

People can charge whatever they want to, including autoworkers who charge $75 per hour for pressing metal. The problem is, is there a market for it and will someone else do it for less. That's capitalism, and all Apple's really done is give a bit of limelight to programmers who couldn't otherwise market their own little products otherwise via the iPhone. These guys can use their $200/hr talents elsewhere if they don't like it. Like me, I get paid about $45/hr and I'm really happy with it. I'm proud of my work and am happy to take the opportunity to advance. Or of course I can demand $200/hr for my wonderful skills (I have a M.A.Sc btw, which is more than what most of these programmers have) or refuse to do good work, and get fired. If these guys hire $200/hr workers (almost double what my MD makes) or else they will produce crap, then I guess that's unfortunate for everyone, because that's what ppl are willing to pay for, and maybe they'll be stuck with crap and the developer will have unhappy programmers. Which reflects American society today. We're big and fat and demand high wages for crap work while people in Africa are starving and farmers in China are making a dollar a day. Maybe the era of the big fat white guy making easy money first off the backs of black slaves, then colonialization, and then by exploiting foreign workers in countries like China simply because they can get away with it (and then blaming the Chinese for working like dogs) to supersize our meals, pollute the environment with our endless appetite for the extravagant and novel,… is over? Imagine that! Us living in a frugal manner and respecting others around the World instead of exploiting them and thinking we deserve more just because we're big fat white guys, making less money, wasting fewer materials, consuming fewer calories. But no, it's all about greed, and greed is not sustainable. And at the end of the day, these buggers can charge $200/hr for their $100 app, but no one will buy it, and yes, maybe that little brown guy half-way across the world feeding his family on $1 a week will just roll up his sleeve (he's probably missing an arm from leprosy), and just be happy writing a great app for a reasonable price. And you can all make fun of him and spit on him, but be ready, because the era of the big fat white guy consuming up to 1000 times the resources as anyone else in the world to keep himself big and fat may be coming to an end. Hopefully we'll get off our high horses before that happens or we'll be in for a rude awakening.

I've got to say that JR in Columbia's got it right. In a free marketplace, attempting to modify the system to suit the product rarely works. To swell the sales of your more expensive apps, you've got to invest in marketing.

If you're the type of guy who has faith in the market model, then there's reason to believe that consumers will eventually understand the value of higher-priced apps and recognize the short-lived shoddiness of those you can get for a buck. It just takes time — and that's that.

Btw — to all y'all who don't understand the article — really?

This is actually a no brainer. If you are not satified with the price and exposure that you get with the App Store then DON'T PUT YOUR APP OUT THERE. People always want something for nothing and the App Store caters to that notion.

As a programmer, I stopped this type of foolish behavior years ago.

I work for a large company that sells my services to other large companies (the highest bidder). I get X dollars an hour, the company that I work for receives multiples of X an hour. Do these companies pay $150-$200 an hour. No, they pay multiples of that amount. I don't worry about getting paid, insurance, 401K, 401K matches, etc. The company that I work for takes all of the risk. They have to collect the money and pay taxes to Uncle Sam.

I don't claim that it is perfect, but it has certainly worked for me the last 10 years.

It really is all about supply and demand, Econ 101.

Finally, please don't complain about what I make per hour. I worked very hard to get a great education and to get to where I am today. If you aren't satisfied with your salary, then DO WHAT I DID AND GET A BETTER JOB. It isn't that hard, if you are willing to work very hard for it (and we are not talking about 40 hours a week to get there).

For those that insist on complaining; 'Once again, jealously rears its ugly head'.

There is a major difference between a "ring tone" application and some other application that provides serious usefulness to the user. I am shocked that you have to pay for ring tones to begin with, not to mention that I am sick and tired of hearing YOUR SHITTY MUSIC blaring when someone calls you. Use a normal ringing sound, please.

If I develop a serious application for the iPhone then its going to be priced accordingly. NOT 99cents. I dont write 99 cent apps. There are far too many others who do and will continue to.

I dont get it. Are you saying that 99 cent programs are too costly? Do you actually believe that a software developer with any sense of brains is going to develop software for 99 cents and give 30 of those cents to Apple? Why? What exactly are you trying to get for 99 cents? A full-fledged spreadsheet? A CRM? What then?

Expect to pay more for more quality, not less.

Stop whining. I know that the trend has been to expect and demand and feel entitled, in this nation but this has gone too far.

When lawyers and doctors and electricians and plumbers, etc start lowering their costs down to 99 cents for their expertise, then I might follow as well.

Otherwise, if you want cheap and crappy software, you can always outsource your work to India where they will work for the equivalent hourly rate that Target pays their employees. SQUAT.

@jr, Columbia, SC:

We "techies" dont like you marketing people for one reason. You cant be trusted as far as you're thrown. You're post was like one long run-on sentence but somehow you managed to interject you're "pitch" for your services and how you're "fee" is worth it.

What a typical marketing person. I guess I'd rather be underpaid than hated.

Are you kidding me? "Overpriced" developers? You need your head examined. We have too many fruitcake software developers charging 99 cents for something that they create – is the problem.

Does your doctor lower prices down to 99 cents for his services? How about your builder or your attorney? Your electrician? I'd hate to flip on that light switch when he's done.

Point is, you charge what you are WORTH. What is the VALUE that you're software is worth to the client. Is it worth 99 cents? Then charge 99 cents. Is it work 19.99? then charge 19.99. Is it more, then charge more.

My time is not free. Sorry. You can outsource to India is all you want is cheap, crappy software.

Wake up software developers. its time to take back your profession and get respected in your field.

Jen says "Apple does not have such stringent submission requirements so everything and the kitchen sink is out there. "

Anonymous says "If apple didn’t control what apps can go in the app store and what apps can’t then this would be a non argument… The app store is in no way a free marketplace if you think that you need to research what it takes to get an app into the app store and what it takes to maintain…"

What's the truth?

Hi all, to add my 2 cents from a marketing guy who programmed before getting my MBA, and who now works with techie guys, who don't understand the need for marketing, Hockenberry and his followers are breaking one of the fundamental tenents of business, coincidentally, one that Itunes has already faced in the past.

His argument about needing Apple to change the format of Itunes to accomodate "serious" developers is the classic argument of needing to change the system so that people will buy the products offered (especially "better", more expensive) as opposed to changing the products offered to what people are buying. This is the same stance taken by the music industry several years ago with the proliferation of traded digital music for free and, later, the introduction of buying music @ $.99 a track.

The music industry fought this change tooth and nail for a number of years, instead of innovating to maintain their position, ie imagine if Sony had launched an Itunes!!

They argued the same aspects, ie the high and rising costs of "quality" music and the overhead costs (Ie producers, studios, marketing etc) that it took to produce an full album and that they couldn't make money by having music downloaded for free or sold track by track for $.99!! They did not see the fallacy that, in the real world, it didn't matter their costs, consumers now knew that they could get music for cheap or free and therefore, the VALUE of the album as a whole was gone, replaced by the convience of choosing only tracks you liked. This was similar to the current argument. You are arguing that your costs are too high for you to make money selling your product at $.99 per user. Consumers don't care. They don't VALUE your software that much right now. Not that they couldn't if you convinced them of its value ie Marketing… (BTW I am DEFINITELY available to consult on this and i think that you will find that my fees will produce much more of a return on your money than additional programmers!!)

Sorry, i know this is a long post, i just honestly wanted to try to help and also point out that if you are going to make this argument, you probably chose the singularly worse company to make it to. Good luck to you all!

"is the work of making an app that will locate the nearest Starbuck’s for you really worth five times as much as the work of a PhD biologist?"

Hell yes! Unless you can synthesize an enzyme that pumps caffiene straight into my bloodstream.

im super confusedd…

so this whole thing is about how people think the apps are too much money?

thats gaaay

i was going to use this as my current event project in tech ed,

BUT I CHANGE MY MIND

lol!

As a professional developer there are a couple of things the non-pros are missing here. Expectations set by Microsoft, Nintendo and Sony with the way they establish product delivery for their hardware. All three have stringent submission programs, requiring developers to follow specific guidelines. This is to protect their customer base from crapware. Apple does not have such requirements so everything and the kitchen sink is out there. Lots of very good developers are trying to figure out how to get their titles on the store and visible amongst all of the junk.

I have seen a lot of "Hey, go market your product". Well marketing is pretty expensive. So the $80K to develop just got quadrupled because it'll cost $240K to market. Companies like Google have essentially 'free' marketing built into their main business and can easily advertise. Large companies like EA point customers to their product from their websites. Small developers do not have such resources and have to start shelling out a ton of money in order to increase visibility. Non-publisher developers run into the very real issue of having to market and sell their own games, which is pretty expensive.

Some possible solutions: Establish guidelines for shipping a product. Must easily install, actually operate and not crash.

Allow for demo – anyone with an Xbox 360 or PS3 is familiar with the try-n-buy concept and is a requirement of shipping on that hardware.

Have a more robust sorting system and actually respond to user feedback. If an app is total garbage then go ahead and pull it from the iTunes store. If it were a brick and mortar store Apple wouldn't allow junk that never sells, or looks bad on their shelves. The same rule should apply here.

He has some valid complaints, especially given the experiences working with other hardware companies. Margins are already razor thin, so adding in extra costs in order to get more sales is really risky. And yes, the pros could pull out of the App store. But then it's up to the fly-by-night guys who apparently are making a lot of crapware which most people sound unhappy with. Which means you'll probably stop even looking at the store and Apple will lose $$. So it's to everyone's benefit to aid developers in getting their product easily in front of the customer. Remember, Apple makes money from our efforts too.

Two points

1) If I'm understanding what is going on here, the App Store operates like a casino rather than a marketplace. That's clearly the failure of Apple to provide proper market clearing mechanisms. Anyone want to build a better App Store? There are lots of good ideas out there, and putting up an e-commerce site is probably cheaper than building a 99 cent app…!

2) Prices are indeed ridiculous, and reflect the 'race to the bottom' that developers all over the world have got themselves into. Good for Iconfactory that they are paying a (decent) salary for this work…but developers all over the world have proven over and over that a lot of them are willing to work for free. Advice? If you are still young, probably best to train as a lawyer or doctor, as those professions don't offer their services for nothing.

200 dollars an hour is deployment cost for a software engineer, not hourly salary.

I just don't understand how people can take this letter seriously or worse sympathise with it and blame it on Apple. Let me get this straight, apple creates a product that is so popular people want to develop other uses for it, Apple creates a testing, and distrubution vehicle for these App's that is extremely easy to use and is so popular that apps are forced to be competive either on price or "quality"/utility.

So it is therefore Apple's fault/problem that some of these App developers are unable to be competitive and do that?

Well app developers that are looking for review coverage of their app are always welcome to submit them. Just click the Request A Review link and I'll take a peek and maybe do a review for the iPhone 3G Software Reviews Blog.

http://iphonesoftwarereviewsblog.com/

George that makes sense. A song is recorded, but software evolves from version to version. I have seen lots of applications never get updated on the App Store. And some do get updated and are high quality. The Illusion Labs apps (Labyrinth, TouchGrind) and MotionX (GPS, Dice, Poker) come to mind. Those are very high end applications and somehow the developers have figured it out. It is clear that they don't just rely on the App Store and the iPhone to prosper. Looking at the quality of what is there, you'd see that it would take a year to develop those kind of applications for a team of three.

Software is not like a pop-song and the App Store is just "one marketing channel". When Apple has sold 100 million phones, the laws of large numbers will make economics more logical. In the meantime, invest in your brand like Labyrinth or MotionX.

To everyone that says he just needs to improve his marketing, it looks like his letter did a pretty good job. Maybe it wasn't intentional, but how many of you have Googled Twitteriffic and his other apps since reading this? I bet some people have even bought them.

iTunes is designed by Pop music. Tracks are $0.99. It's one way in which a song can generate revenues.

Software is more like an album, and every "store" such as iTunes takes work. To an album sells for $9.99.

But here is the challenge: In the iTunes store, you can't download much free music. If you could, you'd have countless bands, groups, orchestras making "free anything" and there could be a behavioral change.

This is compounded by the fact that you can only manage so many icons on your iPhone. With songs, it's just a list with filters and playlists. You can manages a million if you'd like.

Naturally things will balance out: Software needs to be maintained and evolved, the iPhone will get better at managing a lot of apps, developers will find a proper business model not just based on selling on the App Store.

Your rates may only be $35.00 USD,

But you may not be producing I phone apps That are quite as complicated or as Graphically Complex. These guys are creating Apps Such as TWITTERIFIC widly popular programs that require months of planning, concept, BETA testing, Marketing, Management, Design, Coding, ext.

As a graphic Designer myself, I earn $100.00 a hour Doing Freelance Graphic Design. So $150.00 is not that far off the mark. As well a good programmer makes about $120.00 to $235.00 a hour, Take EVEN $55.00 a hour for a programmer then $55.00 a hour for a designer, you are still looking at a $40,000 Investment for a short term project. The problem lys when you develop a app, then you have another company develop a copy of your program (witch many do) And give it away for free or $0.99, VS. your $1.99 asking price.

What do you think ?

Maybe the real issue here is about paying developers $200/hour to develop apps that users are willing to pay only $2 for.

150 to 200 USD per hour?

I run my own shop writing trading software. Want to know what my rate is? 35 USD per hour! I have to make it work with 35 USD. At the investment bank I work parttime I earn 55 USD per hour.

I would LOVE TO EARN MORE! Before the dotcom bubble I used to earn 200 USD per hour for Internet consulting. Open Source, Free Software has fundamentally changed how software is priced. We can't go back to previous days. Yes it hurts, but there are two ways to deal with this situation, adapt or die.

I would rather be working and earning money than whining about something that you can't change!

Anyone one to buy my iPhone? I want an android. After paying the AT&T premium, I don't want to pay $10 for an app that could suck. The iPhone is great for app to pass time and stay in touch, I don't want to do CAD with it.

The problem here is developers are relying on Apple to do all their marketing for them. Maybe it’s time that these app developers do something other than pray for a viral phenomena and featured Apple placement to sell apps for them.

I want to thank the author of this open letter. The reason apple is great is because it is a fully featured product designed by an expensive VP of design, who has helped adopt premium methods of manufacturing. Why not have applications to match this level of investment and refinement? I would love to see what could be accomplished with 9 man months of focused effort and would gladly pay $30 for a "killer" app. When you consider the price of CAD or other specialized software (or even MS Word) isn't it a bargain?

This might be the dumbest argument I have ever seen. For large software development projects do they look to a window of a few weeks to sell their product? No. How many iPhones are out there, 100 million? So even at 99 cents, if it's that great of an app, you're going to do just fine.

Maybe it's time to do some marketing outside of the appstore and stop complaining that people won't buy your product. Again, if you come up with a really good idea, people will pay for it. So maybe test market an idea before you invest in a developer. For 1 day's salary a market research firm can give you some pretty good feedback on the potential demand for your product. I'm actually surprised that apple doesn't allow or make people pay for premium shelf location for lack of a better word. It's how it works and always has worked in retail

"From my experience while Doctors and Lawyers may spend a lot of up front time to get educated their ongoing education is minimal.

I’m a 27 year software developer and the technology I work with now is nothing like the technology I started working with in 1981, 1991 or 2001. In software development the only way to command top dollar is to constantly invest time in learning new technology.

Posted By Mike, Cary, NC : December 11, 2008 8:02 am "

Who is this guy?? Was he a doctor? what is his experience? I am a physician and the drugs I use, the technology I use in diagnosis and treatment and the information I have is vastly different that what I learned in medical school, significantly different than what I learned as an intern, and constantly changing from what I learned during residency – that is why we have a yearly CME requirement – continuing medical education – and why we recertify in our professions EVERY 10 YEARS. Oh, and unlike lawyers, we don't charge $400/hr to "research" information – we are expected to already know it, or find it out on our own UNCOMPENSATED time.

People don't realize that even working at minimum wage you still cost your boss $50-60 an hour.

$150-200 isn't much really.

When I was a tech at HP, I got billed out to customers at over $400/hour.

First of all I think Hockenberry is wasting his time complaining and should know better. He is not going to get much sympathy and should just figure out a way to make it keep working or move on to some other kind of development work.

As to his 150-200 per hour rate that seems to be generating the most controversy, this is an example of what is wrong with peoples understanding of economics. It is just supply and demand. There was not a great demand for objective-C programmers before the iPhone app store so there was not a big supply. Eventually the supply will catch up with demand and the cost will come down. In the meantime be happy for the developers that can make some good money off of this craze because it is going to slow down eventually and most will have to move on and learn something completely new while living off of the money they made developing for iPhones.

Jade-

I have to disagree with your assessment that Apple is the Walmart of computers. Have you looked at the history of Microsoft and PC's?

At least Apple makes an effort to control what goes into their machines and that the OS works seamlessly with the equipment.

The PC market is full of "whatever is cheapest goes in" and lets hope that XP or Vista will run on it (it usually doesn't).

And then the market for Windows-compatible software has always been full of crapware and stuff that doesn't work unless you get this new processor and that much more memory and upgrade to that video card.

I think its funny that your description of Apple and Jobs is what just about everyone else would call Microsoft, Gates, and the entire PC industry.

That being said, the way the App Store is run is fairly poor. But then again, Apple is only perpetrating the same "Who cares if it works as long as we make the money" attitide that has defined Microsoft and the PC industry for decades.

Do developers and designers cost $150 to $200 per hour? Yes. For short term projects its not uncommon for an freelancer to run anywhere from $125 to $200. If you are a really good and in a high demand field you may be able to charge upwards of $300 – $500 per hour.

This is for short term contracts. Medium and long term contracts usually have significant reductions in the hourly rate. A person who charges $150 for 40 hours of work will often only charge $75 for a 6 month full time contract.

Ok, Lets see. You pay $300 for a phone, then complain about paying over $0.99 for an App? Too funny.

It's not just happening at the App Store. Welcome to the airline industry.

People's expectations are too high for their $99 ticket. Unfortunately, 99 bucks seems like a lot of money to many people, but it doesn't cover the cost of the flight. Some airlines under-charge just to generate cash flow and traffic (passengers). A smart, healthy carrier is forced to price the same or lose the limited number of passengers.

This is why one stupid carrier can ruin the revenue base for many other airlines. Ahh, the race to the bottom…

It's funny how most comments are focused on how the author eluded to 150-200/hr fees by developers & designers. I don't know about your industry, but it's not uncommon for a commercial photographer to get 2k+ per day for a shoot or for a motion graphics designer to charge 150-200 per hr. Doesn't your profession have an organization that discusses fees so everyone is on the same page with your hourly rates?

One wonders why Apple doesn't offer a "bundled" subscription service. Pick any 2 apps for $10 a month. That lowers the per unit price point and creates an ongoing revenue stream. $60 per unit per year ongoing much more attractive than multiples of .99 cents.

Especially if you can change your mix of products during the year — say getting an app for a vacation and a new one for a business meeting.

If apple didn't control what apps can go in the app store and what apps can't then this would be a non argument… The app store is in no way a free marketplace if you think that you need to research what it takes to get an app into the app store and what it takes to maintain…

Here is the big failing of the Apple iPhone store.

NO TRIALS

If a company wants a trial app, they have to release a separate app.

I don't want to spend $4.99 or $9.99 and discover the app sucks and doesn't do what I expect it to do.

That said, if I knew all worked and it was a great app and provided the functionality I needed. I'd pay $5 or $10 for it.

And quite a few times, the $1.99 or free app is better than the $10 app.

Apple is the Walmart of technology and Steve Jobs is their Sam Walton. He doesn't care about the user and he doesn't care about the vendor. He wants to push out mass quantities of phones, computers, and compliment that with cheap apps to make his billions. Just like Walmart, Apple is forcing the Mom and Pop software companies to compete cheap or die. $120-$200 is for the TEAM and includes overhead like the lights, computers, heat, building, and chairs the employees are working in. Own a business first before you start blasting the small business owner. Just because it's technology and "invisible" doesn't make it free to all you greedy users. The economic boom is over, now you guys are seeing the real cost of your glitzy gadgets.

Welcome to the real world of competition man! I love the apps that are in the store and see 100's that I would want developed but the flaw in your argument is the fact that you are basing your $75k cost and above on the rate you are paying your "programmers" Do you think that the 10 year old programmer in china makes that kind of money per hour? No way but I am sure that some of them can do great work right? At least the numbers show it. Maybe you are paying your programmers a bit too much at $150/hr.

Using the numbers supplied above: Market size of 14M and a break even point of 225K-300K, lets just do the math… If he is able to capture just 2% of the, just 2, in any other market that is chump change, he will be satisfied. By capturing 2% of the market he is able to reach an estimated 280,000 users. O and thats at his ridiculous hourly rate… reduce it to a fair market rate and the number drops substantially to 1% or less. You can't make the numbers lie.

I'm sorry if this is a repeat, but I didn't want to read 150 comments to find out…

$150 – $200 an hour to make little cell phone applications? Where do I sign up!?

I work on far more complicated software for much less. Maybe you should consider your extravagant expenses before complaining about the lack of profits. Start hiring people at a more reasonable $45 – $60 / hour and you'll probably find it more reasonable.

It's not Apple's job to tell you how to do business and make a profit.

Quit whining about the $150-$200/hr part people. The developer is not taking home that kind of money. No wonder you aren't business people.

As for the rest of the authors boohoo'ing, find another profession. These are the times, they are a changin'.

Dear Rodney,

I am sorry to see that the economic downturn has so greatly affected you. I feel the need to downsize feel free to send me your Macs, Iphones and countless Ipods.

From my experience while Doctors and Lawyers may spend a lot of up front time to get educated their ongoing education is minimal.

I'm a 27 year software developer and the technology I work with now is nothing like the technology I started working with in 1981, 1991 or 2001. In software development the only way to command top dollar is to constantly invest time in learning new technology.

did this guy hear we are in the worst economic times since the "great" depression?

he is lucky people are even bothering about downloading apps that keep you from being bored!!

i have 5 macs and countless ipods..2 iphones etc..i even watch what ido!! also my experience with the expensive apps are that they do NOT work as well as the free/$.99 ones

so smoke that one for awhile!!

I did not see anyone point out other than minor brief brush strokes that this is about marketing. There are some brilliant companies selling apps, brilliant because they know how to market, they first offer a free app, basic, crap (maybe) but free so tens of thousands load it if the graphic and category is interesting enough.

Then they offer the much improved upgrade to a whopping .99 cents, if they have a product that is exciting and draws the user in, then of course they will pay a meager .99 cents to add all the added features, and finally they bring out the big guns showing all the new upgrades 6 months later and who can resist that at an easy to swallow $9.99 when you have already been drawn in, you loved it, you upgraded and loved that and you will upgrade again.

Then they have you, they can send app information directly to you, you will trust that their new games, utilities, entertainment apps etc. will be just as good as the last ones.

Who every said that $.99 cents is the end game, it is just the sample scoop at Ben & Jerry's once you have had a taste, it is easy to get you to buy a scoop, get you to taste two or three flavors and you will upgrade to the larger cup and buy two or three scoops.

Quit boobing, hire a real marketer, get your costs to develop under control and see just how far this new market segment can take you.

The issue here is the marketing lock down of the app store experience and the complete lack of interactivity of the application shopping process. If I want to find an app to write a document on a laptop, I could do some research online, download various versions of openoffice, microsoft trial packages etc, and figure out which one I like best, and then buy it or use the free one in this case, depending on what made sense for my daily use after i tried out the full user experience. Likewise, there are tons of independent reviews from "experts" on the pros/cons of these applications on the web that I can quickly search and I can go to the websites and see flash video recordings of how things work, etc. This is the software buying experience that makes someone pay more that 0.99 for an app, i.e. getting a full sense of its potential without dishing out money first. In the iPhone world, you either download a crappy watered down version of the app for free/0.99 (i.e. the ringtone model complaint), or pay for a better version, but there is no try-then-buy, or interactive preview, or "quality subject matter expert" review system in the app store that would encourage anyone to actually pay for a unique app that may be good but i will never know since it is priced higher and i don't want to waste money on a potentially crappy app.

I'm sorry but if he spent upwards of $80k plus to develop Twitterific then that is ridiculous. That is a very basic program. There are TONS of free or even .99 apps that are made by everyday people that are fantastic, I'd name some but I'm not here to plug. Bottom line is that Iconfactory is flat out greedy and/or needs to look at their budgeting and company structure. Dont make me pay for your gross costs for development. Get over yourself and just make the apps, sell them and be happy people even buy them. Thats how we got into this economic mess partly, we hit our celing. Theres no such thing as endless money to be made. YOU ARE GREEDY ICONFACTORY… not to mention the whiny "poor us, we need more money and its someone elses fault other than ours" attitude in your letter.

Sounds to me that Craig is unable to cope with a maturing niche in the software industry. If he can't reform his own business to work with the model that is clearly working for other companies and independent developers then he should move on. It wont be long until people find paying $0.99 for "Twitterblahblahblah PRO!" completely ridiculous when a better app can be downloaded for free. Simplicity is the beauty behind most apps available for iPhone… the more complex your app is, the less attractive it is to users.

Trial versions? You gotta be kidding… That would be little more than a fantastic way to alienate current AppStore users. Its totally a Microsoft thing to do. If it did happen, you'd see more and more users jailbreaking their phones so they dont have to deal with such craziness. Or worse, people start tossing their iphones out the window and picking up an Android powered phone from Google.

And if you really think Jobs cares about your situation… wow…

Amazing! "developers and designers cost somewhere between $150-200 per hour"???!! I'm a PhD scientist with twenty-five years of experience and a couple dozen publications, and I'm making probably a little over $40k per year (at a public university). I'm fine with programmers making a decent living, but is the work of making an app that will locate the nearest Starbuck's for you really worth five times as much as the work of a PhD biologist?

"As a developer, I will put the time and effort I’ve put into my education up against a doctor or lawyer anytime… and no, I don’t make anywhere near $150/hour."

As a former stanford computer science grad who spent four years in the industry before going into medicine, let me just say…. LOL!!!

the amount of studying/training involved to educate you to the basic level of expertise in medicine is just ridiculous. software/developer education doesn't even come close.

"Both developers and designers cost somewhere between $150-200 per hour."

Well gee, maybe that's the problem right there. I've been coding on the Mac for fifteen years, and I own my own Mac OS X software company. I've written apps that have been featured in MacWorld and on Apple.com, and I make about $28 a day. Yes, a day. I'm going broke, sure, but my yearly expenses are only about $18k a year tho. And I live quite comfortably at a $18k expense output. So if I can get a regular 9-5 at the grocery store next month to supplement my Cocoa programming I think I'll do fine…

My point though, is that maybe if these designers/developers spent more time actually writing code and less time planning their next snowboarding trip in Switzerland, some of these problems might resolve themselves.

$200 an hour for a couple thousand lines of Objective-C? Are these people out of their $#@ minds? Get a grip on reality.

Both developers and designers cost somewhere between $150-200 per hour.

Notice how it doesn't say "each?" That's for the total for the team of developers and designers. OK, you can now proceed with your awkward math and the notion that you should get inexpensive (read: cheap) stuff at the cost of another person's time and money.

I've read Mr. Hockenberry's letter a few times to try to get the point. Each time it reads to me as:

- He is frustrated that there is competition saying it's "a fricken' cat fight to get into one of the top 100 spots."

- He is frustrated that competition is eroding profit margins saying that "market conditions" make 99cent titles more appealing.

- He erroneously thinks that iPhone app buyers have to buy products sight unseen, saying that "you only have a screenshot to evaluate the quality of a product."

Each of these complaints are misdirected.

Starting at the top with the booming competition and dwindling price points. This is what happens in a free market economy and should not be surprising. It's basic demand curve stuff that is found in all marketplaces, especially when they become heavily populated by producers.

Mr. Hockenberry can price his app accordingly on the curve at a place that still makes him money. If there is no such place on the curve, then he's in the wrong market and should pursue other ventures.

As to getting potential customers to see the value of an app, there are many avenues for this. iPhone app customers do not have to buy apps sight unseen. There are plenty of ways buyers can evaluate the quality of a product. For example, the App Store provides reviews from other users.

What does he think people do when they shop Amazon? There is a product description, just like at the App Store. There are pictures, just like at the App Store. And there are customer comments and reviews, just like at the app store. And yet, Amazon is not filled with expectations of 99 cent cameras and two-buck laptops. The price people are willing to pay has nothing to do with having "only a screenshot" to evaluate the product.

At any rate, by way of consumer ratings and product description, the AppStore provides more than "only a screenshot" to evaluate the quality of a product. And beyond the App Store, there are many other ways that quality apps can rise to the top. For example, Mr. Hockenberry can highlight all the features of his apps with a full-blown product tour on his own site. He can have many iPhone app review sites do reviews for him. He can generate buzz about his apps like he has for Twitterrific. I'm sure he is aware and experienced in how to build demand for quality apps, so I write this only for other readers.

I don't see the story here. It simply sounds to me like Craig is upset that other have joined the iPhone App party after he enjoyed a relatively uncrowded marketplace for a bit. He welcomes competition. Just not when that competition means he might have to lower his prices. Well, I hate to say it, but that's generally what happens in most marketplaces.

The good news for Craig is that producers of low quality apps will quickly find their apps at the bottom of the barrel based on poor reviews (inside and outside of AppStore) while producers of high quality apps should be able to leverage the app's reputation to see continued sales.

The problem is that iTunes is not a marketplace. If it were, Craig would be a whiner.

The problem is that it's a monopoly.

A marketplace is generally a place where a free exchange of goods and services take place. There is little freedom in the exchange that occurs via iTunes. It's all Steve's way or the Highway.

I'm also an iPhone developer, and there are over 10 million iPhone users (not including iTouch users). There are expected to be over 14 million iPhone users by the end of 2008. As an end user, I have purchased $2, $5, and $7 games for my iPhone, because I perceive value. If the iPhone market is too small to achieve your sales goals, then either switch markets, expand to other cell phone, or get out of the business.

Here is a link with the sales data for the iPhone:

http://www.ilounge.com/index.php/news/comments/goldman-sachs-sees-sales-of-14-million-iphones-by-end-of-2008/

Apple has been quietly dictating price from Day 1. And, selling a game on a carrier (carrier's that matter like Vzw or ATT) return 65-75% of retail. So, the truth is that many developers are feeling like Appstore is not any better than a carrier deck — which is a sad realization to come to.

The complete lack of merchandising and promotional controls, the terrible meta data management by iTunes (as if games and apps were tracks) and good analytics is a major short-fall for a company whose leader has called the major US carriers the 4 orifices of the apocalypse.

I was once told be an Apple store employee after complaining about the crappy battery and poor network connectivity, "if you don't like the product go buy a phone somewhere else."

Check out http://unlockiphone.asia

Most of the people who are arguing that the system is flawed miss the most basic point of all. If you don't want to create and market apps for the iPhone, go do something else. No one said you had to do it. If you do create an app and it is priced correctly, you may make money, you may not – that is business. Grow up – no one owes you anything….

The mass market is talking. Period. What publishers and application developers are not factoring in is that by retaining 70% of the sale, they are getting ~50-60% more than they normally would in a retail model. Lastly, publishers should lay-off Apple here. They do not set prices for the applications (unlike with music and videos).

This is a MARKETPLACE.

Whaaaaaaa… no money no funny

$200 an hour for a programmer?

Someone's getting overpaid.

supply and demand. econ 101.

Develop an application to use effectively skype on the itouch and iphone…and really revolutionize telephony. The current iphone concept tied up to ATT is elitist, and has damped down the true potential of the iphone of becoming what the ipod did for MP3 players.

The hourly rates for developers and designers likely include items other than salary, e.g. real estate, equipment, support staff, benefits, taxes, etc.

$150 an hour, works 8hrs a day, 20 days a month for a year. That will make ur engineer top 1% of income earner. No wonder u are QQing cuz ur just dumb in economy.

"As a developer, I will put the time and effort I’ve put into my education up against a doctor or lawyer anytime… and no, I don’t make anywhere near $150/hour."

Won't speak for the lawyers but as a physician I've got to tell your the time and effort won't come close (doesn't mean you're not a brilliant or less valuable person though).

Sorry I don't want to shell out top dollar for your mobile phone app.

Well, this doesn't seem to have prevented half of the current top 10 apps from being priced over a dollar (1@$1.99, 1@$2.99, 2@$4.99, 1@$9.99). Which, incidentally, is completely consistent with the bar chart, but I guess saying "half of all commercial apps cost more than $0.99" doesn't support this kvetch, so we get the spun version.

Honestly, do people just not even bother to do rudimentary research or think about data before regurgitating material anymore?

JoeDeveloper must be the worst developer ever if $150/hr is 5X what he's making currently lol.

For everyone gripping about the cost of developers or saying that this guy should quit complaining and just make .99 apps, you clearly have no clue about the free market system, creating an application, or the point of this article.

What??!! People would pay hundreds for porn and nothing for softwares that translate languages, giving geographical knowledge, do calculations ….. Are these the cosumers who crashed the housing and then the financial market as well?? It's OK, Uncle Steve will bail us out. Hahaha.

What??!! People would pay hundreds for porn and nothing for softwares that translate languages, giving geographical knowledge, do calculations ….. Are these the cosumers who crashed the housing and then the financial market as well?? It's OK, Uncle Steve will bail us out. Hahaha.

Not my problem. If you start increasing the cost of programs, you increase the temptation for others to get the program for free. The number of jail-broken phones would jump up, and developers would not sell a thing. This is not a PC is is a phone, and everybody who has an iPhone also has a computer, with many of the same high end software running on it. Why should I buy the same thing twice. No one is using the iPhone as there only personal computer. I want free or cheap apps for my phone, nothing more.

Developers need to be creative. If there is a market, expensive applications will sell.

For instance, World of Warcraft is an extremely popular game with several very tedious grinds in them. If there was an iPhone application that let me FISH, just click two buttons over and over again, I would pay at least $10 for it. Find out what people like to do, figure out how they can do it while standing in a line and people will buy it.

As a developer, I will put the time and effort I've put into my education up against a doctor or lawyer anytime… and no, I don't make anywhere near $150/hour.

This reminds me of the story of a waiter that brings a mans order and the french fries are burnt, The waiter says, I know the're burnt, so I gave you extra and wont charge you. Obviously we would prefer to pay for something that is edible(usable).

And yes we get sucked into: less than a beer? oh what the hell if it turns out useless.

There is no code that will ever be created for the iphone which requires a developer or designer that charges $150-$200 per hour. This is an easy platform to develop for. So they could start there. The other problem is Apple markets the cool factor. Cool is not frequently productive and as result most of what they create are solutions that don't fill a real need.

$150 to $200 an hour for designer! Geez. I've been designing for years and years and have never gotten close to that kind of hourly salary. I can't speak for developer costs, but their design costs are through the roof.

Not sure which world Hockenberry lives in where he has to pay $150/hr to developer/designers. If the developers/designers are in such short supply, then stop developing applications for iPhone. They are junk applications anyways. I am yet to see any worthy application for iPhone. Windows Mobile phones, on the other hand, have far better applications at far lower prices.

Lots of great points, but when spreadsheets came out as "killer apps" they weren't built cheaply or marketed for free. If you've got a killer app, let us know and if we deem it as such, we'll buy. If you build it, they will come.

Low monthly charges? On a $4.99 app???

Also, the argument of "do your own marketing" does not hold too much water in this context. Not too many people are out browsing the web, reading magazines, watching TV for iPhone applications. Instead, they go to the "App Store" within iTunes and browse the categories. There are a few mechanisms that could be employed to succeed there but they are not the entire solution. One thing that could immediately help app developers is if App purchasers used the "Search" functionality of iTunes more when searching for Apps (as opposed to using it just for music/video searches).

Some things to consider before complaining about the high hourly rates that are mentioned are the low supply of developers who are familiar with the programming language and the SDK/API (programming libraries) for the iPhone as well as the nuances of programming for the iPhone. Unless you were a Mac developer from day one, it is a daunting task to make the switch from a different programming environment…and then to be considered an expert in it worthy of contractual work.

If they changed up the revenue streams so that the more expensive apps could be sold with very low monthly charges instead of a lump sum, then customers get to see how great the app is before they shell out a fist full of money.

That might be the best way to compete in this market if customers are extremely (and irrationally) price sensitive.

The vertical integration that Apple enjoys should give them the flexibility that makes this solution viable.

iTunes is a store. It doesn't replace your own marketing. If you want favorable "placement" in the consumer's mind you have to advertise your product or get it recommended by third parties or word of mouth.

What's hot should be an interesting calculated list for each category. Updated by the minute.

The calculation should be something like….

number of sales * cost (with a minimum of 1 even for free items, maybe a max of 20 or so) * avg user rating / 5 * number of reviews / number of days since release.

Exclude from review anyone with fewer than 50 user feedbacks (because that would be too easy to fix)

This type of metric should suit Apple well because it will favor higher priced games which generate the best return for them. It will generate a split between who sells the most units and who is producing the best game…and it will also be a good indicator of who is making the most.

I think that would be a good metric.

The solution for the Apple store is easy… It should be split into departments with a section exclusively for higher end, more sophisticated apps. In fact it should probably have many more departments, as reviewing the available apps and making a good choice from among a zillion offerings can be a tedious process.

As a developer in a former life (and a project manager for the past 20+ years), I can say that the costs quoted per developer-hour include all the associated overhead – employer's contribution to Social (in)Security, office, equipment, management, health insurance, etc. The developer – before taxes – gets about a third of that.

@ MBo: Ok, you are right about Starcraft – but my point is still that people will pay more for apps on the iPhone if they are worth more. It should not matter that it is on the iPhone instead of another platform. If people will pay $59.99 for Starcraft on their PC, then they will pay $59.99 for a similar-quality app on the iPhone. There is nothing inherently special about the iPhone that should make it less cost-effective. All that is missing on the App Store is the quality apps to warrant a higher price. When that comes, so will the bigger purchases.

This is disgusting. Craig you are so full of it, there are plenty of cool ap's that are complex and are free. If you make ap's 50-100 bucks for a 200 dollar phone. Nobody will buy them, and you will fail the whole product. A level of freeware is the whole point of the apples product, and you are going against it.

Maybe you should invest (yes you have to invest to get rich, people don't just pay for you to do the leg work at the beg.) Write a legit application that is "complex" make a name for yourself, and then come out with something else, or figure out some other greedy way to charge people….

If Apple were to follow your advice, you would be out of a job.

Get real.

Those of you justifing his $150 – $200 statement by saying "computers, overhead, electricity and benefits are included" is just silly.

A computer costs $1000 and lasts 3 years. Thats a dollar a day.

Most contractors work at home so there is no overhead.

Electricity – come on!!

It's amusing to read through these responses. It strikes me that most people are consumers and not in the tech field and know anything how contractor fees work let alone the cost to hire (if you could find one) a seasoned developer that can actually code an app for you.

I'm don't think the scope is the throw away junk of AppStore, the author is refering to robust applications that would have all the functionality you would find in your home version.

Do a google on java, .net developer and see what the going rate is, it's not that far off.

Apple made this mess and if they don't fix it, they will be left with mostly amatuer apps of little value that while not a bad thought is hardly what you need to substain a mobile platform.

Now excuse me while I go back to using my Blackberry with some real apps.

Pender — "Why can’t they get the word out about their great applications on their own?"

Of course, they can. But any marketing the developer does is of negligible effect compared to placement on Apple's popularity lists (or, even better, featured spots on the face of the App Store); that's what drives sales.

Microsoft and Adobe don't sell apps for $0.99. How many click-throughs do you think it will take to equal one for a full-priced traditional app?

The App store is a DELIVERY SYSTEM, not just a market.

Is there something that says these developers can't advertise their $50 applications somewhere like in magazines or on television? I mean, Adobe doesn't rely on Apple and Microsoft to sell Creative Suite.

Why can't they get the word out about their great applications on their own? Anybody?

How much per hour? That is crazy. In this day and age with people worrying about paying a mortgage and feeding their kids you want to ask/pay a developer how much? Find a student to do it for cheaper more reasonable rate and offer a percentage of the sales. I see no reason why a programmer should make as much as doc or lawyer.

That's why I love my G1, open source. I don't even pay 99 cents for my apps. Think Linux!

One more comment: The problem isn’t the price of the applications; it is finding them on the Apps Store. The way it is now, one does not know how good or robust an application is. Now you have to use user comments, which is not totally reliable because of the users sometimes unrealistic expectations. The only other way is the “What’s Hot” list which drives sales only for a short time.

@ Patrick from Vancouver

Starcraft is $9.99 on the PC now. It was around$50 when it came out. They've covered their development costs many times over after more than 10 years, so they can sell the game for $10.

If you think game developers are going to create a game of Starcraft caliber and sell it for $10 you're delusional. Making games is not cheap.

Even porting Starcraft to the iPhone would cost money. And Blizzard is making too much money with WoW to even bother with that risky proposition.

@Husar:

$150-200/hour is not what they pay the employee, it's what the company spends on an employee including salary, overhead, benefits, etc.

Iconfactory??? Good products??? They wouldn't know a good product if it hit them in the face.

I agree with Craig Hockenberry, the apps store is great but a rethinking of the apps store both on the iPhone and through iTunes is desperately needed.

I’m a new user to the iPhone and it is fun to check out some of the more frivolous apps but it is difficult to find robust business applications. The problem is that both the apps store on the iPhone and through iTunes do not have enough categories. Itunes could be a great way to distinguish between more serious applications and the more frivolous ones. I’d pay a lot for an Excel and Word editor and a program to mimic the Windows Explorer on the iPhone to make it into a thumb drive.

The operating system on the iPhone is robust and the creativity of the apps developers is astounding and Apple has a real winner here, let’s hope that Apple does the right thing and helps out both the little guy and major software developers.

To the person who wonders why give away apps for free- it is simple, amateur developers sometimes come up with neat little programs that have no commercial value and name recognition is reward enough for a lot of effort.

Complaining that he's being undercut by people with cheaper apps would be pointless. That's not really his complaint. As many other posters have pointed out, the prices he's quoting for development are not unreasonable for *professional* application development — maybe a little high, but not crazy.

The issue is that the App Store ranks apps with more downloads higher than apps with fewer downloads but higher customer satisfaction. Of course, it's Apple's store, so they can run it however they want, but this seems kind of backwards. Free or very cheap apps are almost always going to have more downloads than more expensive ones, even if the more expensive ones are preferred by users.

One possible solution would be to offer a free trial version of an expensive application. Certainly that would help users who are hesitant to pay $10 or more for software that they can't check out themselves beforehand. And the author of course could try to advertise his software through other channels, but it would be better for everyone if Apple improved their store.

Those who comment that doctors are worth more than programmers but do not get paid as much make a valid point. However, your value and mine is set by supply and demand, rather than by the good we bring to society. If you have lots of companies looking for specific skill sets, those programmers will make lots of money, whether we might deem them valuable or not. This is why a few people can make millions by dribbling a ball. A lot of people are willing to pay to see them, and very few other people exist who can do those things.

As for why people are not willing to pay more for their apps, the same answer applies. We can get lots of cool things for free or very little, so something has to be unbelievably cool in order to be seen as being worth more than a dollar or two. If people see you offering them what they want, and no one is offering something reasonably close for a lower price, they will buy. Unfortunately for businesses, as the number of programmers and the capabilities of low-priced resources expand, most apps will continue to march toward becoming commodity items.

There already is a try before you buy option. It is called a "lite" version of an app. I download them all the time to see if I want to buy the full app.

Also, $150-200 an hour is silly. Relocate away from the east/west cost. Plenty of talent in the Midwest were you only need to pay $75-100 for say skill.

One way to compete with true $0.99 apps is to offer a feature-limited (but still impressive) version for free, as an appetizer for a full-featured $4.99 app. I have purchased (after trying) several apps this way. The "Labyrinth" app is a good example.

The problem I have with his complaint is his assumption that apps costing $4.99 or more will never sell no matter how good they are. That is not my experience as a user of the Store. I am always searching for a great app that would, say, do spreadsheets, or mimick an app in MS Office. But I just don't see those yet. And I would gladly pay for such a great app. Or make a killer game that is comparable to a PC game at $9.99 – that's what Starcraft now sells for on the PC. I would buy Starcraft on the iPhone for $9.99 in a heartbeat.

Don't choke on that bone apple. Customers now expect cheap applications, ring tones, backgrounds, etc for their phones. Charging more than $2.99 per [app/song/image/etc] is obscene taking into consideration the $299+ everyone shelled out just for the hardware. Good lord, it's just a phone for a 2yr contract!

Welcome to the world of business!

why not pay your developers $75/hour, thus your sales volume requirements will be lower, hence you can make a Profit with lower volumes, or lower costs.

Ths issue here is that you are greedy and want to make millions doing this type of development work. The market conditions have changed, so the producers of product selling into a changed market need to adjust or go out of business.

This is simple economics, so quit griping. If I were Jobs, I would tell you that it is your responsibility to do your own marketing. Why should Apple do this for you? You want to put a relatively simple program out there and have Apple do everyting else for you. Advertise in PCWorld, Wall Street Journal, and then your sales will increase. Ask anybody that sells one of a thousand identical or nearly things on ebay, everybody does not get pulled up on the first page, some are hundreds of pages down.

And how do people get top billing in google, etc., they pay for it. So ask Steve how you can pay for top billing. apple might be interested at this point, since it would be a revenue source for them, which is why they are in business. They are not in business for you!

As an iphone owner I can tell you that I have 1 ten dollar app, and half a dozen 99 cent apps. As a business owner you have to realize that the customer sets the price and if they want it for 99 cents you have to work in that framework. Right now the apps are a still novelty and until that changes you have to deal with it.

Another point I don't get is WHY are there free apps in the app store???? Charge at least 99 cents for crying out loud! What's the point of putting something there for free??!!!!

Wahhh! Wahhh! Craig Hockenberry sounds like my three year old. Here is an Open Letter to Craig Hockenberry -

http://www.211me.com/corp/blog/index.php/2008/12/10/an-open-letter-to-craig-hockenberry/

As a professional software engineer who also has an MBA, I understnad where this guy is coming from. Decent developers are expensive. Many of you complain about the cost of quality developers that this guy states. Understand that rates he quotes are contractor rates, and those guys are not full time employees who make $150/hour for 8hours/5days/52weeks a year. The software developers actually bring home much less than what you might think based on how much of their time is considered billable, and trust me, a lot of it is not. And whether or not you still think quality developers should make this much money is irrelevant. The fact is, quality developers are in short supply and high demand, the job market will always set their price(salary). If you don't like that aspect of a capitalist economy, you could always move to China where the government determines how much you need to make.

Oof, I posted this comment earlier with an incorrect link!

The App Store solves a distribution problem, not a marketing problem. If you’re relying on placement in the store to market your app you’re doing it wrong.

In that environment the only way to stimulate demand is to cut prices.

I wrote about just this in my article, “The $0.99 (App) Store.”

Trey -

He's not saying he's paying "writers" $200 an hour – he said the cost of a devloper is $150-$200… the costs include more than just wages – they include infrastructure (computer, software development tools, licenses, etc).

His point is well taken by this 30 year "writer" of software – since Apple has made it impossible to add software except through the app store (without the iPhone being jail-broken), and they have a UI for the app store that awards $.99 apps over more robust ones – there is really no financial incentive to write the killer app.

What a load of crap…

"Both developers and designers cost somewhere between $150-200 per hour."

I don't know where they're finding these developers, but I want to find out where so I can join up and start charging 5 times what I'm making now…

There is nothing for charity neither for developer nor for apple store. it seems to be failure of marketing plan At the end end, there is a money left in the pocket which exactly not.

I am not sure if all this is, upto the targets of Steve Jobs.

It should be weighted. (10) 0.99 apps should = (1) 9.99 app. when being shown as the most popular on the app store. That way it encourges developers to find that sweet spot between quanitity and price. =-)

"The problem with the letter writer is he is hiring “writers” for $150-200 per hour! Idiotic!

Most apps are written by amateurs. Anyone who thinks they are worth $200/hour has an awful high opinion of themselves!"

For a "writer" perhaps $150-200 is a bit spendy. But for a software developer its in the right ballpark.

Stated differently, an established software developer who feels that they are not worth $150-200/hour has a low opinion of themselves.

Hockenberry needs a class in marketing. Why is he relying on Appstore to put his app in a good place to be seen? That's laziness. Also, get a handle on those expenses. With this economy, there are plenty of people who could do the same work for half the cost (or more).

To Dave from Boston.

You are correct in your estimation of teacher's salary, and the schooling required to be certified to teach. However, the difference is the skill set and knowledge base required to be an effective programmer is much more difficult than that required to teach. There are fewer people in the world that are able to excel in programming vs. teaching. There are also other factors to consider such as the fact that software companies record a profit from the work of programmers, schools do not.

This is not to say one is more important than the other, just to explain why the gulf in salary. And obviously we all know without teachers there wouldn't be any way to learn the jobs that make people money.

PS the 150-200 development cost includes the cost of computers, their office space, electricity, testing, etc. It's not simply their salary.

Developers are earning $200 an hour because they can. There's a demand! The same reason that an MLB pitcher can demand $160million, because he can. If peope are whining that developers are making too much money at $200 an hour, then those people should learn how to develop and stop whining.

The reason I don't buy expensive apps is because I can't try them out. If I go into Best Buy and purchase an item and don't like it, I return it. Until the App Store gives us this ability (say a 3-day trial period) I won't touch an app over $4.99 in price. I would gladly pay $10, $15, or more for a really good app that I want to keep, but I have to try it first. A very simple concept!

To the people thinking that Hockenberry's rates are high, he's quote the cost to the company, not the hourly rate the employee makes. If you pay someone $75/hr, when you factor in benefits, payroll taxes and insurance, the rate nearly doubles to $150/hr.

That said, his rates still seem a bit high, but not as absurd as appears at first glance

I would be more than happy to pay for a $10 app if it could do one of the most basic functions even a track phone can do and that is SEND PICTURES in MMS, With all the hype about I-LIFE and how music vids and pix are so easily managed by apple why did they leave out MMS on the IPHONE why isnt ther a good straight forward app that can perform this function. with the write phone digits and syntax this phone can send pictures I've done it so why wouldnt apple put a pretty GUI around this function.

I've had my I-PHONE for a year now and its novelty is wearing off due to many lacking fucntions of basic phones(how about cut and paste, how do i run lotus notes mail).

Blackberry storm is going to decimate the apple market if they dont get up to speed.

As another iPhone developer, I agree completely with Hockenberry.

I will add this one point: the simplest thing Apple could do to alleviate the problem is to base the popularity lists (which are by far the chief vehicle of app exposure, regardless of any developer marketing) on *revenue* of downloads, instead of *number* of downloads, as presently seems to be the case.

It's not fair to me or useful to anyone that my $2.99 app Subway Shuffle has to do three times the business as a $0.99 app to get the same visibility.

For all you hourly rate haters out there… Iconfactory employs some of the most talented graphic and interaction designers in the world. Yep, that's right, the WORLD. Not to mention being super nice and genuine folks. I am certain that the rates quoted are based on opportunity costs of developing apps instead of doing client project work. They are in great demand by some of the giants in the software/computer industry so stop hating on them for being good at what they do. (No, I am not an Iconfactory employee – past or present.)

To everybody complaining about the $150-200/hr wages: Companies typically multiply hourly wages by an earnings ratio of anywhere between 2.8 and 3.2 to cover health care, retirement, and company profit. So that $150-200/hr is more like an employee earning $50-70 /hr.

Hey Donovan….as someone who works in the development of applications, I make $85,000 a year, and my bosses would tell you that I am worth every penny – and more if they could afford it. On top of my gross pay, there are benefits, employment taxes, the cost of the equipment and office space that I use, insurance, utilities, and the cost of my supervision. All that comes up to a billable of $120 hour when I am assigned to a project – so no, the numbers are not off.

You missed the point of the letter entirely – If you are working out of your mother's basement in your spare time on a buy-use-forget application like a game, that is one one cost point and any price over 1 cent is profit. However this guy is talking about real companies developing real applications that will be maintained and expanded so that they will be around for a while, hence the need to factor in overhead. The cost numbers that the letter quotes are low, if anything.

The problem is that the cheapie stuff is being mixed in with the serious application with very little to differentiate it to the consumer. Until the company can get its brand known and the capabilties of its products described, the consumer has to hunt and peck through the chaff to find the product. The costs are not the issue here.

OK, So Appstore:

- Reduces the cost of games.

- Lowers the price of games: for end users.

- Weeds out inefficient producers of games: those who would like to sell it for $99/-

- Encourages new and innovative kind of apps(where else do you find so many different kinds of games).

- Encourages weeding out of games by either viral promoting or demoting.

Why whine or write a dumbbass article about whiners?

One Possible solution to this problem is to develop a deployment installer that allows you to install the application straight to the iTunes application, and sync it from there. This way, you are not limited in selling your application ONLY thru iTunes. You can sell it straight from your website as well.

I understand the author's challenge in the marketplace, but that's why there are a lot more discount stores than luxury ones. The people who complain about the "high" price of applications are likely the kids who got an iPod for a gift and can't afford to fill it with higher priced applications. The fault is in the developers who would develop a good piece of software and sell it for $.99, not the customers who are asking for a cheaper product. I'll bet that if you have a truly good piece of software, there will be 50 people who will say it's worth every penny and 50 who will complain that they can't afford it. Yes you have to compete with the "crapware" . Get over it, so does every other company on earth. Developers aren't economists, but in their defense, they respond to blogs and feedback in a much more immediate way than, say, Ford responds to a customer letter. These are public comments and they can be painful to receive, but I think the best model out there to combat that is the free trial software with the upgrade option. Most of my expensive applications have allowed this and the price is a non-issue once you know that it is the product you want.

The problem isn't the app store; it's the fact that these apps only run on an iPhone. Imagine a bakery making bread that only works in a specific brand of toaster. Good luck with that. (Android, despite it's less-than-stellar launch, stands to be much more profitable for developers, IMO).

Wow, lots of people missing the point.

The point he is making, regardless of how much the developers cost, is that the way the app store works there is no point for a company to spend any effort making apps for the iPhone. This results in a big pile of ametuer garbage, a few good apps, and alot of bad experiences for users. That's not a good thing.

That goes double for those who market. Why would anyone spend money marketing an iPhone app when all the garbageware apps get free marketing in the most prominent place possible.

The problem with the letter writer is he is hiring "writers" for $150-200 per hour! Idiotic!

Most apps are written by amateurs. Anyone who thinks they are worth $200/hour has an awful high opinion of themselves!

Consumers: Steal everything

Producers: Hire slaves (aka third world workers)

The problem with the letter writer is he is hiring "writers" for $150-200 per hour! Idiotic!

Most apps are written by amateurs. Anyone who thinks they are worth $200/hour has an awful high opinion of themselves!

The best solution, which would cover the programmer's biggest concern, would be for Apple to allow you to preview (i.e., use) demo versions of Apps in iTunes.

To the guy saying he is a software engineer who deserves to make $150-200/hour over someone who is uneducated: I'm sorry, but that is a ridiculous amount of money for someone just because they got a college degree. The average teacher makes $30-40/hour and they went to school just as long as you did. The average doctor makes $100/hour and they went to school four years longer than you did.

“Our products are a joy to use: as you well know, customers are willing to pay a premium for a quality products. This quality comes at a cost—which we’re willing to incur. The issue is then getting people to see that our $2.99 product really is worth three times the price of a 99¢ piece of crapware.”

I don't get it! First he says that "customers are willing to pay a premium for a quality products" and then he says "The issue is then getting people to see that our $2.99 product really is worth three times"

Which one is it?

I doubt that anyone is willing to go with low quality product for $2.0 difference. It is not like people are buying thousands of applications for their iPhone so that two bucks would matter.

There is a fallacy here in the pricing model. The "hourly rate" that they're "charging" for coding is arbitrary and based on what a software publishing FIRM (like EA) might pay a high level coder to create an app.

If you reduce their hourly rate to something more reasonable, you can reduce that cost by a third, or more.

You can certainly price your application at whatever price point you want, but that doesn't mean it will sell at that price point. The iPhone is a disposable product, and the software you "buy" is more like a license. You don't have any control that it'll be available and that your license will be extended for free to future iPhones. If the developers were sending me a retail boxed disk with the iPhone app on it that I could install again and again and again – that would be one thing…

But otherwise, phone apps are never going to be "premium" software.

His wages of USD 150-200 an hour are standard for Europe. And I think for the US as well. We pay on Average €900 per day for experienced developers, less for testers.

I don't think that rates will drop either, though I have seen it happen in spain, where some contractors are now getting paid 10-15% less.

His problem is not his costs, but the overabundance of applications out there. And it is going to continue to happen. Its a free market, and its tough, thats capitalism for you He might have to drop his rates, but they will go to other companies, not as quickly as they did in the past, but eventualy he will loose his quality. He then needs to think of other channels to sell his applications maybe.

Give away a free demo.

Sell a basic $0.99 version.

Then, a $2.99 silver edition.

A $5.99 gold.

$7.99,

$9.99,

$19.99,

Then the $49.99 Platinum edition that does everything and does it twice as fast.

The App Store solves a distribution problem, not a marketing problem. If you're relying on placement in the store to market your app you're doing it wrong.

In that environment the only way to stimulate demand is to cut prices.

I wrote about just this in my article, "The $0.99 (App) Store."

ex ped: Er, I think you've linked to the wrong piece.

Your average iPhone app is NOT worth $.99. In fact, most of them, even the free apps, are not worth the time it takes to download them.

The App Store is equivalent of a flea market. How many cheap worthless apps that do THE EXACT SAME THING do we really need?

Where is the app that allows for saving and editing documents on the iPhone? Where is the Office compatability app? Where is the app that allows for video recording? Or cut and paste? You know, the apps that are actually WORTH $4.99 or more.

I bought two apps for more than $4.99. Used them both once, and since deleted them. Worthless.

The App Store is a great idea in concept, but absolutely HORRIBLE in execution.

Clear out the garbage and offer some apps that actually DO SOMETHING valuable (other than turning the phone into a 'lightsaber!!) and you will see iPhone users pay money for them.

What some people may not be realizing is that people who develop software sometimes choose to do so not as a hobby, but as a career. You get what you pay for, and higher priced designers and developers are indeed people who have dedicated their working lives to making well-designed products.

In my mind, the real issue is that the average person seems to prefer lower quality goods. Hockenberry's applications are well designed and executed and just get buried behind piles of crap.

As a single-man developer myself, I am starting to see the app store getting saturated by all these bigger software names like EA. Giving me less opportunities to compete in this huge arena. If these companies can't afford to develop a "quality" product at the particular price demanded, then by all means choose a different platform, lower your risks. That's just good practice, business wise.

Hockenberry – Not too many products can suceed without marketing. If you're hoping to launch an app based on app store browsing alone, you're going to EPIC FAIL. I assume you have the corporate SDK. That allows you to deploy the app without the app store. Give away some copies to game reviewers and gamers, and request that they use social networking or blogs for positive reviews. Marketing is your friend.

Boo hoo hoo. The problem he is complaining about is one that I have had to deal with for 25 years – i.e. young people mindlessly buying and driving the technology market in ways I do not want it to go(yes, I'm old). I was happy with hundreds of applications and products over the years that I've had to fix myself or dump and then relearn new,inferior products because "the young" go ga-ga over every new nuance of technology.

So my trick for the last 20 years is just to stay about 2 or 3 years behind the cutting edge:

People give me their "old" stuff or I buy it for pennies on the dollar

I don't waste time learning "temporary technology"

All the bugs have been worked out.

Technology trends last about 3 years and then the successful part becomes mainstream: I only invest time and money (and little of each) in something that is useful forever

I don't learn "bad habits": get dependent on a technology that no one no longer supports.

I can't drive technology, but unlike the Hockenberry, if I don't like it I get out of its way.

Integrating video clips of the app in action would be better than the 5 or so screenshots we currently get. Of course, this doesn't stop developers from putting video clips on youtube, right now, and some have done it. Integrating the video would be a little easier for buyers.

Linux has proved that free software can be great software. (There's also lots of junk, so obviously one needs some mechanism to help sort it out). I don't see why the iPhone platform couldn't be the same way.

Besides, developers who are whining about lack of exposure for their commercial projects could be more creative: e.g. they could have their own websites with interactive demos, or a limited-functionality free version on the app store, …

Let's be frank: if a killer app comes along, sooner or later people will know about it, and buy it if they feel it's worth the price… or wait for a competing free app if they feel otherwise.

As a software developer, I have mixed feelings about Hockenberry's point. First, I agree that the App Store's user interface is awful. Every time I use it I wonder why there is no way to sort applications by rating or why there's no way to try out an app before buying it or even why there is no way to buy/sell subscription apps (per month or year, etc.). I strongly feel that the App Store needs to be more intuitive rather than just display the cheapest (and/or most useless?) apps first.

Having said that, I think Hockenberry's company is paying its developers too much–MAYBE if they were in San Francisco but it looks like they're based in North Carolina! A developer earning over $50 an hour in a city with a low cost of living can live very comfortably. Of course, I understand that there is overhead for each employee. But even accounting for that, $75 an hour comes out to $156k a year. Even after accounting for overhead, this is a very good salary for a developer.

Well stated [Hockenberry] EXCEPT… ”You and your team are perfectly capable of dealing with it [solution] on your own terms". Wish change, and change that works for developers, then offer SOLUTIONS. I don't own an iPhone (yet) and thus not very familiar w/ the AppStore but can imagine improvements like… (1) time-limited demos (Apple can zap your apps remotely – intended to eliminate mal-ware), so they could offer developers a no-cost trial version, and users an easy way to preview and buy or not afterwards. (2) better rating system which may include "function points", that is, some measure of functionality… single-purpose, multi-function apps. BTW any such changes should be made transparent so neither developers nor users are surprised by Apple-initiated actions!

if you make a good/great game then it will be bought, it's that simple. word of mouth (in these days meaning forums and blogs) are what will make or break your app. so stop the whining!!!!!!!

I was about to write my reaction to this when I saw Mike's post: he's dead on.

I keep hearing this complaint about the iPhone app ecosystem and it's really getting on my nerves. Why? Because the press keeps interviewing these engineers who have no idea what it means to run a business.

Mike is right: Hockenberry, go take a business class. You need to sell and market your product. If you build it, they just don't automatically come. If you have built something of value and you communicate that to customers, they will be happy to part with more than 99 cents for your app.

Hockenberry also may want to consider outsourcing his labor to India. You can get a very good iPhone app built there for a few thousand dollars, max. I know, as I have done it.

There are plenty of good apps out there for free and at that 'magic' 99-cent price point, but many users (like myself) will gladly pay a premium for a more robust application. A few weeks ago when I was going through the app store looking for a guitar reference application I found a number of chord libraries, tuners and scale charts in the free-to-a-dollar price range. What I ended up downloading, though, was the much more full-featured GuitarToolkit app that has a tuner, metronome, chord library, alternate tuning library, scale library and much more for the very reasonable price of $10. I have not regretted the purchase at all. The app is fantastic and much more convenient that having to sort through half a dozen cheaper apps to access the information that I need. 99-cent apps are great but there is always going to be a place for apps that have more time and effort put into them, and that time and effort is worth a little more money.

Some of the ignorant comments regarding pay scale of a software engineer must come from the Walmart greeters or fast food employees. When you spend years going to college to earn a degree at a considerable cost to yourself, the expected outcome would be a financially rewarding career. Successful software applications that are accepted by the masses are typically not written by uneducated people. So quit whining about my salary! I earned it!

Offer and Demand. That's all. Due to iphone intrinsic ergonomics, you can't have a too complex application. Forget the spreadsheet.

One study found that people usually use only less than 10% of any office functionnalities (unfortunatly not always the same 10%…).

This tells us a new economic model is on its way: simple, "atomic" applications you buys easily (hence the psychological 1$ threshold) and use as easily for a very specific use.

Its the difference between old fashioned razors and dispendable blades….

Adapt or perish, a new software economy is on its way.

So the problem is that higher priced apps are being crowded out by lower cost apps….Fortune that is what business is about. I have bought enough McD burgers to know what a low cost burger tastes like and why I pay more for a great one at my local restaurant. As consumers learn what are good and what are bad apps they will pay accordingly. I am confused by Forture wrote an article about something that is basic Economics. Oh yeah, they have to sell content….

What appalls me is that Developers and Designers can't let go of the fat, happy salaries they have been making in the past 10 years. The auto industry has something to learn from here. EVERYONE is having to bring their labor rates down to accommodate the current market. It's either that, or have no work at all and close the doors. Hmm… $60-$80/ an hour vs. $NOTHING/Hr.?? I would think that Iconfactory could use this as leverage to still get their great apps out there and still achieve a profitable margin.

Hey Mr. Hockenberry, what about putting out a bid for a programmer at a "flat rate"? That way they actually work their butts off to complete in a profitable timeline for themselves instead of "milking the clock" on your dime and you having to charge more to consumers because that is NOT going to be acceptable.

Real people are losing their homes and jobs, and 401k plans. Reality is here. This article just opened the window to show us all how greedy some individuals can be….

Most of the 6 pages of apps on my phone come from reading about the apps online, and in blogs. They don't get purchased by me because of placement on the app store. The placement referred to in this article is essentially free advertising. Maybe Mr. Hockenberry should invest money in his own advertising, and let that drive up his costs even higher.

Is the app store perfect? Does it encourage that new app that will cure cancer? No. It is what it is. A great medium for distributing applications written for a specific device.

I am a just now beginning to write my first i-phone app. I am planning on selling it for .99 . If I sell one I would be so enthused and stoked. Think about it. If you come up with a great idea and implement it well, you can make some money without having to spend any capital other than your time. Apple handles the entire sales process for you. For developers this is a great deal! You don't have to create the whole backend for selling your app. This allows me to concentrate on my app and not worry about the other stuff. There is nothing stopping me from advertising on my own, makeing a flash video of my product, creating other versions on other platforms or calling everyone I know on the phone and asking them to buy it. If my app (assuming I can actually write it ) gets into the store, I believe it is up to me to market it. I think of it this way. The apple store is like an election ballot and if you are in the store, you are on the ballot. That doesn't mean that you don't need to run ads, put up signs, and kiss babies in order to get elected. Allocate some of your capital (or time) to marketing.

HORRIBLE title to this story!!!!

EXTREMELY misleading!

Anyway, try checking out:

http://en.wikipedia.org/wiki/App_Store

At the bottom, you'll find a link to a "scraper" that can help sort out reviews on "Apple Apps".

The bottom line: One must wade through a ton of reviews to gauge whether it's worth a gamble. So?

Or you could team up with a bunch of friends and pitch in the dinero to buy a package and see if it's worth it. Basically split the cost of the experiment.

I do agree that Apple could do a better job of sorting down to a sub-catagory level or even deeper.

i have yet to purchase a single app on my phone. i don't plan on buying any if i can help it. there is enough free shit to play around with anyway. my motto for free games is "beat it and delete it"! my motto for free entertainment is "enjoy it and deploy it"! my motto for free utilities is "use it and loose it"! live it, love it.

Waiter, reality check please. Developers and designers at $150-200/hour. Do the math. That would = $300K yearly on the LOW end. A good contract programmer can be obtained between $75 and $100 on contract, and excellent full time employees (FTE) can be obtained below $125-150K/year even on the HIGH end. Add 28% to fully burden the FTE (benefits), and you're still far below your assertion… Another case of throwing numbers out hoping people can't think for themselves… Rejected!

This is the most absurd argument that I have ever read:

The other apps are too cheap and my app doesn't make money because I want to make 200 dollars an hour.

If that's the case you probably believe in Amway too…

What about all the FREE apps? Should they not be free now? I'm not even talking about Jailbroken apps, I am talking about the free apps that you can download on iTunes.

Look it's very simple math and economics. If the app is good, people will download it. People will pay for it.

For all intent and purposes out of all my iTunes apps, I have only paid for 1. And it was 5.99 at the time (now it's like 3.99). Why? Because it was worth every penny.

(internetradioBox in case anyone is interested)

It is the only dedicated shoutcast/icecast player out there. It is simple to use and to the point. Sure, there were some other "free" apps out there, but they kinda sucked, and crashed, and really didn't do the job. This app that I paid for WORKED and i use it every time i drive my truck.

5 bucks to pay is a small price for commercial free internet radio from all over the world… FOR FREE anywhere i go.

This Hockenberry fellows argument is the same argument that people use to justify their failure at creating something that no one really wants.

It is very simple: You created an app that you thought was great and worth the price. Very cool. Unfortunately you were wrong. The price for your app is, according to the masses or the consumer, too high. Why should I pay when there is a free app that does the same thing if not better?

Or even better, does the use justify the cost?

And most of the time, I'd say that 99 cents is too high of a cost for an app that doesn't do a whole lot in the first place.

It's almost like the Willy Wonka argument regarding Augustus Goop flavored chocolate "ewe, no one would buy it…"

150-225 THOUSAND DOLLARS to develop an app? Are your freaking insane? Look I know that computers are the wave of the future, but good lord! I've been accused of having a silver spoon but this takes the cake and eats it too!

Next you'll probably blame all the people who have cracked your apps too.

It's people like you that make me thankful for GNU, and Linux, and Open Source, at least their priorities are in the right place.

This is a reply to the poster: JPO from Brecksville. And anyone else who thinks 1) Hockenberry is a whiner 2)Developers and Designers are over paid.

I'm a motion graphics designer for a living. I teamed up with my brother to develop and design a couple IPhone apps. One of them, which just finished this week, is probably the most labour intensive and well thought out project I've ever worked on.

The game started from a concept, and as me and my brother put in months of our time into this project, coding, bugging, designing, testing, re-coding, etc, I can tell you this is no easy feat. If you invest several months of hard work into something you may or may not see returns for, then it justifies why should you be charging $100+ an hour. Computer programmers earn computer science degrees. Imagine doing insane math for 12 hours a day, everyday, and not getting paid for it. This isn't a regular mundane job. This is a contract type of job. Just like you would pay your mechanic or plumber or landscaper or anyone who doesn't hold a 9-5 job that can be easily replaced.

Its true that the App Store from Apple isn't perfect. Working on something for months without seeing a dollar, just to sell it in a crowded, noisy online vendor like the app store for .99$ is degrading. Of course there has to be marketing and advertising for the product, but most people don't browse the internet for apps, they go directly to the app store to look for high rated, featured ones.

I think 2 factors would help alleviate some of the issues. The first would be get the cost of labor under control. That would change the dynamics of how much it cost to develop the apps and how the apps can be priced. Second offer a free trial to get the placement and offer the full app at a price that makes sense. In a way you have to game the system to make it work for you. Theses are things I consider with 2505 Studios.

1) Your labor costs are high in this sector. Will be coming down as companies continue to lay off. $200/hr with a BS? Consulting engineers with PhDs don't charge that much.

2) As others have said, only a few developers have lite versions as try-it tools. None seem to have a trail period; may be impossible on an iPhone app, don't know. If I pay $30 for an app and I don't like it, I am out $30. I am willing to roll the dice for $1.00 or for a promising app, $5. But not $30.

3) To me, the platform (small screen size, difficult data entry) does not lend itself to very complicated apps. The true virtue of apps is to make something I could do with the Web on a full-screen computer much easier to do on the small screen. For example, the YPmobile app allows me to do what I could do on the web anyway if I had a full size screen much more efficiently. This is what apps are good at. Trying to navigate my car using the "Maps" app? Crazy and dangerous. Trying to scroll around a spreadsheet? Forget about it. So I don't think the iPhone platform is ever going to do well with anything that requires a lot of compute power or real estate. However, I think apps on all platforms will revolutionize the way we access and use the information on the Web. This is the power of apps. Anyone who has an iPhone can tell you how powerful it is to be able to look up information at a whim. Extremely powerful.

4) For goshsakes, add a friggin' Flash player! How long is Apple going to hold out on this? They already claimed the iPhone would not have GPS, but guess what?

5) Also, recess or protect the camera lens! Mine is damaged to the point it is virtually un-useable from just having it in my pocket by itself (no keys, etc).

I see this as a problem with the software development model being used and not a problem with the platform. As tools improve and resources become more prolific should the cost of software development remain so high? Clearly it is possible to develop high quality applications and recoup costs at the ringtone pricing structure. I'm wondering if this is just sour grapes over the democratization of software development as barriers to developing successful apps is trickling away from larger, dedicated software developers into the hands of people who just have good ideas.

But if this is truly a problem, that somehow more people developing more apps is restraining the creation of more useful applications, then a simple solution is to build an iPhone emulator into iTunes that permits users to demo the application prior to purchase in order to determine if paying a premium is justified.

For those of you complaining about the developer cost per hour, you need to be aware of a few things. You've obviously never been an employer. In addition to the take home pay an employee gets, the employer has to pay employer taxes, there is hopefully a medical plan for the employees, the office and everything included has to be paid off, the building needs to be heated, there might be a pension plan the employer contributes to, advertising costs money, do you like your Christmas party?, company insurance is pricey, and so on and so on. For convenience sake, all of these costs are built into the employee "cost" when figuring out what amount of income is necessary to break even and what is necessary to make a profit. When you think about it that way, 150 dollars an hour doesn't sound like much at all.

I got an idea for a really 'cool' app.

How about an app that allows the Iphone …..and other mobile phones… to operate with the clarity, confindence and reliability of a land based line, Wow would that be 'cool' or what?

If you want to talk about crapware, start with this article. The author doesn't give up the point of the article until the tenth paragraph … and even then it reads like a Japanese translation of the description of the secret masonic hand shake. Enduring the rest of the article was worse than listening to fingernails on a chalkboard. Where do these journalists come from anyway?

From the article:

Both developers and designers cost somewhere between $150-200 per hour.

Holy crap, dude, that's your problem right there. Even if you figure that overhead, benefits, etc, make up half that cost (which is high compared to where I work – in the defense industry!), then even the guys at the low end of that range are making over $150k/year! You can't tell me that you couldn't get people at lower rates than that in the US, to say nothing of going overseas.

I would be more than willing to spend the money on a good App. The problem lies in the system. I've noticed that many of the "game type" programs offer a stripped down lite version as a trial. These lite versions are often free. I don't see this with any of more expensive business applications. A agree that the business model should change. I would prefer that all the applications are free initially and comsumers would pay for a semi-annual/annual update (bug fixes should be free of course). Encourage consumers to try more apps and also encourge developers to continue to develop their product and take into consideration customer feedback.

Would you like some cheese with all of your whining? Your company has no overhead, you work from your home and Apple does all of your marketing. You have very little invested in your product but development. I'm so terribly sorry you can't recoup your investment in two days or even a week but its called business, I guess you missed that class in college. At any rate, if the market won't bear 9.99 for an app, don't make it. Force Apple to actually do some work and develope one or two. Also, from the developer stand point, hold Apple more accountable! Their organization of the app store is horrible. Also, have them advertise higher rated apps as their value increases from purchase. Have a comment card or feedback for the developer when they purchase it instead of negative comments. Actually, just do your homework before you complain!!

Damnit now I'm going to brouse the App store…

CURSE YOU!!!!

Note to developers: price as you see fit as a buyer.

People who don't generate IP will grumble about any price point. This is human nature and it does not matter where you are.

There is no reason not to charge a premium for a good product. If a plastic sheet protecting the iPhone can sell for 10 bucks, a good app thoughtfully written should fetch just as much. Some of the reference software isn't cheap but good work deserves to be rewarded.

At the end, if people don't value useable app more than a big bag of potato chips, then something really is wrong with the free-market system.

Hockenberry should relocate his company to a city like Denver where his hourly labor costs for experienced developers and designers would be in the $40-$60 range. That changes the economics considerably, compared to his $150-$200/hr. His $200k in development costs for a "big project" would come in less than his current costs of developing "ring tone apps".

Of course, this is obvious, and perhaps that's why Hockenberry is the one complaining, an 99 cent apps proliferate, by developers around the world.

Developers at $150 an hour? There's your problem. Watch out as the cost of labor drops to near zero.

Simple solution.

Allow downloading of trial applications (say 5-10 days of limited use) so the users can see what they're getting before spending the money. It's the best way to get more clients.

The appstore is truly a "free market" and it's in its infancy. It will take a while for the economics to sort themselves out.

Apple could provide a few more tools to help developers promote their apps, like try-before-you-buy and demo videos, and Mr. Hockenberry could try taking a little risk with his "killer app" ideas.

Personally, I find the democratization of the app store very compelling, both as a developer and as an iphone user.

The Appstore made a good start but it suffers from two huge problems.

1) There is no way to try and buy. That leads to lower prices where people are willing to risk on an unseen app. If there were a way to use an app on a trial basis, people could later decide to purchase it or not.

2) Poor categorization and search. The Appstore provides remarkably few ways to find an application. There are few categories. There are no sub-categories. On the iPhone, there you cannot do much if any sorting of lists. The end result is that you end up with 10,000 apps on which only the top few sellers or "featured" or newest get any attention. Anything else regardless of how good it is gets lost in the noise.

These two problems need to be fixed for Apple's sake mostly but also for developers and consumers. Today the only viable way to sell on the Appstore is to give away a free version of an application as a way to sell either a pro-version or a desktop companion program or service.

I see an opportunity for a 3rd party website which rates and demonstrates apps. He says his only problem is visibility, so he just needs to market his apps outside of itunes then link customers there for the actual purchase. It would be nice for all involved if apple would provide a better way to evaluate apps before buying, too.

And this is a surpise how? People are CHEAP – how many apps do they expect to sell in the $20-50 range? Ask Palm and Microsoft how that worked. Some of the leading developers there were lucky to sell 10,000 copies of a title.

Face it the AppStore while a great content delivery system is a joke and people view it as part of the overall iPhone price so free / dirt cheap works.

Maybe you should make your apple cross platform and develop for Blackberry, Android, Microsoft, etc then you have greater sales, larger customer base.

Didn't Spore do really well at $9.99?

Seems to me if the market will only pay $0.99 for an Ap then figure out a way to sell more of your expensive cool Aps for that price. If the market will spend more for a cool useful Ap then it is your responsibility to market it in a way people realize that value. Coming up with a cool product is only part of a successful business. Don't blame Apple you if you don't succesfully market YOUR product.

I don't have an iPhone, but I have owned many Palm OS applications. Several good points have been made. No trail period, no demos, and no returns/refunds are big problems, both from a consumer point of view, and the publisher's point of view. The last thing a consumer wants to do is to spend money on an application that they don't find useful. The last thing a publisher wants is a customer that feels ripped off just because your app isn't the one that the customer wanted.

What should the price of a good quality application be? I generally will pay up to $30 and sometimes even more for an app that will meet my needs on Palm OS. Games for Sony PSP, or Nintendo DS range even higher.

All clear and right, but for now the Iphone/Ipod applications do not have so much pirating to worry about. ALL and every program in my computer is pirated or free, from windows to excel to games. Why, because I find them too expensive to purchase. I'm sorry Mr. Bill Gates, but I did not pay for your Windows, I hope I'm not making a dent in your zillion bank account. If Apple makes developers compete, well, at last we users get something at reasonable price. I have to go now and search for more free games for my ipod…

Craig Hockenberry = whiner.

If you build it they will come. This guy instead wants to stop development of "cooler (and more complex) ideas" because he's afraid no one would shell out more $$$ for them. Is this guy running a company? Has that ever stopped anyone in developing anything? We wouldn't have BMW or Apple Computers if both respective companies laid down like this guy has.

I admit I'm a free guy. Some of the apps I've downloaded are not truly free. I have to see in game ads. This is another avenue for revenues for some developers. Some free apps are gateways to the higher cost brethren (very similar to the shareware market that was spawned many years ago on the PC side). I do not remember dBase, or Microsoft or Wordperfect bemoaning freeware/shareware. They still forged ahead with expensive/bloated software, and did very well.

For this guy to even suggest Apple do something about this is comical. Hahhahaahha – he'll be bankrupt before the end of the year.

PS A developer/designer makes $150-$200 an hour. Man, I’m in the wrong business!!!! Time for reality to set in – readjust wages down to reasonable $50-$100 an hour, or move to India. What are these guys? Lawyers??????

First thing to consider is "it a real problem?" and if so, for whom?

The next steps, if warranted, are to brainstorm and develop ideas and solutions that address the root causes to those problems.

Third step, evaluate the alternatives with respect to their likelihood of success and then implement.

Throwing out half baked ideas, criticism, and conjecture on a blog serve little purpose and obfuscate the issue.

when pc came to this world, we cannot justify to use those mainframe/mini engineers to support such type of machine. what is happening now?! basically, a different ecology will emerge around such a gadget of the decade.

Problem is there are very very very very few apps that I have used so far that are worthy of purchasing for any price. The market must mature first before complaints like this can be validated. If he has no confidence that his apps will not sell than he should not spend the money to develop them. The problem is not the app store but the idiots like this guy who wants a no-risk arrangement to develop apps. Not gonna happen. He should be more worried about the weekend programmer that takes the same idea and gets it to market first (probably with the same or better quality. It is a very democratic system, if the "big developers" don't like it than they can move on to develop for Android and make no money.

The problem isn't with Apple or the app store, it's with these kids who think they know how to run a business when they don't.

They think if they have a cool app then the world will beat a path to their door and they're entitled to lots of cash. The world doesn't work that way.

If they spent some time and money advertising their products and explaining the value, then people will spend more than 99 cents to buy them. Why do they think Apple spends millions of dollars each year on advertising? It's not to sell the cheapest computer in the world. It's to impart a sense of product value to people and make them want to buy the product.

Google advertises its iPhone app online. Other app makers should, too. it's business 101. If they go out of business, it's not Apple's fault. It's their own for not going after the customers and instead sitting on their butts and wondering why people aren't knocking on their doors.

He says he has no solution but he's clearly suggesting a shareware or trial period for some software where you can download it for free and then try it for a little while before buying.

It would be a good idea and it would help stop the flood of crapware on the iPhone.

So, the "problem" is that the store is way too democratic? Like the complainer, I have no solution either. A robust program that might cost $10, or $50 or more will likely require a bit of outside advertisement. Or perhaps advertisement embedded into a free game or app, or a "lite" version of their apps. That's gotten me (the "King of FREE Apps) to actually shell out to buy some games and apps.

Overall, the iTMS APPS store has TOO many positives, especially for the smaller programmer or "Lone Wolf" out there. No overhead costs other than the cut to Apple, which makes it "pay as you go". And once people decide to purchase, it's just one click, all the billing is already set up, etc, and downloading, etc, is a piece of cake!

No shipping, packaging, inventory, etc.

Let's have a thought experiment though. Let's close the Apps Store. No more readily available one stop shopping. You'll have to go to several sites, all costing many to advertise to you. You be on "iphoneapps.com" , "getappshere.com", etc, etc. paying by credit card here, paypal there. etc. Just like Treo users! haha! Now, under such a scenario, would higher priced programmers be happy?