Are Smartphone Apps Overpriced?

Since the term ‘smartphone’ was coined there has been debate over what it is that makes a phone ‘smart’. Several suggestions have been put forward and many centre around the idea that it is the use of apps that can be downloaded to a device to expand its capabilities that truly make it a smartphone.

Many of those apps are available for free, often performing simple tasks or offering quick, limited gaming experiences. But many of them come at a price, ranging from a few pence up to nearly a thousand pounds.

The number of apps available runs into the hundreds of thousands for the majority of major platforms, with both the iTunes app store and Google Play able to boast over 600,000 each.

Figures released by US research firm Canalys earlier this year suggest that the average price of a paid app on Android is over two and a half times that on iOS. The research found that the top one hundred apps in Google Play each cost an average of $3.74 (£2.32) whereas the top one hundred apps available on iOS would each cost an average of only $1.47 (91p).

Beyond these prices, there can also be further costs charged through in-app purchases after the initial payment. Many games make use of this model, charging users for upgrades and extra features from within the game itself.

There are other models for in-app purchases too, with a recent companion app to George R.R. Martin’s A Song of Ice and Fire books (upon which the TV series Game of Thrones is based) being initially free but charging for services relating to each book in the series from within the app. To access all of the content would cost well over £5 in total.

The practice of charging extra for features after an app has been downloaded hasn’t gone without scrutiny though. The Australian government recently launched an inquiry into the way in which these charges are made and how they target certain audiences, with findings expected in January.

But could it be said that apps cost too much? After all, the Canalys figures show that the average price of an iOS app is below a pound. While some apps offer extensive services for free, the small fee charged for others is unlikely to break the bank of many smartphone users.

Also, even the newest, most high-profile smartphone games are usually only priced at £4.99, considerably less than the leading titles for the likes of the Xbox 360 or PlayStation 3.

Having put the question of whether apps are overpriced out to our social networking audience over the past week, we found that opinions differ greatly. As Facebook user Andrew Westgarth wrote on the Dialaphone Facebook page: “No, why should they all be free, who’s going to pay the developers who spend hours making them?

“Often most smart phone apps are made by individuals who have to buy tools, equipment and pay store fees before they can submit.

“At a bare minimum 79p for an app is very, very reasonable it’s less than a cup of coffee which many are happy to spend plenty on!”

However, Johnny Hewison disagreed, simply stating: “Android no, Windows Phone and iOS yes!”

Another Facebook user, Ross Dargan, floated the idea of a different business model for app sales: “If people think they should be free, then someone needs to pay for them.

“Wonder if we will end up with a Spotify model where developers are paid royalties based on the apps’ usage.”

Running the same question as a poll on the Dialaphone blog also brought some interesting results. Two thirds of people who responded thought that apps are over priced but that left a significant minority who think that pricing is fair and reasonable.

While it seems that opinions vary greatly on the subject we can’t help but feel that the prices that app developers charge for their creations help to sustain a very creative industry, as well as gives consumers a degree of influence that they may not otherwise have.

While the pricing of some apps may seem a little arbitrary, when there are apps such as Dropbox and Evernote which offer extensive services for free, there is an enormous developer community behind them which needs to be supported.

Further figures from Canalys which were published just a few days ago reveal that up to half of the revenue generated by the iTunes App Store and Google Play in the first twenty days of November 2012 was spread between just twenty five developers.

When also considering that 59% of apps do not even break even in terms of revenue, developers of new software face a particularly hard task.

It is interesting to hear ideas about possible subscription-based models and from the angle of smartphone users we would like to see more ‘lite’ versions of apps which have limited features but give an impression of how a paid edition would work before purchase.

However, if it is the plethora of apps that are available which truly make a smartphone ‘smart’ then it looks like the small charges that some developers demand for their software will continue for the time being, hopefully supporting development and innovation and spurring the industry on to create even more new and exciting possibilities.

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