Upgrade Pricing: The Mac App Store’s Achilles Heel

| Analysis

Developers are resourceful people, and when presented with a problem that seems unsolvable they'll work even harder to find a solution. That's exactly what The Omni Group did to overcome the lack of upgrade pricing on Apple's Mac App Store. Their new tool, called OmniKeyMaster, lets users who buy Omni apps through the Mac App Store take advantage of upgrade pricing, but there is a tradeoff, and it also shows Apple still has some work to do before the Mac App Store is a perfect solution for developers.

No upgrade pricing limits developer options at the Mac App StoreNo upgrade pricing limits developer options at the Mac App Store

If you purchase an Omni app, such as OmniFocus, OmniGraffle or OmniOutliner, through the Mac App Store, your updates are tracked and managed through Apple. It's easy and doesn't require extra trips to websites to find and download your updates. When it's time for a major app upgrade, however, Apple doesn't offer a way for developers to give current customers a discount when buying the new app version.

The Omni Group's solution is OmniKeyMaster. The app finds the already installed Omni apps you purchased through the Mac App Store, and then generates an out-of-App-Store license code you can use to buy your upgrades through the Omni website. The upside is that you can take advantage of upgrade pricing. The downside is that Apple's App Store app on your Mac won't handle future updates for you.

Losing out on Apple's centralized app update system isn't a huge issue since each Omni app can auto-check for updates on its own, and handles the download and install process. It also means that if you ever want the App Store version of your favorite Omni apps again, you'll need to repurchase them at full price. Apps that aren't purchased through the App Store lose out on the one-stop-shop system built into OS X for app updates, and losing that convenience may turn some people off to the idea of going back to the old each-app-updates-itself system.

It's a clever way to work around a big App Store limitation, but it also underscores a problem developers deal with every day: Apple has its own style and hasn't been willing to work with developers to find a solution to this problem. Apple apparently doesn't see the need for upgrade pricing, therefore it isn't an option available to developers.

Upgrade pricing has been a standard practice in the software industry for years, and not just for The Omni Group. It's a way for companies to help build customer loyalty while generating revenue on new app versions, and it's a nice gesture to show that developers aren't trying to screw customers out of every penny they can.

Apple has worked to make the Mac and iOS App Stores more friendly for developers and customers, but there are still some big omissions that need to be addressed, like upgrade pricing. Some developers will sell new apps at a discount on the Mac App Store as a workaround for upgrade pricing, which works, but still doesn't address the underlying problem: upgrade pricing is an industry standard, and it's a glaring omission at the Mac App Store.

Apple doesn't seem concerned about catering to developer's need for upgrade pricing options, and it's possible that the Mac and iOS App Stores weren't designed to support that feature. Depending on how the stores were coded, it may be a major undertaking that Apple doesn't want to deal with. Since Apple offered upgrade pricing on its software products for years, I'm guessing it was a conscious decision the company made when designing the App Store to forego upgrade pricing.

Since developers don't have a key app selling feature they've relied on for years, they need other compelling reasons to sell through the Mac App Store, and those are certainly there. A single app shopping place for users to find the apps they need is a strong sell, as is the fact that accessing the Mac App Store requires only a couple mouse clicks. The intimidation factor new users face when trying to find apps is cut down, too, since they don't have to wander around the Internet hoping to stumble on what they need.

Much like the App Store for the iPhone, iPad and iPod touch, the Mac App Store gives customers a single place to find all of the software they want. That's compelling for end users, and frustrating, too since they pay more for new app versions than they otherwise would have to -- or developers have to take their losses on building major upgrades by not charging for the new version and hoping to make up the difference in extra sales, or deal with angry customers that don't want to pay full price for apps they previously purchased.

Right or wrong, app buyers often feel like developers are nickel and diming them with paid upgrades, even when those developers don't have other options when releasing new app versions. Apple's decision to not allow upgrade pricing options takes control from developers, but leaves them saddled with the accountability. Customers don't want to hear "It's out of our control," but that's exactly what developers are left to say.

Overall, the Mac App Store is great, but it's time for a change. Bring on the upgrade pricing.

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Comments

ksec

I think they are still waiting to see how this works out. Apple’s new Pricing strategy is that every Major App Update is like a new App. Therefore charging a normal price. That is exactly what happen to all the Pro Apps. Where Apple drops the initial price to $99 from $499. $99 is basically what the previous upgrade pricing were.

With Games, You dont get a discount if you own the previous Final Fantasy or FIFA. Is just that Software happens to have this.

I think Apple is again trying to change the industry.

mjtomlin

Apple is trying to kill “upgrade” pricing by making software affordable in the first place and releasing regular update/maintenance updates for free. This is how software should’ve been written in the first place. Way back when, software was priced through the roof because there was no volume. Developers had to recoup costs ASAP. The PC market has plateau’d - the volume is there now. Sell more for cheaper, provide regular fixes. Develop next version sell that for cheap as well. In the end the amount the customer spends probably ends up being the same.

paikinho

I would like upgrade pricing for movies I want.
Sometimes I rent a movie only to discover I would actually want to buy it, but there is no way to upgrade from rental to purchase.

That to me would be a fantastic add for the iTunes store.

They do this sort of thing for albums already… why not movies.????

GraphicMac

The App Store’s pricing structure is actually perfect. You don’t need upgrade pricing because the initial purchase price is already half what it would have been previously (in most cases).

For the most part, the only people that have a problem with the current setup are those who have a long history of software purchase/upgrade pricing and just don’t like change.

kevinolive

Perhaps another option would be to offer an in-app purchase that would do an update.  This seems a little too obvious so I’m guessing it wouldn’t work.

Mark Travis

I’d buy OmniGraffle Pro if it were $99. (Current upgrade price). I’m not going to buy it at $199. I wish I had a version that I could upgrade for $99. I’m just not going to join the bandwagon at an entry price of $199.

I wonder how many more customers out there feel like I do, which could mean that Omni Group is leaving more money on the table by sticking to old pricing models. Look up theory on supply/demand and elasticity.

I’m not necessarily condoning Apple for enforcing their view on the matter, but if you want to take advantage of their platform and distribution channel, you need to play by their rules. They’ve thought about this for many years and they may have developed some good insights into what works.

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