Selling Value over Price

There is an ice cream sundae in New York City that sells for $1,000! It's hard to believe, but the restaurant Serendipity sells its Grand Opulence Sundae for $1,000, and it actually sells one or two of them a month. Who would be crazy enough to spend that kind of money on a sundae? There couldn't possibly be enough ice cream or toppings to make it that expensive. So, it would follow that people are drawn to this sundae for other reasons.

Obviously a few people feel there is value in spending so much money on an ice cream sundae. However, the value goes beyond just a bowl of ice cream. The person is also buying intangible benefits such as prestige, attention, adulation, appreciation, and so on. It's almost a guarantee that whoever buys the Grand Opulence Sundae will not be sitting in a faraway corner of the restaurant. He or she will want friends and family and anyone else to watch the presentation. The desire to purchase this product starts with the restaurant's own description:

"Five scoops of the richest Tahitian vanilla bean ice cream infused with Madagascar vanilla and covered in 23K edible gold leaf. The sundae is drizzled with the world's most expensive chocolate, Amedei Porceleana, and covered with chunks of rare Chuao chocolate, which is from cocoa beans harvested by the Caribbean Sea on Venezuela's coast. The masterpiece is suffused with exotic candied fruits from Paris, gold dragets, truffles, and Marzipan cherries. It is topped with a tiny glass bowl of Grand Passion Caviar, an exclusive dessert caviar, made of salt-free American Golden caviar, known for its sparkling golden color. It's sweetened and infused with fresh passion fruit, orange, and Armagnac. The sundae is served in a baccarat Harcourt crystal goblet with an 18K gold spoon to partake in the indulgence served with a petite mother of pearl spoon and topped with a gilded sugar flower by Ron Ben-Israel."

The restaurant has done an amazing job conveying the value of its product and convincing a small number of people to purchase it. The restaurant has sold the value of this product by its description, coupled with the strength of its brand and prestige. Through savvy marketing, it has convinced buyers to suspend their focus on price and think about the excitement and quality of the product. Although you may not have a $1,000 app (there are no apps priced above $200, but there are a few priced fairly high, as shown in Figure 12.1), you're nonetheless going to have to sell the value of your app, especially if it's above $4.99.

Figure 12.1 One of the Android Market's more expensive apps, Scoreout Caddy, at $34.99, is focused on the golfing market.

Customers are price sensitive on the Android Market, starting at about $4.99. There are a number of reasons why this is the case, including the following:

• People have come to expect all things Internet to be free. Because so much information is available at no charge, many buyers think everything should be free. It's only recently that online publications (for example, newspapers) are tiptoeing back into the paid subscription model.

• Apple iTunes set a precedent with $0.99 music. People who visit iTunes have become accustomed to all prices being set at $0.99. Although many albums are for sale on iTunes for $9.99 and up, most people choose to buy single songs.

• People don't equate an Android app as having as much capability as a regular PC app. Over time this perception will change, but some buyers think that a mobile phone means limited app capability, so they instinctively believe that an Android app isn't as powerful as apps provided on other platforms.

• People don't have unlimited funds. If someone is looking at an app that is priced at $9.99, they have to forego buying several other apps at a lower price. The average Android Market buyer spends $10-$20 a month, tops, on apps. If you factor in the cost of an Android smart-phone, plus the monthly subscription fees, it starts to add up for the average consumer. Therefore, consumers are sensitive about how much more money they will spend for an Android app.

Therefore, if you have an app that is priced in the $9.99 range, you will need to spend some time focusing on selling value. An example of an app that sells in this price range is shown in Figure 12.2. This app is geared toward pilots, allowing them to file a flight plan via their Android. The audience for this type of app is very

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Figure 12.2 A higher priced app is generally focused on a narrow audience, such as pilots who own an Android.

specialized and narrow—all pilots who have an Android. Therefore, the developer of this app cannot possibly make any money selling at $0.99 given the audience size and the uniqueness of the app.

This chapter is focused on selling value. So the two main topics of this chapter are concerned with just that: selling value.

Because you can't have a conversation with your buyer about the price of your app, you may be wondering how you convince someone that the value of your app is worth the asking price. This is really the crux of the issue. Buyers must think that they are getting what they pay for in terms of quality, usefulness, and return on their investment. If you can convince your buyers of at least one of these three points, you are more likely to achieve the sale. You have to let your app, Android Market verbiage, product website, and reputation do the talking.

One area of Android apps that has done a great job of selling quality is mobile navigation. Mobile GPS apps have really become popular over the past year, and the quality has approached that of regular auto GPS systems. Still, buyers want to be sure they are buying quality when spending $50-$100 on an Android app. The graphics and accuracy of the GPS have to be of the highest quality. Pricing for navigation apps is between $50 and $100 from a number of competing companies. Figure 12.3 shows a navigation app in this category. And, yes, there are a few free and $0.99 apps in this category, but not of the caliber found in the higher price range.

The developer can also help buyers of this app to understand that their Android can function as a turn-by-turn navigation system when they need it, without having to go buy a completely separate navigation system for their car. Any time your app allows the Android to function as another device, the customer is actually saving money by not buying the other device. Be sure to point this out to your buyers, and they will not be as hesitant about the price because you are extending the value of their mobile device.

Many thought that after Google offered its free turn-by-turn navigation app, prices would continue to sink lower for navigation apps. Although it's true companies such as Garmin and TomTom have had to drop prices dramatically for their apps, the prices for high-end navigation apps have remained fairly constant at the time of this writing.

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