Getting InApp purchases right and wrong!

Feb 24

Getting InApp purchases right and wrong!

In this podcast series we ask experienced Appreneurs for one success story and one fail. In this episode of the Mobile Engagement Podcast:
Independent App developer Graham Dawson has been releasing Apps since 2009 and makes a living entirely from paid App revenue. Hear his lessons about inApp purchases, price setting, how he got featured by Apple multiple times and how he defends against competition. Graham’s Apps include: Oz Weather, Sun Seeker, Moon Seeker, See Breeze, Climate Eye and Solace & Courage and astrology App: Astro Gold. You can find them here.

Engagement Score

We score all out interview anecdotes based on 3 axes of: acquisition, UX and retention – I let this interview run the full arc of Graham’s experience and so I could extract a dozen actionable points he made. However, to pick the most relevant “across-the-board” insight would be his fail and learnings for InApp purchase. For this reason So Graham’s learnings scores 0,8,5.

Let us know on our Twitter account how you score it.

Transcript

The TL;DR

As I mentioned there are many lessons for indie developers:

  • First to market is a powerful position
  • Getting featured in the Appstore is fantastic but seems to arise out of novelty, first-to-market and quality.
  • Positioning your InApp purchase correctly is critical to user acceptance and more importantly keeping away negative user reviews
  • Brainstorm the potential uses of your App – otherwise you might find it is extremely valuable to a small sector of users who will pay a lot more!
  • Test your pricing based on incrementing and measuring the performance.
  • If you are building genuinely lasting useful Apps, you need to make sure your billing model matches that – hence subscription via inApp purchase might be the best model for you.

Transcript Detail

DAVID: Hello, this is David Jones from StreetHawk. I’m here with Graham Dawson. I’ve known Graham for several years. He’s one of the true independent developers in the mobile space. Graham, how are you?

GRAHAM: I’m very good. Thank you, David.

DAVID: So tell me if I’m right or wrong if you just got one app in Google Play and six apps in the App Store. Is that correct?

GRAHAM: It’s probably a little bit more than six but it varies with time because I have actually withdrawn some apps over the years. But, yes, I have one app in Google Play. I used to have two, but again, I withdrew one. It was getting a bit old and it didn’t seem worthwhile to maintain it, or at least the cost and difficulty of finding a good Google Play developer. We’re a bit much it just didn’t seem worth continuing there. But on the other hand, the other Google Play app I have is well worth it and doing very well.

DAVID: Ah, okay, that’s interesting. So you nailed something in that particular ecosystem. A lot of people I talked to say, in terms of paid apps, they make so much more in iOS versus Android. Is that true for you as well?

GRAHAM: Actually I can confirm that to you. It is true because the Google Play I have is called Sun Seeker, and this is the app that does best by far for me in iTunes at the moment. So I did originally develop a version for Google Play that didn’t do very well, partly because it wasn’t developed to the same standard, so I had to make a decision at some point whether I was going to try and do my own programming in Google Play.

I decided that I’d actually try and hire an external developer to do that and ended up finding somebody via oDesk, I think it was, and it seemed to work reasonably well. But because I was already working on my other apps, I perhaps didn’t put enough time into oversight of the way it was developed and it turned out to have some flaws, which meant that it wasn’t as nice a user experience in Google Play as it was in iOS.

It’s only much more recently I found perhaps a better fit developer who had a university degree and English as a native language, and that made a big difference. He did a much better job, so the Google Play app is now looking almost identical to the iOS app and the feedback is much better. Previously I was getting some low star ratings when there were glitches, but now it’s consistently high star ratings. However, despite that, the sales revenue from Google Play is probably maybe a fifth or a quarter, probably a fifth of what it is from iOS, despite all that.

DAVID: Wow, that’s quite a difference. Would you say—sorry, just for clarity—it’s priced at the same price point in Google Play?

GRAHAM: It is the same price point, but one big difference is that there’s more competition in Google Play, at least there was a competitor who established himself before I had a chance to bring out the updated and perfected version. I think he got a large part of the market there and that is partly the reason for the lower sales on Google Play. I have heard stories from other developers that they actually get more revenue from Google Play. I’m sure that will vary a lot from case to case, and in my case, it’s certainly much less.

DAVID: Right. So do you have that same competitor in the App Store as well?

GRAHAM: Indeed, I do, but it turns out that I was the first to market there…

DAVID: It’s a true “land-grab”.

GRAHAM: And I think that was a big advantage. Yeah, it was “the first who come makes the biggest land claim” and it’s continued that way. It’s partly—well, how should I say it—to a large extent because it got features from Apple in iTunes, editorial recommendations and so on.

DAVID: Right.

GRAHAM: And that is being consistent with the Sun Seeker app all the way through. I mean, it is quite an unusual app with a big wow factor – perhaps just to explain to your listeners what it is.

DAVID: Yes, please.

GRAHAM: It’s an augmented reality sun tracker but it will show you through the camera lens the path of the sun for any day of the year, in a compass mode and in a map mode, so you can see the direction that the sun will be at different hours of the day, different times of year, different hours of the day, and all done very, very smoothly. So it’s kind of a slightly different application of augmented reality from the usual ones which are more like finding business locations by looking through a camera lens, which isn’t quite as compelling. But in this case, there are applications which you cannot do without augmented reality. A case in point would be a cinematographer who’s setting up a scene for a film.

DAVID: Right.

GRAHAM: They want to film something; the sun is going to be going between two buildings. The only way of knowing exactly when the sun is going to be showing in between those two buildings is by the use of this augmented reality feature; otherwise it’s impossible. In fact, I’ve got a lot of very positive feedback from cinematographers. In a way, it’s a shame I wasn’t able to create a separate product for them at a higher price point.

DAVID: Exactly. It’s one of those tradeoffs, isn’t it?

GRAHAM: It is, yeah. I wasn’t very clear about all the potential uses of it. The reason I first developed it was for my own use in looking for apartments. I wanted to be able to see what the sun exposure was at the balcony, the windows, even though it’s visiting these places when the sun wasn’t out. I wanted to know how much sun they actually got.

DAVID: Right, very clever.

GRAHAM: So that’s one of the niche uses. The other one is photography. That was probably the biggest one that took off. People want to use it for knowing where the sunset and sunrise are going to be, what time the sun’s going to be at a particular angle to optimise the shot. Cinematography, also architecture, siting of solar panels – there are all these different niche uses, each one of which could potentially have its own market, but they’re all in this one app. So that’s one of the issues I have to deal with now is working out how to optimise the revenue, given the fact that there are all these different niche uses of it.

DAVID: That’s amazing. It’s always the sort of thing that you release something and find people are far more creative with your product, what you originally expected.

GRAHAM: Absolutely true in this case.

DAVID: So tell us a little bit. So what you launched, I think, was a weather app, Oz Weather.

GRAHAM: That’s right.

DAVID: So that’s many years ago. It must be—what—2010?

GRAHAM: No, no. It was just after the App Store was launched. I came out with the first app about a month after the App Store is launched.

DAVID: And so obviously first-mover advantage again?

GRAHAM: Again a huge advantage. I was quite shocked by how well that did. I think on the first day, there was something like 50 sales, on the second day 100 sales, and it didn’t really go down much from there. Now in more recent years, it has gone down quite a lot. There’s a huge competition for weather apps now. Weather apps, of course, are one of the areas in which there’s massive retention of users because people go to visit it on a daily basis, and sometimes multiple times per day, which creates interesting challenges of its own because for an app, these are all paid apps I’m doing, or most of them at least. So I’m not getting any advertising revenue but the users are paying a one-off price to purchase the app, and then I’m servicing them via server calls, etcetera, for the indefinite future.

DAVID: Yes, exactly.

GRAHAM: So, yes, I’ve had some interesting experience there in trying to work out how I can maintain this on an indefinite basis. It’s one of the big challenges for all independent developers, I would say, if they’re trying to use the paid app model.

DAVID: I’ve been going on for about a year about how apps that are paid are really difficult to actually make a business out of, and exactly for the things you outlined. But also, if a user truly values your app, then they’re probably willing to pay for it over time, and so I’ve always kind of thought that it would be free to download and then in-app purchase being the default model. Have you experimented with that?

GRAHAM: I have indeed experimented with that and I guess this is where you’re going to ask me at some point, I think, in this interview about wins and fails. I’d have to say if you’re going to ask me about the fail, now is the time. [Laughter]

DAVID: Okay, let’s do the fail now.

GRAHAM: Having an in-app purchase to Oz Weather. So, yes, this was fairly early days. After a couple of years, I’ve been getting some good income from new users of the app but realising that the base of users was growing and growing and had hundreds of thousands of users of this app, so I was needing to put more and more time and effort into maintaining the service side of things. I thought, “How can I continue to get revenue from existing users who are using the app on a daily basis?” So I thought, “I’m going to give the in-app purchase a go and what I’ll do is I’ll provide some premium features only available via in-app purchase.”

So I thought it all through carefully and worked out what would be the premium features which would be high-end users with advanced weather maps and so on. But I also thought that I should be providing users with a trial of this, so that otherwise probably no one would be tempted to pay extra for in-app purchase unless they get to at least see what they were going to get. So I made it very easy to get a free seven-day trial. In fact, I made it too easy. [Laughter] So this is the crux of the fail.

What happened was when I launched this, I notified the user at the beginning that they were getting a free seven-day trial of the new advanced features, the problem being that many users either didn’t see the message, ignored the message, didn’t understand the message, and then after seven days, when the app dropped back to its default mode, they felt they were being robbed of something they’d paid for.

DAVID: Oh, wow, right. Perception is everything.

GRAHAM: So I started getting some terrible feedback. People would leave scathing reviews and then, you know, 20 people would click on “yes, this review was useful,” and bring them to the top of the user reviews. So that was pretty awful. So over time, I phased out that in-app purchase but I think a lot of damage was done there in terms of new sales because the review ratings of the app had gone down so substantially because of that episode.

DAVID: Wow, that’s a huge lesson!

GRAHAM: There were many users who understood what was going on and sympathised, but the ones that were most upset were the ones who were most vocal, the ones most likely to leave negative review in the App Store.

DAVID: So did you kill off the in-app purchase altogether or did you just not offer those features by default and then prompt people to upgrade to that premium level?

GRAHAM: No, I gradually over time moved the premium features into the full app, into the normal app, in other words, moved them out of the in-app section to the point where everything was in the main app and then I dropped the in-app purchase altogether.

DAVID: Oh, okay.

GRAHAM: But I did it gradually. I didn’t want to make a sudden move because then people who’d paid for the in-app features would feel “Oh, I paid for that and suddenly now it’s in the main app.” I had to get it out over time.

DAVID: Rock and hard place.

GRAHAM: Yes, exactly – between a rock and a hard place.

DAVID: But did you feel as though that instead of giving them the free trial of the premium services, don’t give them the premium, give them the premium level?

GRAHAM: Oh, I see. In terms of the trial, yes, that was something I changed very quickly as well. Rather than automatically providing the free trial, I made sure that the user had to activate the option to get the free trial themselves so they would be aware that they were getting a free trial.

DAVID: Right. So you did go that path.

GRAHAM: I did go that path but it wasn’t enough; the damage had been done. So that made me very wary of in-app purchase. But things change. Those were the early days of in-app purchase.

DAVID: Okay, right.

GRAHAM: It wasn’t so much the accepted model. Now things have changed. People seem to be much more readily accepting of that, but it has been a slow process. It has taken years to get to that point.

DAVID: Are you doing in-app purchases with any of your current live apps?

GRAHAM: Yes. In fact, I’m just about to introduce an in-app purchase on one of my other apps. I’ll tell you there are three apps that are doing well for me at the moment. We already mentioned there are at least six, and I think it’s probably closer to eight or ten apps that are currently live for me in the App Store, but only three apps are doing particularly well. The others I keep in just because they’re complimentary and maybe you could even call them vanity apps. It’s just that I enjoy them. Its not so much vanity. [Laughter]

I like to exercise my skills and I like to put apps in just to see how they’ll do. Most of them do not do well. It’s very hit-and-miss I cannot predict. But three of them do well. One is Oz Weather that we’ve mentioned, the weather app. Although that does no way near as well as it used to, it’s still a consistent background income, which is very valuable. The other one is the Sun Seeker app that I already mentioned, which is the one that does best in an ongoing basis.

But the third one is a little bit different; it’s a niche app. It’s an astrology app. It’s called Astro Gold. This is because in my previous incarnation, my previous career, I was building Windows apps and I had an astrology app which I developed and we had a whole business around it and did very well, especially the astrology app for professional astrologers, people who really were deeply into astrology and quite a complex app. It sold for many hundreds of dollars—while the iOS version is selling for $40 and is much less well-featured—but it is an area, a niche area, where people are willing to pay that because it’s quite a difficult area to cater for and it requires a lot of programming and astrological expertise to put in those features.

DAVID: Right.

GRAHAM: So with this particular app, it sells for $40 and, believe it or not, we’re just about to introduce some in-app purchases on top of that.

DAVID: Okay, very good.

GRAHAM: But in this case, there’s a history behind it because the new in-app features is the on-selling of the professional grade astrological written report that you can offer as gifts or potentially even sell to other people and there are things that you would already have to pay a lot for, typically $10 or $20 per report. Well, we’re putting these as in-app purchases for $4 to $6, depending on the individual report type. So this is probably just coming in the next week or two, so for me, it’s a big experiment but I’m not expecting any user resistance in the way there was user resistance to the Oz Weather in-app purchase.

DAVID: Because it’s a clearly defined upsell.

GRAHAM: In this case, the customers are primed to expect to be paying money for this kind of premium services, which is not true in a mass market like Oz Weather.

DAVID: Right, I get it. It’s very easy to understand that, the reason why they’re actually paying for something and what they expect out of it.

GRAHAM: Absolutely, yes.

DAVID: All right, that’s terrific. I think we’ll check in with you in the future to see how that little experiment goes.

GRAHAM: It’s a very interesting one.

DAVID: Just out of curiosity, do you use a computer-generated report or is there a human in there that actually customises that in some way?

GRAHAM: It is a computer-generated report but it uses a database which is effectively the size of a textbook in terms of predefined paragraphs and texts. The app then pulls out the appropriate ones based on the astrological factors and combines them together in a report, which is an illustrated report—it has graphics—so it’s a high-quality product, a premium product.

DAVID: Right, okay. So let’s hop back to the phases of the three axes of user acquisition, user experience, and user engagement or retention. It sounds to me like in each of them—certainly in Oz Weather, first-to-market advantage, in Sun Seeker, first-to-market advantage—it sounds like Apple reviews or Apple features were a key part of your acquisition strategy or luck?

GRAHAM: Well, yes, those two apps, Oz Weather and Sun Seeker, I can’t say that I did anything in particular in terms of acquisition. It was a matter of putting them in the App Store, and then luck, in a way, I suppose you could say, given that it was an interesting and different and well-designed app that Apple chose to feature it. But apart from that, I haven’t found any way of being able to attract users in a cost-effective way.

DAVID: Aha, right.

GRAHAM: It’s just too expensive to try and acquire a user via any other means than putting it in the App Store and hoping that Apple sees it or that bloggers blog about it, for example. For Sun Seeker, it’s been very helpful that certain bloggers have featured it, for example, famous photographers, and I see occasional big surges in sales which correspond to those blog posts being published.

DAVID: Right, yup. So have you then adopted a directed strategy at getting people to blog for you? Is that a thing that you’ve actually done by plan or is that again accidental?

GRAHAM: No, not at all by plan. It’s totally serendipitous. People blog about it, other people see their blogs, so there is a certain organic motion there. But I think the biggest feature overall is the fact that Apple had chosen to keep it as part of their editorial picks and is featured in many different places in many different countries in different categories, for example, outdoor apps or navigation apps. So they keep it in the list there, and I believe it has a very big effect on maintaining a certain level of sales.

DAVID: Right, okay. Just to step right back, do you make a living off this?

GRAHAM: Yes, indeed. I wouldn’t say that I’m rich but I make a very good living from it and I have done almost since day one, so I’m kind of surprised. I was thinking at the beginning, “I wonder how long this will last, maybe a few years,” but it’s just continued on this basis. To start with, Oz Weather did really well, Oz Weather started fading out, Sun Seeker started fading in, and now the astrology app is doing quite well. So I’ve been very lucky in that way because I think to have more than one successful app is probably rather unusual.

DAVID: Would you say that the underpinning of the success has also been the quality of the app? Every time I look at your apps, they’re actually just stunning to look at. Do you think that’s really what makes it work?

GRAHAM: I have to say yes. Not to say that I think I’m making my apps any more stunning than anybody else’s, but over time I refine the apps. I listen to the user feedback. I make sure that people are getting exactly what they need. In terms of the weather app, I have a background in meteorology; I studied that in university. I have a strong interest in it, even a passion for it, so when I built that weather app, I built it for myself to encompass what I wanted in a weather app. That seems to ring a bell with many other people. I even have to say that Oz Weather is not as flashy an app as certain other weather apps that are out there now, but it’s very focused in what it presents. I still believe it’s the best one at presenting in a quick and efficient way the key weather information, as well as not at all being unattractive because it is actually quite attractive and that I’ve been through a number of design iterations.

So I would say that whilst the visual design is not my forte, I’m very happy to hire designers to help me with that, and I have done, but that’s not really what makes the apps so functional. It’s more that I’ve managed to leverage my own interests and make sure that the apps are appropriate for what users want to use them for.

DAVID: So really great fit for purpose or functionality, then the focus on quality design after that.

GRAHAM: That’s right. And all that takes time, so it’s also a matter of persistence. Sun Seeker is now in, I don’t know, version 4, I think, the major version. So there’ve been many sub-releases as well, each one I’m refining, adding a few features, adjusting, so it’s an ongoing process. If I left it the way it was initially, I don’t think I’d be successful still with that.

DAVID: Right.

GRAHAM: It does require ongoing attention. It’s not a totally passive income.

DAVID: Yes. Okay, that’s really good. It’s good to know that things aren’t “set and forget”, particularly for people who do outsourced development. They have to come up with an idea, they would have to “scratch an itch”, they have a very good sense of the functionality, but they don’t know how to develop. So you’re saying, “Well, you’ve got to be in it for the long haul. You’ve got to re-invest in the application over time.”

GRAHAM: Well, I think so. You probably could put out an app, get a certain amount of money, but it will definitely go down with time. I think people also seem to be quite aware if your app hasn’t been updated in a while and they notice that the app is becoming out-of-date, especially when Apple, for example, brings in new design paradigms, i.e. flat design. If your app is still skeuomorphic, people will see that it looks old-fashioned.

DAVID: Okay, that makes good common sense. Just going back to that statement of “I can’t find a way to actually acquire users otherwise,” I can see, if I look at Sun Seeker in the App Store, it’s got a very good and detailed description about its functionality, who it’s ideal for, etc. Have you figured out the whole ASO thing or is that a complete myth? Or was it good in 2013 and now it’s no good at all?

GRAHAM: No, I haven’t done it in a very scientific way, but my tendency is towards clarity. So when I write my descriptions or whatever, I want to be as clear as possible. I’m not really interested in acquiring users on an exploratory basis. I want to make sure that they’re going to find the app useful. Because of that, I’m also willing to charge a higher price. Sun Seeker, for example, is priced at $6.99. In fact, I did have a story about the pricing of the app, which is one of the wins.

DAVID: Yay!

GRAHAM: I’m so sorry to direct the interview and telling you what to be talking about –

DAVID: I love it. Please take over.

GRAHAM: But I’d like to talk about a win I have with it, which is to decide on the price point for Sun Seeker. I started out charging $2.99. That was when I first introduced the app, and of course, it didn’t have anything like the polish or the number of features it has now. But at a certain point I decided that I had to do some experimentation with that price because I just wasn’t clear what the correct price point was, especially when cinematographers were coming to me saying, “You know, this app has saved me many thousands just in a week.” So I thought, “What can I do?”

So I actually went through the process of adjusting the price. Price point by price point, I moved it up, I moved it up, until the revenues started going down. Now the amazing thing was that the first change I made was from $2.99 to $4.99, so that was just like a 60% price increase. And guess what? The sales volumes did not change, which meant that I was immediately making 60% more.

DAVID: You had a product that had exactly the functionality that people were willing to pay for.

GRAHAM: Well, it appeared so. So I thought I’d better experiment further, so I raised the price point a dollar and a dollar again. Well, I found that the revenue started falling slightly once I took it up to about $7.99. So I decided I’d leave it at $6.99. That was some time ago, and I probably am due to do another experiment because I think things have changed a lot since then. The apps have evolved a lot; the market has evolved. I don’t I should rest on my laurels, but that for me was a huge win and I practically doubled my income just by making that change.

I guess I’d be a little bit cautious about experimenting too much in terms of annoying users who find that they paid a price and then the price had gone down again, but I’d probably just make some gradual changes, maybe leave it for a couple of weeks at a time so that I can be sure that I’m factoring out little short-term spikes in revenue, etc. But I’d strongly recommend that to anybody, just doing the experiment with the pricing. It’s basic economic principle to maximise the revenue; you just change the price point and see what happens.

DAVID: Basically be quite methodical about it, so iterate, test and learn.

GRAHAM: Yes, exactly.

DAVID: That’s a pity you can’t do a split test, an A/B test on pricing.

GRAHAM: Yes, I agree.

DAVID: That would be a very handy thing. Hmm, I wonder… Anyway, from an elastic pricing perspective, were you ever experimenting with any of these paid apps to be offered at “free”? Because obviously then your volumes are much larger.

GRAHAM: No. I mean, I had been tempted a couple of times. There are people offering a promotion. For example, if you’ll let your app go free for a day, they’ll feature it, and then although your app’s free for the day, you should get follow-on sales from people who missed that but saw the publicity. Well, I’ve been very cautious about that and I never actually took the bait and went in to do it. I think for a cheaper app, like Oz Weather, I would consider it, but Sun Seeker really is a fairly sophisticated app and I don’t know that letting it out there for free is in its long-term benefit.

DAVID: I agree. You say you’re always going to attract the users based on certain dispositions. So the people are always bargain hunters – it’s like the GroupOn thing, right, that basically nobody ever came back to buy the products or services at full price. So you’ll always attract the “bottom-feeders”.

GRAHAM: Yes. And you might generate – if you let it out there for free, you’ll be getting some reviews from users who got it for free who don’t have the same investment.

DAVID: Yes, exactly. Graham, this has been terrific. I really appreciate that. I’ve got a few different takeaways to take out of that. I’d love to have a short conversation with you again in a few weeks or months after you’ve experimented with this in-app purchase.

GRAHAM: I’d love to.

DAVID: All right, that’s really terrific.

GRAHAM: Very interesting for us both.

DAVID: Well, okay, thank you very much. Have a great day.

GRAHAM: Thank you, David.

 

 

 

 

 

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