In Support of Tweetie: The Case for Upgrade Charges

There was a lot of talk recently regarding Tweetie for iPhone and their latest upgrade. I’m a little late to the game, but rather than letting sleeping dogs lie I thought I’d throw in a developer POV. I’m not sure if Tweetie chose the best solution to their problem, but I do support their decision.

So read on after the jump for a developer perspective on this debate…

The Case for Upgrade Charges

Here is the bottom line – adding new features is expensive. Sometimes it’s even more expensive than writing the original application. This money needs to come from somewhere. There are four options:

  • A constant influx of new customers
  • Charity
  • Someone else pays for it
  • Upgrade charges

New Customers
One way that you can pay the development costs associated with improving a product is with income generated by new sales. If enough people buy the product, beyond the number needed to cover your initial investment and ongoing operations, you have money to pay for improvements.

This is wonderful – as long as you have a constant flow of new customers. The reality is that at some point after initial release you drop into something more akin to sustenance levels. In a worst case scenario, everyone who is going to purchase the product now owns it and the flow of new customers is so slow that it hardly makes sense financially to sustain the product at all.

When this happens, when the influx of new customers fails to do more than sustain the product, there will be no more upgrades. Period. There is no emotion behind this decision – it’s simple accounting. This is what we risk with the Apple store where every upgrade is free.

Right now, people have been happily using our products for more than 12 years. Over that time we’ve continually improved the products, adding features, supporting new operating systems, and generally maintaining them. We can do that because the upgrade charge model supports this. Take this away and … well, you get the picture.

You see this approach with the hobbyist developers who aren’t in this to make a profit. These guys will continue to add new features even if there is no financial incentive to do so – until they lose interest or get a paying job at least. Software developers who do this for a living can’t afford the charity model. At some point the money runs out.

Someone Else Pays
And don’t mistake “charity” with “someone else is paying.” Ad supported products, products that convince you to buy something else made by the developer, and similarly supported projects might look like charity on the surface but in the end someone is paying for that ongoing development. For instance, the money to develop our free applications comes out of our marketing budget. This works for a couple apps but wouldn’t work on a large scale.

Upgrade Charges
When 1, 2, and 3 won’t cut it, it leaves us with one alternative – we have to charge for upgrades. As I said, the money to pay for the development has to come from somewhere and traditionally this is how it has been done.

Under most software sales models the reseller offers a way for us to charge a reduced amount to existing customers for the upgrade. I mean, nobody wants to make you buy the whole application twice. This is one of the real problems with the iTunes App Store.  Not only does Apple not give us a way to charge for upgrades, they don’t give us a way to charge less to our loyal customers.

“In-App Purchases” I hear you say? Sorry. That isn’t the intent of that program, and a developer who tries to use this model to sell upgrades risks App Store rejection.

So what is a developer to do?
Let’s take a look at what Tweetie did. They start out by charging a price that is essentially an “upgrade price” from day one. Tweetie is easily a $4.99 application, but they charged $2.99 from the beginning. When they added a bunch of new features, they again charged the “upgrade price” for the application – $2.99. It’s a hacky, ugly way to do it but it works. Users who want the features can purchase the upgrade – users who don’t want them can keep using the old version.

It’s the same reason we charge $9.99 for eWallet.  eWallet for iPhone is a $19.95 application, but since Apple doesn’t give us a way to charge our existing users a discounted upgrade price (our upgrade price is $10 normally), we’re stuck giving EVERYONE the discount.

The problem is not Tweetie – the problem is that Apple hasn’t offered a long-term sustainable development environment and until Apple improves this, folks like Tweetie are going to pay the price.

Oh, and Microsoft – I hope your Marketplace guys are listening!

Marc Tassin is the Senior Product Manager for Ilium Software, a mobile software developer in Ann Arbor, Michigan. Marc has worked with Ilium Software for nine of its 12 year history, and in that time he has watched the rise and fall of many mobile devices, scores of products, and entire corporations. He joined the JAMM team to provide a developer perspective on the mobile marketplace and share some of his experience in the industry.

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  1. #1 by David on October 9, 2009 - 1:54 pm

    Marc, I have been reading your posts on this topic lately and I completely agree with you (I am not a developer, so I am speaking from the outside looking in). I have a WinMo phone so I haven’t read many blogs where people were complaining about having to pay for tweetie again. But $3 for a complete upgrade on a app? That’s nothing. I don’t see why anyone would complain about that.

    I haven’t used the MS app store yet, but the good thing is that you can still install WinMo apps outside of the store, right? This could work well for MS users who buy the app in the store first and then can check for updates within the app itself. If you register the app like before then have developers have a way to alert their users to developments and upgrade price specials. So basically people would discover apps in the store and then could get more service from the developer’s site. That could be a great advantage over Apple where it all has to be done in the store (from what I have seen.) What do you think? I agree though that MS should have a way to pay for an upgrade in their store.

  2. #2 by Marc on October 9, 2009 - 4:40 pm

    @David: You’re absolutely right about Windows Mobile. The ability to reinstall without the Marketplace store, get outside support and downloads, or even install older versions of the software if you need to are huge advantages for Windows Mobile. Now that isn’t to say they don’t have THEIR challenges, but it is a plus.

  3. #3 by dgoldring on October 9, 2009 - 10:05 pm

    Marc, I think you raise some great points here. For me, though, the biggest problem with the Windows Mobile model was the inconsistency. When you bought software, you never knew what you were getting in the future. Were point upgrades included were upgrades free? Sometimes upgrades were free for a certain period of time, but not always. Every developer did it differently.

    One thing Apple did really well was eliminate this uncertainty. I’m not saying their solution (all updates are free) is the best solution. In fact, it probably stimies at least some developers from continuing to upgrade their products.

    What I would like to see is a model in which there is consistency which allows developers to be compensated for upgrades, while also giving some incentive to the consumer to stick with them. My suggestion would be as follows:

    — all upgrades are free for a certain period of time (30 or 60 days) after purchase.
    — all point upgrades are free. This is basically just improving upon the product I already bought, and usually adding things which should have been there to begin with or fixing bugs.

    — developers would charge for version updates (obviously, how much to charge is up to the developer, as is the cost of the initial purchase)

    That seems like it would make good sense to me.

  4. #4 by Ellen on October 12, 2009 - 8:37 am

    Doug, I completely agree. That would be a great improvement to the iTunes store. I hope Apple adds it.

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