The Evolution of Pricing Models for App Development
As app development becomes more widespread, developers are beginning to experiment with new monetization models—some tailored to publishers on tight budgets.
While most app developers work alone or in small teams, self publishing their work, those who do work with outside clients normally charge per app. "The more features required, the more expensive the app will be," notes Alex Souza, founder of Kwiksher.
In the future, small to medium size publishers may have more options for "self service" app creation, currently offered by sites like MagAppZine and Mobile Roadie, which charge creation and distribution fees. Mobile Roadie, for instance, has a three-tiered pricing system for development and a monthly distribution fee. It also takes a percentage of money made through Apple from sales of apps or activities within apps (such as music downloads).
A model based entirely on a shared percentage of future revenue, while tempting as a way to avoid large up-front fees, is not a good idea for magazine publishers, Souza says.
"Shared percentage does not make sense in the magazine model because publishers need to take control of advertisement and sales," he says. "The revenue of a magazine is not only the cost [to purchase] the app—in fact most magazine apps are free—but the sum of ads plus subscriptions plus [other sales]."
Kwiksher provides tools for converting Photoshop works into multimedia apps. The company's plugin, Kwik, allows app developers to create magazines and books utilizing very small development teams; MacNeil/Lehrer Productions' Triple Crown App was created by one person, Souza says. Such efficiencies can allow savings to be passed onto clients. "Everything is 'pay per service,' meaning each magazine issue will require a new charge," he says.
Newer models are attempting to find other ways to extend the relationship between app developers and clients. New York-based StoryDesk integrates the apps they create with customers' content management systems. The system allows non-technical users on the client end to easily update existing apps without paying additional high developer fees.
"The traditional model is I hire a developer who writes an app for me and hands it back to the client," says StoryDesk CEO Jordan Stolper. "If the client does not have technology or app development as a core competency then that model does not work very well, because every time the client needs to modify that application they have to ring up a developer … and pay $150 an hour to so something as simple as switch a photo out or fix a typo."
StoryDesk charges an upfront fee for design and development and an ongoing fee for service and support that Stolper says makes incremental changes far more affordable. An easily up-datable app, he says, "transforms a static app into effectively a marketing communications channel straight to the reader. You can push new content [and] have a bi-directional engagement with them. That's what we are seeing huge interest in."