A business model gone awry…

Instead of discussing another iOS SDK issue, I thought some people might find it interesting to hear about the business model of my main app, ArtikPix. Or, more honestly, how the plans for ArtikPix went wrong and we made it work anyway. It has certainly been a wild ride from my viewpoint, and has not gone as I expected. But we now find ourselves with an app that is selling well, and starting to show it’s potential.

The story starts when I had just finished my first app, and my friend and business partner, Eric Sailers, had an idea for a new app. He wanted to replace the articulation cards that take up space in every Speech Language Pathologists office with an app that would allow him to help children practice their speech with bright modern graphics, a game, and features that would help him collect the data he needed to make sure they were improving. He loved the idea of not having to carry around all the cards, and I loved the idea that we could undercut the price of all the decks of cards and still be a high priced app. We were able to license graphics from SymbolStix, which gave us a rich selection of high quality, kid friendly images in vector form.

We came up with the idea of using In App Purchase(IAP) to allow us to sell decks individually or in groups. This way parents who might only need a few decks could buy them, but professionals could buy the cards all at once. And this way, the basic app could be free, so if Eric showed the app at a conference, anyone who wanted to could try it right away. And by having a free app with IAP, I could just write one version of the app, without having to worry about a free vs. a paid version.

Unfortunately, when we were getting close to ready, someone else came out with an app to do basically the same thing. We felt our app was easier to use, and one of our beta testers described it as not just more kid-friendly, but more parent friendly as well. But there were somethings our app didn’t do as well, so we felt we had to finish ours completely before going on the market. And we felt that we should compete by being the premium app that does more and charges more.

Then, the iPad was announced. When I saw they were allowing apps to be released on launch day, we decided to go for it. It was a lot of hard work, and a big risk developing for a platform that did not exist yet. But we were correct that we had no competition on the iPad at launch time, so it gave us an edge. And the app worked well on the hardware except for one little problem.

I had coded IAP incorrectly. Since it did not work at all on the simulator, it was the most likely thing to go wrong. I suppose it was best it failed the way it did. But it meant everyone who downloaded the free app got all the content included. Our expensive app was being given away free. And when I tried to fix the IAP, there were bugs on the iPad that made it hard to test, let alone fix. I managed to get something together, but Apple was taking so long to even start reviewing the update. And we worried Apple would probably deny the update since we would be taking away functionality people had been using for a week already to make them pay for it.

So we had to change plans. First, we advertised ArtikPix with Moms With Apps for their free app Friday feature. Might as well take advantage of our mistake, and make it look like we made it free on purpose. And advertising a free app with Moms With Apps does lead to a lot of downloads, so the free publicity and attention worked out well. Then, once the Friday was over, we made it a full price, paid app. The idea was we would make it a full price version, to be followed up with a “freemium” version with IAP. I thought the IAP version would be so popular that we could eventually migrate the paid customers over to it. I even figured out how I would move their licenses over, so they would get everything in the free app automatically.

So we worked on getting the app ready to compete with the other apps already available on the iPhone/iPod Touch. We added more decks, and improved granularity for the data collection. In order to get the app on those devices quickly, we decided to implement them first on the iPhone, with a universal binary to follow.

While we were doing this, we got some interesting feedback. Apparently, iTunes will let you buy the iPad version even if you don’t have an iPad. So we had customers who had accidentally bought the app to use on an iPod Touch, where it didn’t work. All we could do was promise we were working on it. I had to take a full time job to pay the bills, and it was a lot of work to make the app we had in mind, so it took longer than I like.

Finally, we finished the iPhone/iPod version. It was the free version with IAP, so users could buy only the decks they needed. They were also given a discount if they bought them all at once. It was moderately successful, but it seems many people were not comfortable with IAP, and after trying the free version, they would then buy the paid version.

This was getting confusing, as the paid version did not yet work on the iPhone/iPod Touch. And the paid version did not have all the decks or features of the free version. So we placed a notice in the app description to explain how the next version would have all these features, and we would be raising the price when the update came out. But the fact that the free version had more features was starting to get us bad reviews. And we had more support emails promising the app would eventually work on all devices.

Luckily, it was easier than I hoped to merge the 2 versions into one universal binary. Since the IAP was the last part to be fixed, we released the paid version as a universal binary first. This turned out to significantly help, as now anyone who tried the free version got even more when they changed to the paid version. And those who bought the paid version for their iPod Touch could finally use it.

Then, shortly after, the free version of the universal binary got approved. Guess what, it was delayed because of a build problem with IAP. While enough people bought individual decks that I’m glad I made it that way, more people who tried the free app turned around and bought the paid version. This was the final nail in the coffin for ever having just 1 app. So this post, part of the iDevBlogADay series, turned me onto Hudson, which allows me to automate builds. When I check a change into Subversion a change, Hudson builds both version at the same time so I will never again be confused which one is which.

When the paid version was only on the iPad, we would occasionally make the Top 10 Grossing Education Apps list. This is not a very visible list, so I doubt it drove many sales. But when the paid app went to universal, the sales were divided between iPhone/iPod and iPad, so we fell lower on the list. One of the little downsides. Also, the free app seemed to attract more bad reviews, so it’s lower rated despite the fact that it’s exactly the same app otherwise.

So today, we came full circle. Since ArtikPix is already free, we participated in another Free App Friday, and we lowered the price to purchase All Decks in the free app to 60% off. It caused a few problems. One mother had been buying decks a few at a time when she could afford them, and the app won’t let you buy all Decks when you’ve bought a few. So we had to give her the full version for free, since she had already paid enough. We had a few people confused when the Full version was not on sale. So we had to explain to them how the In App Purchase worked. And apparently Apple changes prices on Eastern time, so the sale ended too soon, and we had to manually extend it.

But sales were so good that both versions, free and paid, made the Top Grossing Education Apps charts on both devices. The free version broke into the top 10 on the iPad, and the paid version broke into the top 10 on the iPhone list. Interestingly, as we rose in the charts, so did the app that beat us to market. I’m not sure if we drove visibility of all the Speech apps, or if something else was driving them up at the same time. I spent too much of the day watching iTunes, as our competition stayed just ahead of us. But at some point in the evening, we passed them and stayed ahead. As I’m writing this, we are #6, and they are #11.

I have no idea what the future holds. At this point, I don’t even know how many sales or how much money this chart placement means. But I took my family out to dinner to celebrate, and I’m going to try to sleep after an exciting day.

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2 Comments

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2 responses to “A business model gone awry…

  1. Pingback: Tweets that mention Creating iPhone Apps » Blog Archive » A business model gone awry… -- Topsy.com

  2. Whoa, what a ride! But now, so much makes sense about what you guys were dealing with. Way to pull it off!

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