Thoughts on Amazon’s Android App Store
I’ve posted some thoughts about Amazon’s upcoming Android Appstore over at the Rectangular Blog. There has been a lot of discussion about Amazon requiring control over app pricing, most of it focusing on the potential negatives for developers. However, one thing that has been overlooked is that if Amazon decides to give your app away for free it might actually be the most lucrative way for your app to be distributed:
The developer will be paid 70% of the purchase price of the app, or 20% of the list price, whichever is greater.
The important thing about this last point is that the developer gets paid even if the app is given away for free. At first glance, having your paid app given away for free and only getting 20% of the list price for each user, rather than 70%, seems like a bad deal but in reality it could be lucrative for the developer. On the Android Market, free apps typically get somewhere in the region of 50 times as many downloads as paid apps. If that ratio translates to Amazon’s store then instead of selling 200 copies at $2 and getting $280 out of it, the same developer could see 10,000 copies given away free and yet earn $4,000.
Not everyone will be a winner, but with Amazon’s other obvious advantages, this new store could potentially be the first alternative marketplace to seriously challenge Google’s Android Market.
on March 10th, 2011 at 11:38 am
While we’re at it, why not put a list price of 10 dollars on your app?
on March 10th, 2011 at 11:41 am
@Jeff, same thought occurred to me but the terms and conditions require that the list price is the same as on other app stores. So you could only do this if you were selling for $10 on the Android Market or if your app is exclusive to Amazon.
on March 10th, 2011 at 12:17 pm
Giving it some more thought, Amazon would probably not decide to list highly priced apps for free. Instead, they’d adjust the price to 1 dollar.. or maybe 10 cents. They have price control right?
While your scenario looks lucrative, Its elementary imagine Amazon won’t aim for a financial loss. From both sides: selling to cheap or giving your app away for free.
Looking at it from their perspective, they’d probably add a price tag the minute an app gets very popular and most likely gradually increase the price to find the perfect price elasticity of demand.
While I saw this price control as an disadvantage, since they might sell my app at a lower price and thus making me compete with my own app, it might actually be useful. Amazon will eventually calculate the most beneficial selling price. This would probably save you some time analyzing this yourself.
What do you think?