Apple Prevents Omni Group From Offering Discounted Mac App Store Upgrades

[theluggage]

A user can buy Apple's entire collection of iPad apps (Pages, Numbers, Keynote, iPhoto, iMovie, and GarageBand) for less than the cost of Omni's task manager, OmniFocus.

Yes, but Omni have to make all of their money from software sales. Apple can use software as a "loss leader" to promote the sale of iDevices and Macs.

I agree that Apple need to remember that not all vendors can make money that way, and that they can't push the price of software too low.

Apple responded with IAPs, which I think most of us feel is monetizing at too small a level and is having a detrimental impact on App quality.

IAP isn't just for smurfberries.

Offer a free update with the same functionality as the original and sell an unlock code for the new goodies as an IAP. That way, everybody gets free bug- and OS-version-compatibility fixes for free, and the vendor gets a chance to really plug the update. I suspect the uptake rate would be pretty high...

Demos could be handled in the same way.

This is pretty common on Android - not sure I've seen it done on iOS so much, but technically it is no different to what games with IAP do.

Apple responded by never pushing new major versions of those Apps.

See above: from Apple's POV, income from software is nice but their software mainly exists to sell hardware.

When talking about App Store prices, one thing to factor in is that App Store purchases are licensed for all the machines you use (OK, no OSX-to-iOS cross-licensing, but in general OSX and iOS apps are completely different entities). Outside of the store, many vendors still expect you to buy one copy per machine, sometimes enforced by DRM.

 

[jonnysods]

Apple should change this. It's only going to turn developers away and customers away to pay for cheap upgrades.

 

[iCole]

They can still chose to offer a limited version on the MAS and a pro version with payed upgrades on their website.

 

[charlituna]

Keeping your third party developers from offering upgrade incentives to their customers is stupid no matter how hard you try to justify it, and something Apple should reconsider.

Third party developers can offer all the upgrades they want. Outside of the MAS.

But if they are going to offer their goods in the store the rules are clearly stated and have been from day one so they will follow them. No matter how big and important they think they are and how that should give them different rules to play by. Folks have tried that game on Apple even with iOS and were shot down and that is the right move.

 

[furi0usbee]

For the people who like paying full price for every minor/major upgrade, there really isn't any need for you to comment on this article, other than to confirm that you are rich and like paying full price for any update.

If every dev wanted to follow Apple, and drastically cut the prices for their apps, I'm all for that. But for the devs who maybe can't afford to do that, AND still be able to be competitive and offer a discount for current users, Apple needs upgrade pricing. It's not like I enjoy paying more for stuff, but if the devs I love have to close shop because they can't pay their employees, that is not good for anyone. I don't mind paying a fair price for good work.

For instance, say developer A can absorb the cost of offering a class A app in the MAS for $10. Now say developer B, who may only have a couple guys working with him, has a competing app, just as good (or better), but must charge his customers $20.00 for his app. Now, looking at that price, dev B is twice as much. All things being equal, most people may opt for the $10 app. But, if dev B could offer upgrade pricing to current owners of his app, then he could bump that down to $10, and now be on a direct competing level with the bigger dev A.

Or course, dev B could not do this for *everyone* without going broke, which is what Apple says he must do. This is just one type of scenario, and I'm sure there are many more.

As I said before, if someone can give me one good reason why Apples pricing strategies for the MAS work, please let me know. If you are going to side with Apple on this, please give some good explanation or rebuttal on the points made against Apple on this.

Bryan

 

[spacehog371]

So basically, you get your app in the store, agreeing to all apple's terms. Your app gets exposed to millions of users for a 1-time 99$, but apple is taking that juicy 30%, so you as a developer figure: "hey why not let people upgrade through our website", we earn in sales + ad revenue from traffic visiting our website. Well guess again, lmfao.

This all rather seems like a publicity stunt, a company of this scale should be fully aware of apple's terms. The fact that they handle it like this makes me think they want some extra attention from the media. Playing the victim, gets attention and support very easily, especially when it concerns business with Apple.

I agree. Omni is essentially trying to move customers away from the App Store so that they don't have to pay Apple their 30% cut.

Basically, they used the App Store to get wide exposure for the app and a ******** of new customers. But as those customers came from the app store, Apple gets part of the cut for bringing the customer to Omni's product, and handling all of the payment logistics.

Then Omni decided that Apple didn't deserve a 30% cut for incredibly wide exposure they gave to Omni's apps, and tried to convert those App store customers into regular customers to avoid the 30% cut.

I don't understand why more people aren't calling this out as being an extremely sneaky move to try and transition app store customers to regular customers.

Apple brought you those customers, they deserve the 30% cut.

Omni is trying to make this about upgrade pricing, but I guarantee you this was motivated by their desire to avoid the 30% cut Apple takes.

 

[furi0usbee]

Third party developers can offer all the upgrades they want. Outside of the MAS.

Ok, that's a solution... actually NOT. The MAS is a great marketplace. So your solution is to just tell people not to sell there, rather than have Apple incorporate some form of upgrading pricing? So it's the old "love it or leave it" mentality?

Outside of 30% profits, the only other reason I can think of why Apple doesn't want upgrade pricing, is for devs to price their apps so low, that people won't mind paying for updated versions, and then the store has a reputation of having quality apps at not so high prices. I'm sure any devs with $100+B in the bank would be all for this.

Apple is in a very unique position to do what *they* do. They are by far the exception. Again, one line of code, please Apple (or at least a tiny function). That's all we need for upgrade pricing.

Do the right thing!

Bryan

----------

I agree. Omni is essentially trying to move customers away from the App Store so that they don't have to pay Apple their 30% cut.

From another angle, I do think that Omni apps are highly over-priced. I've used a couple before, and they are good, but like some other apps, such as Things, they are grossly over-priced, especially for the volume they sell.

However, if I could buy their apps in the MAS, and know I would be eligible for upgrade pricing, say 30-40% at a discount, that would maybe sway me. Just like Adobe, how the price to get into Photoshop is insane, but the upgrade pricing is at least at the outer grasp of crazy.

Bryan

 

[curmudgeon32]

What utter pish. You are not restricted to software from the Mac App Store. You can download software from anywhere as you always did.

For now, yes.

 

[pmjoe]

Buy straight from the developer. No need to deal with the Mac App Store if you can get a discounted version elsewhere. There are certain developers that offer their software on the MAS, but I still go to their website because of discounts, access to betas, etc.

Exactly! Always buy directly from the developer.

The day I can only provide applications through some mega-corporation's blessing is the day I retire and find a new field of work.

 

[Rafterman]

Between this and in-app purchase abuse, the concept of the central store will collapse. Eventually, people are going to get tired of being piggy banks every time Apple and app developers need more cash.

 

[stuffradio]

Bryan, Apple does seem to be on the customer's side according to the article. The MAS rules do state that the upgrade has to either be offered for free to existing customers or a full version at regular price. Understandable that currently the upgrade system doesn't offer enough options to satisfy everyone but personally I'm all for a free upgrade and that's fair on many levels.
Right now I want to buy Pixelmator. I've used version 1 for a long time and now version 2 which came out on the MAS has been there for a long time with small updates. I'm afraid of buying version 2 because I'm thinking version 3 will come soon. I can't get any kind of answer from Pixelmator as to when and if there will be a version 3. Now if a free upgrade from version 2 to 3 would be offered that would be fair. I shouldn't have to buy a piece of software today and tomorrow I have to pay for an upgrade if one gets released. What would be make more sense for many at least is to give all customers a one-time free upgrade when buying from the MAS. After that then they pay full pricing.

You're thinking like a consumer instead of thinking about how much work it takes to make applications.

 

[rmwebs]

The idea with the App Store is that when you buy a piece of software, future updates are included in it and there is no confusability with different versions of the same software.

By that logic we shouldn't have to pay for Mavricks as its the same software, just a different version.

If a developer wants to charge for a new version that adds significant new features, they are more than entitled to do so. The problem with Apple's ecosystem is that its extremely limited to developers. There's no porting customers over to it, no exporting customers, no bulk discounts - nothing like that at all.

Steam got it right. Greenlit software allows the devs to import all their customers, offer discounts on other products by the same developer if you've purchased one, etc.

This is a limitation caused by Apple.

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Third party developers can offer all the upgrades they want. Outside of the MAS.

Correct they can. But a developer cant move away from the MAS once they are in there as Apple wont allow you to see who your customers actually are.

 

[buddhistMonkey]

I guess the race to the bottom that practically killed PC OEMs is still alive and well in the software sector.

Apple can get away with lower cost software because it's used to entice people to their hardware, which is where they make the vast, VAST majority of their money. A 3rd party software house doesn't have that advantage. They have no choice but to price higher than Apple does if they want to make any money.

Apple commoditizes software to sell hardware. They pricedrop their OS and first party apps below market value in order to fuel hardware sales. Software developers can't do this because they draw 100% of their revenue from one market alone.

Yes, but Omni have to make all of their money from software sales. Apple can use software as a "loss leader" to promote the sale of iDevices and Macs.

Maybe you'd all have a point, if not for this (quoting myself, here): "The kicker is that every one of Apple's apps is amongst the... Top Grossing apps. In fact, on the Mac App Store, Apple's software accounts for... 8 of the top 10 highest-grossing apps." In other words: each of Apple's budget-priced apps makes more money than each of OmniGroup's premium-priced apps. So, we're not talking about a "loss leader" strategy at all, because there's no loss. Apple's apps are making more money than just about every other app in the App Store.

Now, tell me again how lowering prices is a bad strategy.

 

[nuckinfutz]

Previous responses pointed out what's wrong with your million vs. billion dollar comment.

How is having a price for an upgrade any different from having a price for an IAP purchase? It would be equally clear with both ahead of time exactly what the cost is before purchase. If you mean that IAP prices are listed along with the initial purchase price, what's your point? The same could be done with upgrades. Also, nothing stops a developer from changing their IAP price, so you can't know for sure what you might have to spend later (analogous to not knowing what an upgrade price might be).

A software upgrade could range from nothing to a complete rewrite with substantial new features. Your statement is categorically false. As long as you're not forced to buy an upgrade, so what if some are minor and others major? Buy the ones you think are worth it to you. Just like you do when you make the initial purchase decision for any software.

You should be worried about there ever being an Aperture 4. Sadly it's starting to look like Aperture is on the discontinued-but-we'll-never-announce-it path like a few other notable Apple apps.

What do you mean paid upgrades were never simple? All they were not is automatic or one click to confirm. But mostly they are no harder than an initial purchase.

What do you mean by "someone is going to get screwed"? I cannot even guess what confused thought could cause you to make that statement.

What angry consumers? How will letting me buy an upgrade for less than the full price because I already own something make me angry?

Neither of you has gotten the point. A billion dollar company understands market trends far better that smaller ISV. There's nigh 7 billion people on the planet. The trend is clearly moving towards more affordable software that can be sold globally. WWDC again banged the "localize your app and go global" mantra.

Paid upgrades are messy. I just bought Hypes Tumult 2. They put it on sale for everyone and it sufficed for an upgrade. I'm not going to complain about new users getting the same price. The belief that I, as a former user, should always have a cheaper price than new users is entitlement behavior.

Paid Upgrades stink. They force developers to create a cutoff date. People outside those dates don't get the upgrade pricing which causes rifts.

Apple knows what they're doing here folks. Paid upgrades buttressing overpriced software is old ideology. Come into the 21st century.

And what's this crap about "I always buy locally from the vendor" That's stupid. I've got four Macs and about to buy more. I'm not going back to tracking serial numbers so that I can save a vendor %30. My allegiance is to my family. If a company makes my life easier then i'll pay a respectable price but i'm not into charity cases within the tech sector.

 

[orangebluedevil]

Beleive it or not, there are people in the world who actually know how to use computers without being looked after by Apple. If you ask me, like most of Apple's decision regarding the App Store, this is unnecessary.

Surely those people can disable GateKeeper, and purchase the software from the Developers website then.

 

[orangebluedevil]

That's the user's choice, not everyone needs to be babied. All this says to me is apple is becoming a control freak and is only going to make their platforms more and more closed.

Good comment. (And 3x the upvotes on mine, so I'm apparently in the minority.)

The users that don't need to be babied surely have the technical chops to disable GateKeeper and install anything they want. Including paid upgrades.

This doesn't say anything about control, at least to me. You can still sell outside the App Store. But you can't sell in the App Store, then sell upgrades outside the App Store. I don't think people fully realize that this Omni app was meant to do exactly that, circumvent the App Store.

 

[digitaltara]

Redemption Codes for Upgrades

This has sort of been mentioned, but couldn't Omni sell (on their website) redemption codes for the new version (in the MAS)?

My husband and I both use OmniGraffle, and the only reason we bought it from the website over the MAS was for the family license discount which isn't currently supported in the MAS.

I don't see why codes like the ones used at Starbucks for free songs/apps couldn't be used to redeem for the new version of the app. Sell a code to previous owners at the upgrade price, while new users buy the app at the new price.

 

[Gamoe]

Frankly, I think Omni's software is overpriced....

Nonetheless- Apple's power over its developers and what its users use is very concerning. Yes, having a centralized commercial system present and manage all of your choices is "simple", but it also dampens and controls the relationship between the customer and the developer.

We power users will probably always be aware of alternative software and be able to install the software we choose, but how much longer will it be before it becomes a real hassle and eventually, a practical impossibility for the average user. Even worse, many new users, especially those coming from iOS, are simply not *aware* that there are other sources of software besides Apple's App Store offerings.

In Europe, Microsoft needs to inform the user that there are other choices besides the Microsoft Explorer web browser and offer other leading browsers as options. Considering Microsoft's power to shape and destroy third-party software offerings and user choice, this was a sensible decision. I think the time may be coming for Apple to face similar scrutiny with its App-store. Users need to know that there are other options, and how to find them.

The Mac is Apple's platform, but Apple has no right to use its power to shape and control what developers can offer on the platform or what software users can use.

That said- Yes, this was probably somewhat planned by OmniGroup, but users having this awareness of the situation, rather than it being left as a dispute behind closed doors, is for the better

 

[LoggerMN]

This is why I like the App Store. I don't want to buy the software again just because the developers want to charge for an upgrade.

And developers don't want to spend months of time adding features to your app without getting paid for it.

I get that Apple is trying to prevent fragmentation where users are running different versions of apps, but I wonder how many developers this is scaring away.

 

[iChrist]

I mean, this makes total sense, sorry to say. You can't have users buying Apps through the App Store, then updating that App elsewhere. It removes the customer benefits of security, ease of updates, and security. Oh, and security.

Security is a red herring, a favorite meal of the simple minded.

Obviously the real issue is a strange lack of flexibility in the app stores. The example by macrumors is hilarious, the pricing on Final Cut has nothing to do with lack of upgrade pricing. Are they suggesting the upgrade price to the next Final Cut will be $199 for all users? If so, how does it benefit Apple to push this new pricing scheme on others?

 

[HenryDJP]

You're thinking like a consumer instead of thinking about how much work it takes to make applications.

Are you listening to yourself? I am a consumer, most of us here are. And BTW, tell that to the others who feel OS X Mavericks should be free just because Apple is rich.

 

[Lazy]

I agree. Omni is essentially trying to move customers away from the App Store so that they don't have to pay Apple their 30% cut.

Basically, they used the App Store to get wide exposure for the app and a ******** of new customers. But as those customers came from the app store, Apple gets part of the cut for bringing the customer to Omni's product, and handling all of the payment logistics.

Then Omni decided that Apple didn't deserve a 30% cut for incredibly wide exposure they gave to Omni's apps, and tried to convert those App store customers into regular customers to avoid the 30% cut.

I don't understand why more people aren't calling this out as being an extremely sneaky move to try and transition app store customers to regular customers.

Apple brought you those customers, they deserve the 30% cut.

Omni is trying to make this about upgrade pricing, but I guarantee you this was motivated by their desire to avoid the 30% cut Apple takes.

The fact that completely invalidates your theory here is that Omni WANTS to be able to offer upgrade pricing in the MAS. That is the whole fricking point here; the MAS doesn't offer that so they felt compelled to try something else.

They were fine and successful before the MAS existed. Obviously since they started selling at the MAS too they thought the 30% cut was acceptable for the benefits of the MAS. Why would they not think the same when it came to upgrades?

 

[orangebluedevil]

Security is a red herring, a favorite meal of the simple minded.

Obviously the real issue is a strange lack of flexibility in the app stores. The example by macrumors is hilarious, the pricing on Final Cut has nothing to do with lack of upgrade pricing. Are they suggesting the upgrade price to the next Final Cut will be $199 for all users? If so, how does it benefit Apple to push this new pricing scheme on others?

Saying "obviously" doesn't make your point right. Actually I didn't even understand your point.

 

[Lazy]

Maybe you'd all have a point, if not for this (quoting myself, here): "The kicker is that every one of Apple's apps is amongst the... Top Grossing apps. In fact, on the Mac App Store, Apple's software accounts for... 8 of the top 10 highest-grossing apps." In other words: each of Apple's budget-priced apps makes more money than each of OmniGroup's premium-priced apps. So, we're not talking about a "loss leader" strategy at all, because there's no loss. Apple's apps are making more money than just about every other app in the App Store.

Now, tell me again how lowering prices is a bad strategy.

Neither you nor anyone else outside of Apple knows if they are actually making a profit on those apps. Those figures relate to revenue. The costs are unknown.

Those apps are a great value. With Apple's brand and marketing behind them, of course they sell really well. If they do make a profit on them it's because of the huge volume they get from their unique position of being Apple. No other developer has that advantage. When you get down to the smaller developers there is zero chance they can get enough volume to price an equivalent app anywhere near that low.

There is an optimum (or perhaps two, but never mind that) price for just about anything: the price at which if it were cheaper you'd sell more, but the lower profit on each unit doesn't make up for the increase in sales, and if it were higher, the higher profit on each unit doesn't make up for the decrease in sales.

This is not a secret, it's basic economics, and well-known to any business. Just because you think someone else's determination of that price is too high doesn't mean that it is. Chances are you're the one who's wrong. They know way more about their business and products than you do. (Of course there is the occasional exception that proves the rule when you see something at a price that makes everyone go "what are they thinking?!?". In those cases sometimes the company screwed up, but not always -- e.g. original iPod.)

 

[orangebluedevil]

Let's say Apple allowed this. The next day, every App would be free in the MAS, with paid upgrades through the developers website. Do I need to list the ways that would be terrrrrible?

They had no choice but to reject this App.