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The Death of Upgrade Pricing [Mac App Store]

Thursday Apple officially launched the Mac App Store and immediately every Mac in existence ceased to function. Ok, that’s not true, although some of the more chicken-little-esque prognostications from the punditards prior to the launch would have suggested that would have been the case. Actually, response has been mostly positive. After I have a chance to play with the App Store more I might write up a more comprehensive analysis. For now, though, I want to explore some thoughts that occurred to me after seeing some of the responses to the App Store.

Paid Upgrades: The Bell Tolls For Thee

There have been some valid criticisms of the Mac App Store; one of which that jumps out at me is the complaint that, like the iOS App Store, there is no ability to offer paid upgrades to installed applications. This criticism has been made by both users and developers, and I’m not ready to dismiss it entirely. Perhaps upgrade pricing is integral to the success of the App Store, perhaps not. What I am proposing is, with the introduction of the Mac App Store, Apple is introducing a new pricing model where upgrade pricing is a’ pining for the fjords.

My contention is that instead of the upgrade pricing model where a user purchases an application for a certain price and is then entitled to a certain number of major upgrades at a reduced price Apple is pushing toward a model where all major upgrades are priced at the same amount as the original purchase. The easiest way to see this in action is to look at Apple’s own retail pricing for some of it’s most popular software. iLife, iWork and Mac OS X itself are all offered solely as “full” versions. There is no “upgrade” pricing available.

Of course, many developers and users will balk at this, but if done properly this model can be made to sum up in the same way as the upgrade pricing model. Consider this simple theoretical example:

Bob’s Nifty App 1.0 is currently priced at $39.99. Bob release a new version BNA 2.0 also priced at $39.99, but he offers discount pricing to the owners of version 1 at $19.99. Total cost over two versions: 60 clams. Now let’s look at this scenario in a Mac App Store world. Bob submits BNA 2.0 to the App Store priced $29.99. Wheee, it’s a race to the bottom! A year later he released BNA 3.0 in the App Store for the same $29.99. OMGWTF?!?! That’s a huge rip off! Or not. What is the total cost over two versions? 60 simoleans.

Now, I know that this calculus won’t won’t work for some developers, but I do think we will see many developers moving to this model in the future.

Of course, there is one class of user that will completely balk at this model: the cockroaches who think that purchasing one version of an application entitles them to free upgrades until the heat death of the Universe. But you know what? Fuck them.

There you have it, my vision of the App Store pricing future.

Flame away!