Tag Archives: value

you can compete with free

Marco Arment explains the economics of free, as they apply at instapaper. 

Last fall, I conducted an experiment: I quietly removed Instapaper Free from the App Store1 for three days, leaving only the full, $4.99 Instapaper app. Not only did sales increase incrementally, but nobody seemed to notice.

On March 12, knowing I was heading into very strong sales from the iPad 2’s launch, I pulled Free again, this time for a month. Again, nobody noticed, and sales increased (although it’s hard to say which portion of the increase, if any, is attributable to Free’s absence, since most of it is from the iPad 2’s launch).

This break went so well that I pushed the return date back by another month. I may keep it out indefinitely, effectively discontinuing Instapaper Free.

Here’s why:


The paid app has never been “on sale”. It launched in the fall of 2008 at $9.99, and in June 2009, I dropped the price to $4.99, where it remains. I have no plans to drop it further.2

When it was still available, Instapaper Free was downloaded about 3 times more often than the paid app. This is a very good ratio, especially given such an “expensive” paid app.

The iPad represents about half of my business, but I’ve never offered a free iPad app, and almost nobody has ever asked for one. (Instapaper Free is iPhone-only. Like most iPhone apps, it will run in the iPad’s “2X” simulator, but it’s terrible.)

Bad economics

Maintaining a second configuration of the app incurs direct, significant costs in development and support. Furthermore, the Instapaper web service that powers the app costs a good amount of money and time to operate every month. So Free users have a direct cost to me…

via Why Instapaper Free is taking an extended vacation – Marco.org.

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on the disappearing consultant


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shame is not the same as value

A radical approach to piracy involves catching an offender and shaming them to their social network. Wouldn’t it make sense to create something of value in stead? 

…Now, a smartphone app is teaching digital bootleggers a lesson with a high-tech version of a public shaming.

The Android.Walkinwat purports to be a free version of another “Walk and Text” app, which costs $1.54 in the Android market and uses a phone’s built-in camera to give you a live feed as you text, at least in theory preventing you from walking into stop signs or into traffic.

The free app, available from unofficial Android app markets, works as a Trojan horse once installed and redirects the pirate to the legitimate app in the Android marketplace and secretly sends the following text message to everyone on the phone’s contact list:

“Hey, just downlaoded [sic] a pirated app off the internet, Walk and Text for Android. Im stupid and cheap, it costed [sic] only 1 buck. Don’t steal like I did!”

Then, this message pops up to the user: “We really hope you learned something from this. Check your phone bill 😉 Oh and dont forget to buy the App from the Market.”

via Pirated Android app uses shame as tool | Technology | Los Angeles Times.

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perceiving new sources of value

…While the largest drug companies have been buying each other to replace the revenue they will lose as products come off patent, their smaller competitors have been snapping up venture-backed biotechs to stock their pipelines. Since their own patent expirations are further off, they’re willing to buy companies, like Calistoga, whose drugs are in early to mid-stage clinical studies.

“Big biotech [is] as much of a player as pharma these days,” said Ed Hurwitz, a director with Alta Partners, which backed Alba, Calistoga and Taligen. “There is more large-biotech interest on the acquisition [front] than we’ve seen historically, it’s not just a pharma game anymore.”

via Big Pharma, Meet Big Biotech – Venture Capital Dispatch – WSJ.

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somewhere between price and value

this from NYT book review of : “The Price of Everything”. 

…“By evaluating opportunity costs, we organize our lives,” Porter writes. A poor country could have used revenue from a landfill to satisfy an important public need, like school construction, and the investment may very well have turned out to be worth the risk. The Summers kerfuffle is one example among the scores that Porter weaves together to prove his worthy point: “Prices — how they are set, how people react to them — can tell us who people really are.”

Back in the 18th century, Adam Smith propounded a very different idea: products had an unshakable value equal to the cost of the labor put into them. Much of Porter’s book can be seen as a vehicle for the author to explain to Smith just how wrong he was. Porter marshals an impressive array of research to show all the ways consumers can be shortsighted, self-indulgent, oblivious and inconsistent — not to mention hugely vulnerable to profit-eyed marketers. The information age has further scrambled the relationship between labor and value. How would Smith explain the existence of an iPhone app called “I Am Rich,” which did nothing but flash a red gem on the screen and retailed for $999? Or the computer users who routinely buy new cartridges rather than refills for their printers, effectively laying out $4,731 per gallon of ink?

It’s hardly news that people spend money on stupid things. Thankfully, Porter is interested in more than factoids. Most of his attention is devoted to teasing out the rationale underlying the “cold accounting” that determines the value of things people think are priceless, like human life and national security. What he relates has unmistakable urgency. How much should we spend today to address environmental problems that may be more cheaply tackled by future generations, especially given the number of development projects that clamor for financing now? Should we even attempt to protect against risks that would be more costly to prevent than the damage they would cause?

via Book Review – The Price of Everything – By Eduardo Porter – NYTimes.com.

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