UPDATE: Apptopia Product Update: 6.10.13

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One of my absolute favorite things about being the founder of Apptopia is hearing from customers.  You might be thinking, “bullshit,” everyone says that, but think about it for a minute.  I sent an email to thousands of customers (who I spent the last 18 months of my life tirelessly building rapport with) telling them something that was always free, is no longer free… and I put my personal email as the “reply to.”  I could very easily have had my support team handle this and not given it another thought.  Instead, I patiently and very personally responded to nearly 75 different customers who took the time to write me an email with their feedback (some thoughtful, some emotionally angry).  Nonetheless, I responded to every single customer.

 

I analyzed what types of apps each person had and the quality of apps of those who complained the loudest (as well as those who wrote the most thoughtful emails).  Now, back to my original statement “my favorite part of being the founder of Apptopia is hearing from customers.”  This is not because I love writing 75 emails, but rather because I love learning.  Every week, every single day, I am learning something new from one of our customers or someone in our community.  This pricing change is no different.

 

Now just to be clear, as I outlined below about a week ago, I still stand by the reasoning for needing a listing fee 100%.  There will always always be people who just hate paying for things, and those are not the people who will be successful on Apptopia.  However, having listened to all of our customers, I do think we messed up on the price point.  While $49 certainly sounded good and fair when discussing it internally for the last couple of months, I think, in reality, it’s a bit too much of a barrier to entry.  As such, we are decreasing the listing fee to $29.

 

How This Affects You

 

Existing Customers (with existing listings)

You will be able to keep your listings live for $20 a piece

 

New & Existing Customers (with new listings)

$29 a listing

 

If You Already Paid For Listing

We have your name, email, and listing on record.  We are going to give you 2 upgrades (1. Feature your listing on home page and 2. Tweet your listing) completely free.  Normally the value of these is $64.  You need to do nothing.  We will do this in the next week, and will email you directly so you are in the loop.

 

If You Have 5 or More Listings

Please email Tess at tsuchoff@apptopia.com. Tell her how many listings, what they are, and we will absolutely work out a discounted rate for you.

 

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(previous post below 6/10/13)

Very few entrepreneurs, or people in general for that matter, get it right the first time.  In fact, some of the smartest people in the world (scientists, physicists, etc.), build careers on the fact that they only get it right 1-2% of the time (if that).

Apptopia is no different.  In our 18-month journey we have already learned a few very valuable lessons (most notably: Eliminating Auctions).  Today we are announcing 2 new changes/lessons learned.

1. A listing fee of $49.

2. Bank wires as the exclusive payment method for acquisitions (no more credit cards)

To date we have never charged to create a listing, and this was not a decision we took lightly.  I would like to very transparently explain our logic for both changes below:

 

Problem We Are Trying To Solve

$500 listings/acquisitions are really hurting our site.  In fact, I would go as far as to say this bucket is actually all apps ≤ $2,500.

In short, it comes down to the very simple idea that most sellers are not serious about selling.

 

Negative Buyer Experiences

  • 100% of the cases where a buyer purchased an app and the seller was unresponsive were for acquisitions below $2,500
  • 100% of the cases where a seller was trying to sell just their source code (even though that is not what we do at Apptopia or what the buyer wanted) were for acquisitions below $2,500
  • 96.5% of all acquisitions that were ever escalated to me for major issues/disputes/sketchy behavior were from acquisitions below $2,500
  • 94.7% of apps that failed a code review were acquisitions below $2,500

I could keep going, but I think the above is actually powerful enough.  Now you might be thinking, ‘Why not just set the minimum acquisition price to $2,500?’  Well, that doesn’t solve the problem.  It would just make the same low quality apps more expensive for buyers, and that won’t help our ecosystem grow.

The $49 listing fee works because it makes sure all sellers are serious.  It makes sure that, as a seller, you actually think your app has a chance at selling before you list it.  As founders and as market makers, we are actively trying to avoid the scenario where a buyer searches on Apptopia and sees 0’s for downloads as well as pages of apps with under 500 total downloads.

 

Absurd Amount of Time Spent on Support

When you start a business you quickly think, “My business is going to provide the best support ever…EVER!”  Then you quickly realize that in order to do so, you need to spend a LOT of time with people who 1) Don’t make you any money and 2) Are not appreciative.

This hits on that 96.5% of acquisitions that got escalated were under $2,500.  When I did the research and dug into the numbers, I found out that if we had “fired” certain customers and not even worked with them, we would have made more money than by working with them!  Often times our support team is sending 4, 5, even 6 emails to buyers and sellers under the $2,500 price point just to communicate the simplest parts of the transfer process.

The number of complaints, rude emails, edge cases, and sketchy issues that come up for acquisitions under $2,500 is mind-boggling.  Our hope is that this small listing fee helps keep out the bad, allowing us to better support the core users who really make up our marketplace, our community.

 

Apps Priced Incorrectly

We have an app currently listed on our site for $20,000,000 that made just over $1,000 last month.  Need I say more?  This reflects poorly on all of the listings that are priced competitively and have quite a high value proposition to buyers.

We have thought many times about having an Apptopia Valuation as the acquisition price for listings, but that just didn’t sit well with us.  We think it’s important to have an efficient market and have sellers set their own prices.  However, today, we are not seeing that happen effectively.  Our hope is that when forced to pay a listing fee, sellers will take the time to really price their app correctly (or email our Valuations Team to ask for help!).

 

Fraud & Chargebacks

Very simply put, when you allow people to buy IP & software on a credit card, you begin to see people’s bad side.  More and more we watched as buyers purchased apps with a credit card, went through the transfer process, and then charged back the price of the app.  Meaning that they got the code & app for free, and ultimately it was Apptopia who was paying out the seller.  This doesn’t work, and we quickly realized that there is actually no precedent for accepting credit cards for these types of transactions.  We could not find another brokerage / escrow services which allowed the types of payment terms we did.  We were very much in the minority, and now we know why!

As such, all acquisitions (of any size) will need to be paid for with a bank wire.

 

It’s Not About The Money

I have been through a handful of “price changes” in my career, and people always assume it’s about making more money.  With out implementation of Listing Fees, this is most certainly not the case.  The goal of adding this fee is to solve the problems outlined above.  Ideally, this will allow us to decrease our raw cost for each transaction, but the goal is most certainly not to make more money off of you.

To prove this to you, and show you we mean it, we are going to refund the listing fee of every app sold on Apptopia.  So any app sold after June 10th will be included.  This means that when you are paid out for your sale, we will add $49 to that payout, no questions asked.

My goal in writing this rather long, insightful, description of these changes was to provide as much transparency as possible.  That is what we have done since day one, and will continue to do with all business decisions / changes which effect you.

 

Feel free to direct all comments, questions, or concerns to me directly.

 

Jonathan

This article has 13 comments

  1. Really solid update. Totally agree, and seen it first hand, that when $ is put out, users will pay more attention to the process from the get go. Love that the drive behind this is to create a better experience for the apptopia community.
    keep up the great work guys..onto the next one. #success

  2. Bravo. Besides for what seems like solid/sound decisions, providing transparency into thought process really helps increase trust factor. Not trust as in good vs bad – rather smart vs dumb/lame.

    Understanding app valuation is huge. Apptopia is uniquely positioned to help find that market value. Glad to see the progress!

  3. “…$20,000,000 that made just over $1,000 last month”

    Wow sounds like a great deal. :)

    Definitely seems like a great move. I know you might get some people complaining but those aren’t the people you want to be dealing w/ anyways.

  4. This is not the solution to your problem.

    Your problem is this website. It has so many flaws it is beyond belief.

    If you want to get it right then the listings should stay free. But… you need to add a review process. Only list apps that pass the review proess and meet the requirments for a listing.
    If you want only quality apps listed then you need to take some control and responsibility.

    Never blame your customers or users!!!
    I wish your website to fail for such an act.

    • Bobby,

      Thanks for the strong worded, and negative note. I am sorry this upset you and I just want to clarify that by no means are we blaming our customers/users. In fact, there really is no blame anywhere. If you were to read more carefully the introduction to this post you would understand that if anything i am taking the fault on my shoulders.

      The problem with your strategy is that i do not want to be in a situation where i am judging quality of apps, as that will never crate a efficient, naturally liquid marketplace. My goal, my hope, is simply to make developers who try to sell on our marketplace more serious and more engaged.

      Jonathan

      • Hey Jonathan,

        Thanks for the reply.

        The fact that you return the deposit surely proved it’s not about making more money. Great move, kudos!
        Not doing that would have surely stirred the masses “mumble mumble, more money, mumble mumble” :)

        Have a great day.

  5. Sooo, it’s $50 upfront, then if the sale succeeds you basically give those $50 back?

    What about editing listings? As in: I realize after 3weeks the app isn’t going to sell for that price and I want to lower it?
    Is it a one time $50 fee, unlimited listing time and edits?

    On a side note … although I really don’t mind, you could have told them to add a ‘thanks to Roland for the info’ in the venturebeat article. You would have found out anyway, eventually, but still, it would have been polite&fair :)

    • Hey Roland!

      Thanks for the message, and the email. To answer your question you are 100% correct.

      Its a one-time $49 fee for new customers and a one-time $39 fee for existing customers. Its life-time listing, and you can (and even should!) edit your listing as much as you want. Our goal is not to nickel and dime whatsoever, just to raise the bar.

      Should you have any questions at all – jon AT apptopia DOT com

  6. Really pleased with this change. Thanks for the great explanation.

  7. I think it would be fair to allow blackberry developers to also sell their source codes and not just limit the sync to Android and iOS. BlackBerry OS doesn’t handle only core apps, Im one of the HTML5 app developers with titles already for sale on blackberry world.

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