Developers Should Avoid setapp.com
As a developer these are your tasks:
Sounds complicated doesn't it?
You want to make it simple?
The one thing that you need to be engaged in when in the business of selling software?
Reference price is the price that the consumer expects to pay for your product. It doesn't have to be the price you charge but it is the price that the consumer expects to pay.
You have to work at establishing a reference price for your product. The competitive landscape, the feature set of your major and minor competitors, and your goals from the product will all constrain the milieu that you are playing in. Within those constraints the reference price for your product is your responsibility. You use all the elements of the marketing mix to establish your reference price.
I am going to explain how one establishes a reference price in a future article. In this article I am going to analyze how setup.com detracts from your reference price and your control of it.
As a developer, you are bombarded with the need to make decisions and there is no good cheatsheet. You are flying by the seat of your pants in this process. This is an attempt to make it easy to make decisions.
There is one compelling question you have to ask yourself. This one question will define whether you need to do something or don't.
When you are evaluating a decision, the only thing that you have to ask yourself is "How does this effect my reference price?" If the decision helps you establish your reference price, you should do it. If it detracts from your reference price, don't do it. If a decision is unrelated to your reference price, there is no compelling reason to waste your time on such decisions.
The decision here is a simple one. Do you want to be included in the bundle of software which setapp.com is offering its customers?
What is setapp.com?
setapp.com is a subscription service for Mac apps. The consumer pays $9.99/month or $119.88 a year ($120/yr, to make my life easier) to belong to the service. setapp.com in return provides the consumer a folder of "curated" applications which they get to use in their always updated state for the year.
Sounds like a good deal for the customers. What is in it for you, the developer?
This is the selling spiel to the developer from setapp.com:
- Be the maker, not the marketer.
- Get recurring revenue, without paid upgrades.
- Reach a whole new audience without a single ad.
- You'll be in select company.
There are two kinds of developers:
- Your product is a hobby. You have your eyes set on an opportunity with a startup and this is an incidental revenue stream which you have cooked up in your spare time. Put your product in the setapp.com bundle. Move on with your life.
- Your product is a part of your business. You are in the business of selling software and want to build a viable business. Please read on.
Marketing is not difficult. It is time consuming, it is a lot of grunt work, it requires discipline and sometimes professionals. The one thing it is not is difficult. Boil down your marketing activities to a few goals: design a product which is differentiated, shout about it every opportunity you get, take care of existing customers. Rinse and Repeat. You will be fine.
Paid upgrades enable you to build a cadre of users who keep you in business for the long haul. Embrace them.
You are not reaching a new audience. You are reaching the cream of the audience in the macOS space, and you are doing it at a discount. Don't get conned.
You are not in select company. You are surrounded by a whole host of also rans, and a couple of outstanding products. setapp.com is not curating anything. Their interest runs counter to curation.
Analysis of the setapp.com Consumer
$120/year? This is the top end of the Mac consumer base.
I have no idea what the average Mac consumer spends a year on software. We have some data on the iOS marketplace. The average iPhone user spends $40 per year on software from the App Store. The average Mac user? We don't have data. How many multiples of that figure do you think? I don't know. Considering the service is new and it is not a category which existed before we are going to struggle with data availability. It is my gut instinct which is telling me the following:
$120/year on Mac software is the cream of the market. These are the heavy buyers of software.
These are the people most likely to buy your software. You are making your software available to them at a discount. How does this make sense?
I am going to take two products and try to make my argument:
Apple Design Award winner for 2016, Ulysses is available at the App Store for $44.99. It is the high end of markdown based, minimalistic text editors. There are competitors in the space but Ulysses is the undisputed leader in the category. In fact, if you look at the writing software space, Ulysses is the first entrant who is giving the leader Scrivener Writing Software strong competition.
Soulmen, the developer of Ulysses has been doing this for fourteen years and have built an absolute cult following in the marketplace. They have a web presence, they publish a blog with tips and tricks, they have a strong twitter presence. These folks know marketing. They know how to build a customer base.
They have joined setapp.com.
This is what their decision tells the consumer:
- Ulysses is one of the 68 apps in the setapp.com folder.
- It is not distinguished at all. It is just one of the crowd of apps I get for $10/month.
- The marketing message of Ulysses: "The Ultimate Writing App for Mac, iPad and iPhone" is completely lost. It is just one of the many apps in a folder.
Think about it. Fourteen years in convincing the customer that text and not rich text is the way to productivity. Fourteen years in convincing the customer that minimalistic writing environments are the way to go if you want to control distraction and be productive writers. Fourteen years in convincing the customer that most of the solutions available in the marketplace are laden with choices which make your life difficult. Ulysses makes your writing life better by providing you only the choices which matter and letting you get on with the business of writing.
And you are going to pay $44.99 for this bundle of features.
What does the $44.99 figure tell the customer?
- This is serious software.
- They have the balls to charge this much money? They must be good.
- This is an investment. I am going to learn how to use this product and I am going to be using it for a long time.
- This will make my writing life better.
Does being one of the 68 apps in the setapp.com bundle convey any of the messages that Ulysses needs to convey to the customer to justify their $44.99 price? Nope. Is the customer even aware that the product costs $44.99 in the Mac App Store? What happened to the premium price segmentation strategy?
It all disappeared. Gone.
For the honor of being one of the 68 apps in a setapp.com folder?
Ulysses has given up control over its reference price. Has given up control over its segmentation strategy. They have become one of the herd.
If I was Soulmen, I would pray. Pray setapp.com was a flop. Pray no one signs up.
It is a crowded marketplace. You are a lonely developer working in your office in the backwoods of Minnesota. I am talking about Brett Terpstra. He has a product called Marked 2 - Smarter tools for smarter writers. It is a previewer for markdown files. In fact, it is the best and only product of its kind. It does a great job at its basic function, previewing markdown files, irrespective of your choice of text editor. But, like all of the Terpstra creations, it does a whole lot more. Brett sells the product for $13.99. The promotion of the product is everything he does online. Two podcasts, innumerable appearances in other podcasts, a book, a whole slew of scripts, plugins and doodads which make your use of the Mac better. Oh, I forgot, nvALT. All of this is promotion for Marked 2. It is also promotion for the forthcoming note-taking application from him.
Marked 2 is in the setapp.com bundle.
Marked 2 is unique. It has no competition. It is micro-targeted. For those users of markdown who want complete control over their output and their preview, Marked 2 is the only solution in the marketplace.
Why would you take such a product and put it in the setapp.com bundle? Increase the price to $19.99 and keep improving it. Your user base is price-insensitive. The features of your product are not replicated anywhere. You have a differentiated product in a growth category. More and more people are discovering markdown and your product is what they will grow into. Give them information, lead them to that growth, write a few more books, but don't make your product a non-entity surrounded by 67 apps no one cares about.
You have completely lost the ability to control your reference price at this point. You have given up the fight. You have given up control. You are donating your application and all the work around it to build the business of someone else.
How does this make sense?
To make myself clear, I don't care about the split of revenue between setapp.com and the developers. It is not meaningful to the analysis. I don't care what the share is between the developers of the included products, it is not pertinent.
setapp.com is directed towards the top end of the macOS marketplace and they are selling a service. The effect of setapp.com is going to be the commoditization of the software market. Remember all the griping of the push towards the $0.99 software in the iOS store? That is what setapp.com is doing. Making the top end of the market move to the $9.99/month all you can eat buffet. And they are doing it with your work, your sweat, your ideas.
Whatever the share of setapp.com. Their goal at this stage is simple:
Increase the number of subscribers to setapp.com.
After the service has been established, the goal is going to change to:
Increase the share of $120/year for setapp.com.
More Attempts at Persuasion
When faced with a question in the macOS software space, it is a good idea to follow the ones who have been successful in the space. Look at The Omni Group. Look at Bare Bones Software. Are they doing it? If they aren't, you need to think this through a lot more.
setapp.com destroys your reference price. Destroys your control of the reference price for your product. Takes the cream of the macOS market and makes it treat software as a commodity. If setapp.com is successful it will push down prices across the board.
Concentrate on the reference price of your product. Reinforce it. Work hard at letting people know you exist. There are no shortcuts to business success. Don't be conned.
macosxguru at the gmail thingie