I had the displeasure of reading this TechCrunch editorial entitled “iPad prices are out of control and will kill us all.”

Paul Miller criticizes iPad application price increases as unreasonable. He makes several valid points:

1. It would be nice if developers built Universal Apps,
2. The AppStore needs a “trial” system, and the obvious
3. It’s nice to pay less for things.

Those points aside, the article does a fantastic job of distilling itself into a single closing sentence:

We’re not arguing against the power of paid, we just want it to continue in the best way possible: cheap.

I’m left feeling oddly satisfied that this writer is upset.  It’s a sign that the AppStore’s pricing is correcting itself.  Here are the forces at work pushing that correction and why it’s a good thing:

Technical and Artistic Skill

Conventional wisdom states that the smaller the user interface, the more difficult it is to design for.  Following that logic, the iPhone should be far more difficult to design for than the iPad.  I would argue that statement is true for the UI planning stage.  But, the iPad quickly becomes more demanding in the implementation of that design.  On a much larger display, “pixel perfect design” takes on an entirely new meaning.  Just ask the developers of any AAA title PC or console game.  The iPad quickly separates the (design) men from the (design) boys.  Experienced designers and Cocoa engineers like @flyosity and @alanQuatermain are right at home, while others struggle to achieve the same execution.  That level of skill takes time to cultivate and money to pay for.

Software Complexity

Software complexity isn’t a linear, zero-sum game.  Instead, it’s a science that millions of intelligent minds try to make sense of every day.  As the size of an application increases, so to does it’s complexity.  Here’s a quote from the classic IEEE article Why Software Fails:

Even a small 100-line program with some nested paths and a single loop executing less than twenty times may require 10 to the power of 14 possible paths to be executed.” To test all of those 100 trillion paths, he noted, assuming each could be evaluated in a millisecond, would take 3170 years.

I believe the general expectation is that iPad applications will be more sophisticated than their dimunitive siblings, iPhone apps.  The newfound screen space is being put to good use, and that code contributes to the application’s complexity.  It would be naive to think that applications should remain the same price as complexity increases.

Pricing Ghetto

According to a fairly recent Pinch Media presentation, the average iPhone application makes ~$8,500.  Pinch’s blog post makes a point to say that the data is “top heavy”, with the top grossing applications representing a “disproportionate amount of sales”.  Most professionals I know aren’t interested in pouring months, or even weeks, into an application to make $8,500.  This of course discounts the time and cost of updates, maintenance, and countless support hours.

AppStore pricing reflects the myth that “with access to 70 million potential customers and cheaply priced application, how could things possibly go wrong?”  This mentality has fostered an iPhone pricing ghetto, where sales derived from mobile software are barely sustainable for the majority of developers.

Truth in Numbers

Apple opened the floodgates on the AppStore with the release of OS2.0.  At the time, millions of iPhones were already in circulation; a giant market for enterprising developers.  The release of the iPad is the inverse of that situation, with a multitude of software for relatively few devices.  At last count, there were approximately 70 million iPhones and iPod touches in the wild, while 700,000 iPads were sold on launch weekend.  That represents a market 100 times smaller than the addressable iPhone/iPod market.  Pricing has to be flexible to adapt to varying market characteristics.

Intelligence

What do you do when you have a high profile marketing circus, relatively no competition, and a spike in exposure?  You capitalize on the situation by pricing for it.  Smart developers (who weren’t tied up with other exciting projects ;)) saw an opportunity and took it.  Good for them!

The most disheartening section of that article is the user-submitted comments.  The majority of them can’t wait for a jailbreak, but for all of the wrong reasons.  Instead of unlocking the iPad’s capabilities, they can’t wait to steal software.

And you wonder why prices are going up?