Birding Apps – Part 4. iBird Pro and Whales

It’s not uncommon in the video game business for 1% of the customers spend the most amount of money and support your costs of the remaining 99%. The popular gaming company Zynga (Mafia Wars, Farmville) sells its games mostly though Facebook. People that have worked there reported the fact that a large group of their customers spend $500 a year buying food for their virtual cows, horses and bodyguard weapons. One customer spent $75,000 in a year. They call these customers the “whales”. I am not fond of that label but it does tell the story. We wondered if we had whales (or maybe large geese) that wouldn’t mind spending higher amounts on these apps provided they offered additional value.

In 2010 we had just finished adding a large number of search attributes to the iBird search engine (27). The standard at the time for iBird Plus was 15 attributes. Another argument started at MWG about putting all these features into iBird Plus or creating a new app called iBird Pro and selling it for $29.99. Again I followed my gut. Now we had 9 versions of iBird for the iPhone. Think that is enough? A few months later all hell broke out.

Burned Birders

iBird Pro became our best selling app and totally showed us that people would pay for quality and features that were useful. Unfortunately because app buyers get upgrades for free they have developed an attitude of entitlement. We heard from many Plus buyers in email and our forum who felt that the features of iBird Pro should have been offered to iBird Plus owners as a free update. Some really angry people came out of the woodwork, some even threatened to start a class action suit, claiming we were milking our loyal customers, had no scruples, yada yada.

We felt that these criticisms were unfair. But we still wanted to keep our customers happy. So we came up with a compromise; we created an in-app purchase for iBird Plus that for $10 added all the features of iBird Pro and this made our customers very happy.

No Rest for the Wicked–Then Came iPad

Just when you think you have finally got yourself a good solid product line and can take a rest, think again. You see this business is called software for a reason — soft means it can change and change is what apps are all about. In the beginning of 2010 Apple released the fabulous iPad, the first table computer to really catch the fancy of the public. We knew there was an opportunity for iBird and so we worked furiously with our developer to create a version of iBird that took advantage of all the cool features of the iPad. Its larger screen size meant we could have a much more advanced interface, and its faster processor meant we could ask more out of the program. Being optimized for the iPad meant we could have three columns in the landscape mode, which gave the search engine much more power. You can see the results of a search attribute immediately with no need to go back to another screen like you do on the iPhone. We used higher resolution illustrations and photos in the iPad apps and so we gave them the nomenclature HD for High Definition to help people tell them apart from the iPhone apps. Wanting to give more choices to our customers we created three versions: iBird Lite HD, iBird Yard Plus HD and iBird PRO HD. So now we had 12 versions of iBird, 9 for the iPhone and 3 for the iPad. Even we had trouble keeping them straight in our heads.

Tune in tomorrow to hear about iBird UK.

Birding Apps – Part 3. But You Only Sell Electrons

Birding Apps – Part 3. But You Only Sell Electrons
In our last installment about pricing an iPhone app, we had put together regional versions of iBird at $9.99, considerably less than our $19.99 app, as a way to help people with tight budgets. Apparently that was still not low enough.

I wont’ say that birders are tightwads, that would be harsh, but I will say they are very cautious about spending. Someone in our group had what seemed a brilliant idea at the time: why not create an app devoted just to birds found in the backyard at bird feeders and cut the cost in half again. This led to iBird Backyard with 80 popular backyard birds for $4.99. By now there were a lot of small birding apps in the app store priced at 99 cents. Many were free and in general they did not have all the features of iBird and were nearly devoid of depth of content (It was starting to feel like we were in the boutique coffee business; selling a mocha coconut frappuccino in a market that was use to buying a tall cup of joe.) To make the backyard bird product more attractive we added an additional number of popular birds taking it to 234 species and lowering the price to $2.99. We changed the name to iBird Backyard Plus and finally hit the sweet spot – sales picked up to the point it became one of our best selling apps.

The Real Cost of Apps – Starting with Apple
Let me toss some cold facts on you about the profit of Smartphone apps. There are lots and lots of people who have their fingers in the pie. First you have Apple taking out 30% of every sale. Now I am not complaining when you consider what Apple does for their third: they host the app on their servers and always provide a wide bandwidth on the net for you customers to download it. (For Android Google doesn’t let you have apps larger than a megabyte and iBird is almost 500 megabytes so we have to host our database on our own server). Apple also interfaces with the customer and there credit card collection, cutting down on a ton of support and collection issues. And Apple provides a great market place for your app in the App store, meaning that you don’t have to worry about people finding your app. If they know how to type “birding” into the search box your app will appear.

The Hidden Cost of Development
Most of our customers have no idea what it costs to develop an app. First you have to get the content together. That means artists to paint the illustrations, writers to create the text, editors to review the writing, testers to make sure the text is correct. Art is expensive and will be the subject of an entire other blog but for now just keep this in mind: feathers are one of the most difficult objects in the world to paint realistically. Very few people are good at it so that narrows the number of painters down to a small group.

Then there is programming of the app. You have a lot of people calling themselves iPhone developers today but let me tell you a secret. Very few of them can write good code. I lucked out and found myself a very good developer early in the game. But I also gave him a big advantage which was we had a complete working version of iBird running on Windows Mobile platform. So he could see how we did things and at least had a clear specification of how iBird should work. We also gave him another advantage; the entire content for iBird lived in a time test SQL database on the web called Whatbird.com. Therefore all he had to do was write code to take the contents of the database and display it on the screen. Not a trivial job but at least one that was manageable.

Next we have to pay the people that test the app, plus the people that manage the entire process of content creation, and then there is the need for accountants, and attorneys for the contracts. Perhaps now you get the idea; app development is very expensive. I wont give you our profit margins but I can tell you this much, its not anywhere as lucrative as I had expected.

But You Only Sell Electrons
I’ve heard this argument a lot. In fact recently an attorney told me “you are not publishing anything material like a book or a CD ROM so your cost of goods is zero, therefore your profit margins should be huge.” My answer was “in your dreams.” The truth is all the costs of development for something like a book are put into the hands of a single person; the author. Sure you have editors and production people but they are only responsible for managing words created by a single creative writer. Software on the other hand is a complex synergistic hyper managed process with all the costs I have listed and this makes the it 10 times more complex and more expensive.

Licensing and Royalty Costs
Additional costs come into play for things like bird calls which in our case we license from the Macaulay’s Lab of Ornithology at Cornell University. Other licensing costs can be in the photography, illustrations, and other areas of content. You may also have to pay royalty to programmers and artists, depending on how you negotiate your payment process.

Marketing Costs
If you want to make sure people know about your app you can’t just rely on word of mouth. You need to attend shows like MacWorld, which are very expensive. We have been to Macworld in San Francisco two times and we will be there again in 2012. Magazine ads, Internet advertising, brochures, and other materials all cost money to develop and print.

One More Critical Element
So now that you know a little about the expenses in producing an app. And for this entire formula to work you need one more major ingredient to avoid bankruptcy: success. Success in apps is getting tougher every day. When we started at the end of 2008 there were 5,000 apps. Today there are close to 450,000 apps on the iPhone and thousands of new apps everyday!

A few months after iBird Backyard was out and we understood all the costs I have described above, we realized there needed to be a way to get people to discover our apps without spending the money to buy them. Sounds like the impossible dream but there is a way. We called it iBird Lite. We gave it all the features of iBird Plus but just 30 birds, which was enough to get the idea across and help people make a buying decision. As soon as we published our Lite edition it’s downloads were huge. We saw an immediate jump in overall sales. After welcoming iBird Backyard and iBird Lite to the family we had 8 versions of iBird for the iPhone. Time to stop?

Tune in tomorrow for our next installment: iBird Pro and Whales.

Birding Apps – Part 2. How to Price an App

There were a lot of theories flying around the Mitch Waite Group about why Winged Explorer (WE) failed. Most of us thought the $99 price was too high. Others felt the Windows platform for mobile phones was at the end of its life. After seeing the iPhone it was hard to disagree that the future of Windows Mobile, with its poke with a style interface, was over. But I honestly wasn’t sure what to do about pricing. Clearly people liked the idea of a bird field guide they could carry on their phone, were sick of carrying large books around with them and loved the idea of playing bird songs in the field. Still I was exhausted from the 18 months we had spent working on WE and wanted to throw the towel in. But there were the emails. Dozens of them all saying the same thing: “Love the WE demo but do you have it for the iPhone?” Someone once said the wise businessman goes were the market leads him, and these emails seemed evidence we had the right product on the wrong platform. So I found a good iPhone app developer in September and by December of 2008 and we had the app ready to go into the iPhone app store.

But how to price it? Prevailing wisdom around the water cooler was 99 cents because that was what most apps cost on the iPhone. My thoughts were there were not enough birders with iPhones to make any profit at that sales price. And when you think about it iBird had the equivalent of 14 field guides, which if they were books would be valued around $280 ($20 per book). With birders used to spending $15 to $40 on bird guides I went with $19.99 for the price of iBird Plus. People around the office thought I was nuts.

Flying Below the Radar
For the first few months iBird sold modestly, better than Winged Explorer, but nothing to brag about. Somehow the word needed to get out that you could use your phone as a field guide or we would fly forever below the radar.

Hitting the Proverbial Bulls Eye
Around March of 2009 Apple released a series of television commercials for the iPhone that showed off the various apps. One of them was called “Itchy“. It showed 5 seconds of iBird Plus playing the song of a Red-faced Warbler and a finger taping its icon. Within a few days the sales of iBird went through the roof. The 5 star reviews people left in the store made it very clear $19.99 was a bargain. I finally had a winner. Or so I thought.

Prices are Elastic
There were some however who felt $19.99 was too expensive. They told us in emails they did not travel much and wondered if we could sell a version of iBird that just had the birds in their state at a lower the price? Managing 50 apps, one for each of the states, would have been a nightmare. The answer was five regional versions of iBird: North, South, West, Midwest and Canada for $9.99 each. Once these came out their sales was not as high as Plus but the profit totally justified the effort. So now we had 6 versions of iBird for the iPhone. Was that enough?

 Tune in tomorrow to learn when its time to stop.

Shazam for Birding – When is it coming to iBird?

We got this review for iBird North in the app store today:

Wonderful (v4.0)
5 stars on Jul 12, 2011
I have been using this app for for over two years now and couldn’t be happier! My friends are so impressed how I can ID so many birds just by their calls! My recognition ability has improved ten fold! One suggestion though that would improve this app to the point of astonishment would be audio recognition. Simply point the phone in the direction of a call and the app would ID the bird based on the call (just like “sound hound”). That would be amazing! Thanks for everything!!
Peace…

Even with all the exclamation points its an awesome review. But the part about audio recognition got me to wondering how many other birders would like such a feature? And do you think it would be hard to program into an iPhone?

Birding Apps – Part 1. Too Many Choices?

I’m often asked what is the best birding app to get? The question was easy to answer in 2008 when there was just one app for the iPhone. Today typing “bird apps” into the Google search box will get over 41,000,000 hits. Typing “bird” into the Apple App Store and you’ll get hundreds of results. Does the world really need so many apps for birding? Are there that many birders and do they really care?

The answer to both questions is yes. Recent figures put the size of the birding industry at over $68 billion. This includes travel, optics, camping equipment, books and yes, birding apps. The number of people interested enough in birds to call it a hobby is in the millions.

With so much money being spent would you think the price of an app matters to birders? Let me tell you about the background of our app and how arriving at its price was such a challenge. This little history should be of interest to not just birders but any company that develops apps for smart phones or tablets.

Are 5,000 Apps Too Many?

When we launched iBird in December of 2008 the iPhone had only opened the gates to app developers for 6 months. In that short time there was rumored to be around 5,000 apps in the Apple app store. The majority of these were either free or sold for 99 cents. I was coming off a depressing experience of having launched our first birding app, Winged Explorer (WE) for the Windows Mobile platform, the dominant player in 2008, at $99. It launched in July of 2008 and a month later its sales were dismal. I was ready to give up.

 Tune in tomorrow to learn how to price an app.

Hello iBirders!

I’m happy to welcome you to our new iBird Blog.  The idea for this blog came out of my frustration. Let me explain. First in case you’ve been sleeping under a rock (some birders I know actually sleep in what I bet you would agree is a cave) a “blog” is a way for a blogger (that would be me in this case) to write about stuff, publish it on the web, and have people leave comments about that stuff. So maybe now you can guess my frustration came from not having a good way to talk with our iBird customers. Its my hope this blog will allow me to communicate all kinds of interesting topics about iBird including:

  • Cool things we are working on for future updates to iBird
  • Answers important to all iBird customers
  • New technology in birding, what I call “naturetech”
  • The best places to bird, the best birding books to read, etc.
  • What to do if you get a ticket for J-walking

Okay that last bullet was not serious but I want to make sure you are reading this, otherwise what’s the point?

I’ll publish this message to the blog and ask you all to leave comments. To give some direction to the comments, here are some of the things I would like to hear from you:

  • Is this blog a good idea?
  • What would you like me to post on the blog?
  • What do you love and hate about iBird (when I say hate I mean it tongue in cheek; I will delete hate mail but I do want to know what you don’t like as well as what you do like.)

Thanks for taking the time to read this and hopefully leave some thoughts.

Mitchell Waite
Publisher, Mitch Waite Group