App developer tests hybrid paid/donation revenue model

iPhone developer App Cubby has begun what it calls a pricing “experiment” in which it will sell all its iPhone and iPod touch applications for a flat price of $1 each, letting users who find their utility to be worthy of more money make a donation towards future app development. The company’s products, Gas Cubby, Health Cubby, and Trip Cubby previously sold for $5, $5, and $10, respectively. App Cubby founder David Barnard told iLounge, “the challenges of selling in the App Store have continued to frustrate me and foil my best efforts. So I’ve decided to try a little experiment.”

Barnard has previously discussed the issue of pricing on the company’s blog, stating that developers are “frustrated that artificial market forces are driving down the price of apps, which in turn drives down the perceived value of the products we have invested significant time and money to create. Marketing can help, but it’s throwing good money after bad if the market discourages charging a fair price for an app.” The new revenue model appears to circumvent Apple’s pricing policies, which only allow for pricing on a dollar-by-dollar basis, and require developers interested in offering demo versions of their applications to create separate listings in the App Store, which they can distribute as free downloads. However, the subject of whether developers can solicit donations outside of the purchase price for a given piece of software appears to be a gray area.

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