App Store Pricing Is About to Get More Complicated (But That’s a Good Thing)

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You may have wondered why all the apps on Apple’s App Store seem to have similar price points — all of which end in .99. The answer is simple: Apple’s rules. However, that’s about to change, as the company is opening things up with the biggest pricing overhaul to App Store pricing in the 15-year history of the service.
For years, Apple limited developers to charging specific prices, known as “tiers.” Each of these had to end in 99 cents, and the lowest price a developer could charge (other than “free”) was $0.99.
How App Store Pricing Works
In other words, developers couldn’t just decide to sell an app for, say, $3.47 — they had to pick from one of the 87 available tiers, each with a specific price. The tiers ran in increments of $1 from $0.99 to $49.99, $5 increments from $54.99 to $99.99, $10 increments up to $249.99, $50 increments up to $499.99, and then $100 increments to the maximum price of $999.99.
Apple also automatically indexes these tiers for foreign exchange rates, giving developers almost no flexibility in pricing apps in other countries. For example, a “Tier 6” app was automatically priced at $4.99 USD, $6.19 CAD, €5.79 EUR, and £3.99 GBP. To sell an app for a lower price in another country, the developer had to choose a lower tier and drop the price across the board.
To allow developers to make apps more affordable in emerging markets, where even $1 USD may be too expensive, Apple eventually added seven alternate tiers that operate below Tier 1 in those countries. For example, a developer could use Alternate Tier A to price an app in China at ¥1 CBY, which works out to around $0.14 USD, compared to the standard Tier 1 price in China of ¥6 CBY. However, apps using these alternate tiers would only be sold at these lower prices in specific emerging markets.
Apple Adds Hundreds More Price Points
In December, Apple announced that it would bring 700 new price points to the App Store and new tools for developers to adjust prices by country and region. That’s now live, so developers can start changing their prices today.
Specifically, developers can now choose from a staggering 900 price points — more than ten times the number previously available. While developers will still be limited to choosing a price from Apple’s list, that’s now a significantly more extensive list.
The range has also increased, allowing developers to charge as little as $0.29 for an app — and as much as $10,000. However, developers will need special permission to set prices above the $1,000 mark.
The new tiers will allow developers to set prices of $0.29, $0.39, and $0.49, after which they can use $0.50 increments up to $49.99, $1 increments up to $199.99, $5 increments up to $499.99, $10 increments to $999.99, and — with Apple’s approval — $100 increments beyond that to the $10,000 maximum.
The forced $0.99 endings are also going away, although not entirely. Apple still won’t allow developers to pick any number they like; however, at each tier, developers can choose from three alternate rounded price endings: X.99, X.00, X.90, and X.95. So, for example, a Tier 5 app, which would typically be $1.99, could also be set to $1.90, $1.95, or $2.00.
Apple is also loosening its control over foreign pricing with a less U.S.-centric approach. Developers who primarily do business in other countries can use that currency as the basis to generate globally equalized prices across multiple countries without being adjusted by Apple for taxes and foreign currency changes. Developers can use the equalized price or set prices individually for any one of the App Store’s 175 storefronts and 43 currencies.
While the enhanced global pricing won’t roll out until May 9, developers can begin taking advantage of the new pricing tiers and setting individual storefront prices for apps and in-app purchases and subscriptions today.