RunKeeper is one of my favorite iPhone applications. It basically creates a little map of your last run and stores it for later uploading. It also keeps track of your pace and distance. It works well and was one of the first really useful work-out apps on the iPhone.
The folks at RunKeeper, namely Jason Jacobs, served about 140,000 copies of the program and now wants to change things up a little by selling a $9.99 “pro” version and a free ad-supported version. But here’s the rub: he’s stuck and has to give the application away for free today so that he can sell it tomorrow.
While this sounds a lot like a Crazy Eddie scam (”EVERYTHING MUST GO!”), Jacobs explains things fairly decently on his blog. When he started, he was the only game in town. Now lots of competition has essentially forced him to offer the software for free, thereby destroying his revenue stream. Now, faced with extinction, Jacobs has to change his license and offer two version – a free version and a paid version – under a different license. So now, in order to upgrade current users, Jacobs has to give away the application on the first day for free and hope that tomorrow latecomers will pay:
So, how could we fix it? Well, the only way I could think of is to make the premium app free for the first 24 hours once it goes live. We could send out emails to all of the initial paid users letting them know the app is live to make sure they can download it without paying again. This isn’t the ideal solution by any means, but we needed to make sure that the initial paying customers were taken care of. Yes, the app will be free to the masses for a day, and yes, we’ll lose out on a bunch of new download revenue because of it, but this isn’t nearly as costly as if we had alienated our early adopters, many of which are a primary part our core userbase. Plus, it is just the right thing to do.
Now perhaps this case isn’t typical, but it’s interesting. In order to compete on the App Store, Jacobs had to do a few things. First, he had to start giving away his product then he had to create two revenue streams. In an open platform he could do anything he wanted – offer shareware, create a different payment system, offer multiple version. But the App Store hobbled him enough that he has to lose a day’s revenue just to keep his customers happy. Perhaps Jacobs could have done this differently, but as it stands he’s being punished by the App Store for being a good guy. I don’t want to make this into a David v. Goliath but it seems like a convoluted way to do business.
Anyway, free RunKeeper today, which is good enough for me.
FYI: Pro will not download in the app store
Even worse, now i have a loading icon stuck on my screen
after a restart of the iphone it loaded
Luckily.. by the time it’s been posted here only the select few million readers who subscribe to Techcrunch know that they could get a pro version for free tomorrow..
well, he asked me to post about his troubles. It could also be a cynical ploy to drum up business, but whatevs. FREE APPZ!
Last I checked, 2 and 2 still equaled 4. If he did not want PR from giving it away Crazy Eddie style, he could simply have waited to promote this until the day it stopped being free.
But then he wouldn’t have been offering you a unique angle on just another iPhone App story.
Props to RunKeeper for avoiding “ripping off” their previous customers … although it may hurt their short-term sales figures, this move should create loyalty and sticky customers in the long-term. And look – already RunKeeper is getting great buzzzz.
Loyalty of a $0 app x Loyal Users = $0 of loyalty revenue = Web 1.0 math
If it is so easy to build that there is no barrier to entry, then you don’t have a business. First to market never has been the way to ensure success. Everyone is very comfortable with free base software and extra features for pay. If those extra features aren’t enough to entice the $$, then you settle for the notoriety of being in Crunch Gear.
It’s a shame they’re being forced into this position as it seems like a great little app – I don’t have an iPhone but I’m a keen runner. Glad they’re trying their hardest to do right by their loyal customers, you don’t see enough of that going around right now.
please stop putting crunchgear items in the main techcrunch feed, or if you are at least identify them, it’s really annoying and you are violating the trust and permission I put in the tech crunch brand.
Graywolf – with all due respect, (and I do mean that because you have taught me a ton about SEO), this one might be acceptable to squeak through because it does speak to the challenges of selling within the App Store and the “freemium” economy.
I agree with you in general that the blending of crunchgear postings does take away from things. Perhaps if they appended Crunchgear to the end of the posting then we could quickly weed them out if we wanted to.
Cheers – Eric
Eric problem is its not just one, probably half a dozen in the past 24 hours, its annoying. I get the cross promotion thing but really you need to a better job communicating that in the title of the feed, so I dont waste my time reading stuff thats off topic.
Works only with iPhone 3G ?? (GPS)
This is silly. Once you have an app, it is always free to upgrade. There is no upgrade fee. All he needed to do was charge for the existing app and update it with the new features. Then his users would have been upgraded for free and everyone else would have been required to pay.
The problem was due to the license, not the upgraded. As their blog mentions, the first version was released under a third-party license because he didn’t have an app store license for himself. Now he does but Apple doesn’t let you transfer app from one license to another.
“In an open platform he could do anything he wanted”
What if he would have to distribute it on it’s own little website with payment gateway etc etc in place, what would that cost, would he reach the same audience?
It isn’t perfect but the benefit of the App Store is big for small dev firms.
I’m not big on running for a number of reasons, mainly because it is so hard on your body (running really wrecked my knees). However, If you like to jog, this looks like a cool app, and it’s hard to beat free.
Thanks for the article
- Dave
In settings you can configure the application for other activities such as cycling, which is pretty easy on the knees.
Your running wrong.
actually you have the wrong shoes
God gave you crappy knees.
1) Change the name of the current app to Pro in the iTunes Connect, but don’t change your “bundle identifier” in your source code. Everybody who has already purchased will upgrade fine.
2) Create a new app for the free version.
That of course fixes the problem without the mention on TechCrunch, so your way likely is better for business :)
It would have made more sense to keep the previously paying version, and offer the free upgrade to the new ‘Pro’ version, while launching a new, ‘lite’ version for free.
Alas, from my understanding they made the paying version free, then launched 2 different versions.
It may not be the most consistent way of doing business, but kudos to RunKeeper for being true to their word.
It’s unfortunate the news that the app is free today spreads out, as a) it will ‘hurt’ their business, b) it lowers the value of the gift to previous customers, relatively speaking (as doing well is not enough for man, happiness is in doing better than the others!)
Why not give the app away for free and after 6 months or 100 uses (which ever comes first) you have to pay $9.99 or it deletes itself?
Uh…because that’s not how Apps work. Apps don’t have the permissions to delete things on your iPhone. That would sort of be a security issue.
Freebombers are poisoning the environment for iphone developers. Ad based revenue model for mobile is complete fiction. If you are developing free apps, you had better be doing it just for the egoboo, otherwise you’re just completely delusional.
I was one of the first to download the original version and pay $10 for it, and am thankful to Jason for not making me pay for the Pro version again (which adds the functionality of mapping your route). Sorry RunKeeper had to face this struggle, but glad that I didn’t have to pay for it twice. Thanks, RunKeeper :)
I hope that Jason can figure this out. He’s a great guy and RunKeeper is a great app. Apple should consider more sophisticated distribution options than just a single price per application.
This is way too complex for my small brain to handle. However, it seems like if any of the original paying customers are offline today or didn’t get the memo, they’ll be out of luck when it comes to “Pro” upgrades…?
This app would be cool. However I prefer to listen to music while running. And the silly iPhone still only lets you run one app at a time.
Jason, the iPod app in the iPhone can run in the background – with these kinds of running apps, you just have to start the ipod first and then launch the running app, and you can have music playing (and you can still bring up the ipod controls to pause a song or skip to the next song/etc.).
TomHandy, Thanks I did not know that. I use the Pandora app for all my music needs. Though I just jailbroke the phone and installed the backgrounder which works with Pandora + RunKeeper.
So I’m set.
He mentions in the post that it was a good thing that they built the app under the license of the outsourcing company? I’m guessing that was just because he could get to market sooner, rather than having to deal with this mess later on?
Seems like the software developer solved this easy problem in the most complex way possible.
Granted, it stinks that Apple doesn’t provide a good scheme for “freemium” models. Pretty much every iPhone app should have a free version that can be upgraded to a paid version.