The software and app market has evolved immensely within the last 30 years. Think about it: Consumer software barely existed just 20 years ago. At that time, it was mostly large enterprise software or companies focused on developing software for professionals.
Generally, it was understood that software costs money. The average consumer software was not affordable; a single license to install on your computer might cost hundreds or thousands of dollars.
The tech industry grew, backed by billions of dollars in funding. Then in 2008, Apple introduced the app store. Paid apps spawned in the app store, but many others were free. From the beginning, this was the understanding for the average consumer. Apps are either free or you can get them at a low price – just under or over a dollar.
The rules were established. The more companies realized an initial free product brought opportunities for massive reach, the more we engraved the idea in our minds that software should be free. Of course, this direction was lead by massive software companies who made their money elsewhere. They could afford to give away free products.
Just look at most products by Google, Facebook or Apple. Any app or software product that comes out of the tech industry today is typically free. And it makes sense. If you launch something like Snapchat or Instagram, you’re a high growth company. Meaning you focus on scaling first and worry about the money aspect later. Maybe you never worry about it. If you can afford to give away your software then sure, why not?
Here the issue silently creeps in. If most apps or software is free, it changes our expectations for software in general. We use Facebook, Google, Snapchat and Instagram and have never paid a single dollar for them. And if we do agree to pay a few dollars for software or an app, we expect free updates forever. Unless you're Facebook, Google or the equivalent, it's nearly impossible to sustain a business based on that expectation.
What's more, this model cheapens the inherent value of your product. In any other context, free means cheap or disposable: Free samples, swag, pamphlets or advice are given and treated lightly. The less we invest in what we own, the less meaning and value it holds. Yet curiously, when it comes to software, we still have high expectations for free products. We've been taught to expect it. So we require more support, time and money, draining a company further. Free products draw low-quality customers.
So what about the smaller, independent software companies? It would seem as obvious as building a product and charging money for it, but consumers' minds have been conditioned to get software for free. The only way to charge for what you offer is to target large-scale enterprise clients, or find a niche and market your software toward small businesses and professionals.
It's sad and disappointing that, despite the infinite possibility of the internet and technology, few independent software companies exist today and few are able to survive long-term. Even more upsetting how difficult it is for newcomers to enter the market. Many small companies start with big ambitions only to be acquired by larger corporations who then turn it into a free product. They can't afford to run on their own.
The seemingly simple answer for anyone entering the software market today: Build something of value and charge for your software or app as soon as you can. You will not only be able to stay alive and keep working on your product, but you also help reverse the notion that software is supposed to be free. Charge for your product from the beginning, or as early as possible. The longer you wait until you move your product to a paid pricing structure, the harder it will be for you to convince your users of the value of your product.
Or perhaps free is the future. A future where the majority of apps and software we use are owned by six large corporations who give it away for free because they can financially support themselves in other ways – through advertising or data-selling, for example.
Maybe we are moving toward a time where digital becomes free. Free software, free content, free entertainment. But ultimately, the consumer will be paying. We will pay with our privacy, with the loss of independent software companies, with the loss of innovation and options. The question is what we're willing to pay.
Hi, I'm Tobias, a German designer living in New York. I'm the author of this blog, nice to meet you!