In his Inc column this month, the 37Signals co-founder writes about how his team settled on a $9.99 price for their first iPad app, Draft:
We have no interest in participating in a race to the bottom. Ninety-nine cents is not for us.
What about $1.99? Or $2.99? We could have gone there, but we wanted to use price as a tool to reduce customer demand for Draft, not increase it. That’s right: We wanted fewer customers to buy Draft.
With a price tag of a buck or two, I think we could have easily sold 10,000 copies of the software. On the surface, that sounds great. But not when you think about all the resources required to serve 10,000 customers.