Fri, 15 Jul 2011 Apple bumps up UK App prices- updated

Apple adjusted the prices on its Mac App Store and iTunes App Store on Wednesday resulting in increases in the cost of some software in the UK and elsewhere. We've updated this story with some more comments from App developers.

The pricing hike (and relative fall in other locations such as Australia) was taken by Apple to bring prices in line with current exchange rates. Some online commentators suggest that the move means that Apple will be adjusting international pricing on its soon to be announced hardware releases.

The adjustments took place during downtime of the App Store and have resulted in price increases across the board for UK consumers, as well as those in Mexico and Norway. Euro prices don't appear to have changed. For the lowest ($0.99 in the US) tier, the UK price of £0.59 has risen to £0.69 (in Australia this was a drop of AU$1.19 to AU$0.99).

Content on the next tier, which was pegged at £1.19, is now £1.49, while the tier above that rises to £1.99 from £1.79.

While this affects the 'cheap apps' by a small amount, it's the products on higher tiers that see the biggest hit on the wallet. A product selling for £17.99 for example, is now £20.99, while content priced at £23.99 is now £27.99.

Over on the Mac App Store, Final Cut Pro X is priced at £20 more now than the £179 it was selling for. However prices at the very highest tier seem to have fallen, with a £699 price point dropping to £599.

Spare a thought however for Australia and Switzerland. MacStories reported that until yesterday's rebalancing act there was an 81% surcharge for an Australian buying the same song as an American while those in Switzerland had to pay more than double at a 105% surcharge.

Zac Cohan of Acqualia Software thinks the price changes make sense. "Apple is just adjusting the prices to better match the real exchange rates," he says. "As Australians, we were paying $1.19 AUD before for a 0.99 USD app, when the actual exchange rate is around 0.93 USD for 1 AUD. So as consumers, we're pretty happy."

About half of the app sales from Irradiated.net since the App Store opened were made in the US (54%) while the rest of the purchases were made internationally (46%) according to the developer Michaël Fortin. "Considering that these proportions were relatively stable to date, changes in international pricing should have a moderate impact on app sales revenue," he explained. "In the end I believe that while prices were increased in the UK and some other countries in many others they were lowered, which should compensate for the additional revenue coming from the UK and other unlucky countries."

So while UK customers won't be happy, it's not surprising that this has happened, particularly given that the conversion rate used by Apple hasn't been adjusted for some time and we've had fluctuating currencies across the world.

However developers appear not to have been alerted to the price change by Apple. Kosta Rozen of Apparent Soft first heard of the rebalancing when we contacted the company for a comment. However Rozen added: "I don't think the price increases in UK will affect us much as most of our revenue comes from US and Europe, so the UK part is only around 6%."

Kevin Hamilton said his company, Binary Formations, was not made aware of the pricing changes in advance. “I am a little worried about the increases in the UK pricing, though, as that is a big market for us,” he added.

Others welcome the rebalancing of worldwide pricing, for example RapidWeaver developer Realmac Software. "Our own online store uses daily-fluctuating exchange rates, and Apple's previous pricing jarred quite significantly as a result of the differing exchange rates," said the company's Nik Fletcher. "Whilst we're looking to go Mac App Store only for more products in the longer term, this change is very much welcome in the meantime as we obviously want to offer as equal pricing to customers, no matter which way they choose to buy our apps!"

Another developer informed Macworld that his company had received a message earlier this week warning about the maintenance downtime and that it would impact price changes and sales in some countries. The developer, who wished to remain anonymous, didn't see the UK rise as a big deal because his company only has about 5% of sales in the UK. However he added that it would have been a different matter if Apple lowered the 0.79 euros price point to 0.69 euros, to reflect the USD/EUR exchange rate.

"The Euro sales are much bigger," he said. "Maybe they should invent the ASD (App Store Dollar) and use the real exchange rate to convert to each country/region money. It'd be probably better for most users, they'll buy more, so it'd be better for developers."

Some would argue that Apple needs to update its prices more often. Another developer, who also chose to remain anonymous, claims the price rises/falls around the world prove that Apple adjusted it prices yesterday 'based on exchange rates and not some other reason'.

"App Store is an international market that has developers from all over the world," he added. "For a developer it is easier to set one default price for a product and have it automatically adjusted for different regions. And the default currency was chosen to be the US dollar, which I totally understand."

"I think Apple acted here pretty fairly," he continued. "They might have contacted developers to let them know about planned price changes, but I doubt that would have any major effect on the software price increase for UK customers, or drop in some price in other countries. We were not informed about these changes."

Developer Frank Reiff of publicspace.net didn't get a heads up on the change either: "But as we all know Apple is not the most transparent of companies." 

Reiff also points out that it's normal for exchange rates get adjusted from time to time. "If you look at how software used to be sold in Europe, namely USD price + VAT, then the App Store pricing is more than beneficial for the customer," he said. "Many European companies also sold in Euros, which is obviously better for the developers as there's no exchange rate risk, but inevitably worked out dearer for European customers."

Reiff added that few people think about the fact that Apple absorbed the UK VAT increase at the start of this year. "Of course for us developers, that means less money as 15% to 20% of the sales prices goes straight to the VAT people and then 30% of the rest goes to Apple, making European sales especially particularly uninteresting," he explained. "The maths will tell you that even with the price 'increase' in the UK, developers still get a lot less money than for US sales - without sales tax."

Another developer told Macworld that although he hadn't been alerted to the price changes, neither would he have expected to be. "Pricing in the App Store - outside of our setting the price tier in the US store - is completely under Apple's control," he explained. "They can do whatever they want to pricing, as it's their store. This is similar to what happens (quite often) in Amazon's store, as they set prices as they see fit to drive whatever business they're trying to drive."

"Apple's control over everything in the store is one reason we continue to sell our software directly to consumers," he added.