Despite the concept sounding counter-intuitive – lower the price of your product and then make more money – the numbers have been crunched by people in the know. In a study across the three main app stores – Apple’s App Store for iPhone and App Store for iPad, and Android Marketplace – Distimo found that despite selling an app at a reduced price, the “surge in downloads makes up for the loss in price,” enough to actually turn a profit on the less expensive app. Selling an app not only encourages more downloads from users, but being on sale will also get you a featured spot within the app store.

But before you run off on a price-slashing frenzy, don’t think you can reduce a price on your app and immediately see a boost in your revenue. For instance, while apps on sale generated an overall increase in revenue, only two-thirds of iPhone apps gained rank in the first three days after being featured. Lesson: having an app featured doesn’t automatically guarantee a boost, but it still is likely to help.

Even then, the average revenue increase for iPhone apps was 41% on the first day it was on sale. Anything will sell expediently on the first day of a discount, but Distimo found that within the entire period that the app was on sale (which they defined as a maximum of 15 days) the revenue generated by the app was up 22%. A similar trend was observed among iPad apps and apps downloaded from the Android Market. Android apps, in fact, generated the greatest revenue during the entire sale period despite having lower first-day increases.

Although developers can benefit greatly from putting their apps on sale, you can’t just slap a sale onto any old app and expect it to haul in money like gangbusters, Distimo warns. 44% of iPhone apps, they found, lost revenue during the sale “and 23% actually saw a decline in revenue by more than 20%.” Distimo offers an explanation as to why some apps did not benefit from being on sale:

Offering a discount of one dollar on an application that normally costs $7.99, lowers the revenue, whereas offering a discount of three dollars on average increased the revenue by 131%. In general, we noticed that the tipping point happened when the price was cut in half or the application was offered in tier 1 ($0.99) or tier 2 ($1.99).

As you can see below, there’s a refined matrix involved when predicting whether putting an app on sale will produce an increase in revenue:

So putting your app on sale will general higher revenue, but only if you discount it a certain amount depending on what the standard cost of the app is. Got it. So now the question you’re probably wondering: how much should the app be sold for?

It all depends, Distimo says. You have to take into consideration what type of app it is, work invested into the app, how much demand there is for the app, and so on (what, you didn’t expect a singular Midas answer, did you?). Given all of this criteria, the table graph below should give you an idea of how much the top grossing apps cost among different categories.

Again, though, there is not one magic bullet to put a hole in the wallets of all of your customers. You still have to use that organ between your ears to benefit from discounting the price of your app.

Other fun observations made by Distimo:

The claim is counter-intuitive to how we understand the assessment of credit risk in the developed world because Cignifi’s plan has very little to do with how much debt – if any – you’ve accrued in your lifetime. Instead, it creates a credit report based on a completely separate metric: your mobile phone activity.

Here’s the gist: if a potential consumer or patron has no credit score due to no history of debt, it’s hard for a business to assess the potential risk involved in doing business with this person. A way to side-step that obstacle would be to enlist the services of Cignifi, which will calculate the credit risk of anyone with a mobile phone based on that user’s mobile phone behavior (this premise being functional only in the 21st Century assumption that everybody has cellphones these days). The way a person uses their mobile phone, Cignifi claims by way of their website, “is highly predictive of an individual consumer’s lifestyle and risk.”

Despite how such a calculation could seriously affect the quality of someone’s living standards, Cignifi’s website doesn’t provide much background on their science:

Cignifi patent-pending analytics technology turns billions of raw mobile phone calls, messages, and payments into unique insight. Our multi-dimensional models deliver scores based on hundreds of distinct variables.

Capturing changes in subscriber mobile behavior, Cignifi dynamically updates scores. Unlike traditional credit scores, Cignifi Scores quickly adapt to customers’ evolving lifestyles, risks, and needs.

I can somewhat understand the lack of transparency given their patent-pending technology but at the same time it’s important to know how your behavior affects your credit score. If I pay off my credit cards every month, I maintain a good score; if I blow off my bills for months at a time, my score suffers. In the end, I’m aware of the consequences of my actions. It’s Operant Conditioning 101. The article from the Globe casts a little more light on Cignifi’s number-crunching ways:

Cignifi has developed sophisticated modeling software that can look at usage data from consumers’ mobile phones and make predictions about who that person is and how they live. There’s no single data point —like making lots of short calls between 2 and 5 a.m. every morning —that suggests that someone is a bad credit risk. But Hakim says, “The way you use your phone is a proxy for your lifestyle. It’s not random. So we’re looking at things like the length of calls, the time of day, and the location you make them from. Also things like whether you top up [a pre-paid SIM card] regularly. We want to see how stable the patterns are. When you look at that, you can create these behavioral clusters that give you information about users’ appetite for new [financial] products, and their ability to repay a debt.”

That sounds like the typical diplomacy you’d expect from a group proposing an action that could potentially affect the quality of your life: carefully tailored to assuage any of the knee-jerk fears of people filling out applications for apartments or car loans while validating the insidious maxim “If you’re not doing anything wrong then you have nothing to worry about.” Until Cignifi is able and willing to share a little bit more about how they assess a person’s credit risk based on mobile phone usage, any anxiety on behalf of the consumer is justified.

Conversely, I can understand not wanting to draw the ire of the Verizons and AT&Ts of the world. There’s nothing quite like a company stating, “Hey, you use your phone too much in too many of the wrong ways, so your credit score is going down,” to cause people to consider using their cellphones less (if that’s even possible now). And the last thing wireless providers want is somebody out there giving their customers frightful reasons to not use their cellphones as much. Less cellphone use = less money spent = very unhappy wireless providers.

The service that Cignifi is offering could open up possibilities not previously available to consumers with no credit history. That would be a good thing. Then again, evaluating someone’s “credit” based on what they do (or don’t do) with their cellphones could be a hard step forward into a future of endless debt. I mean, how do exactly fix a bad “credit score” if it’s based on your mobile phone habits? Get a LAN line? Tie a string between two tin cans and wait a year before applying for that student loan again?

So it’s quiz time, readers: the Globe reports that Cignifi doesn’t have any plans at this time to deploy the technology in the U.S. but that doesn’t mean it’s not coming. In what is likely the inevitable arrival of mobile phone usage-based credit ranks, what do you think about this new debt calculus? Thumbs up or thumbs down? Interested and optimistic or ill-advised and opportunistic? Share your thoughts with us in the comment section below.

Through their European Public Policy Blog, Google has announced the launch of a new website, Value of the Web, that will collect economic reports from around the world in order to determine the “economic impact of the Internet.” Some of the research you will find on Value of the Web will look at topics such as the “value of cloud computing in Europe, the value of search around the world, and the Internet’s contribution to GDP – a theme highlighted just last week by the European Commission in its new strategy to build trust in the Digital Single Market.”

The post continues:

Even though industrial metrics like GDP can’t fully capture the Web’s contributions to our information society, these reports represent the best efforts so far to quantify the Internet’s contributions to the economy and society. The new website will highlight the broad range of value generated by the internet, including in areas such as the contribution of the firms who provide the essential hardware and software to power the Internet and the jobs

The data from the research is collected and presented into easily understood infographics like the ones included below:

The information found on Value of the Web draws on reports from economic analyst groups as well as individual economists from around the world, like Boston Consulting, Deloitte Access Economics, and Federico Etro. The goal of Value the Web, the post concludes, is to develop a new metric with which a better understanding of the Internet’s economic impart on different countries in the world.

Unless, that is, most people would prefer to huddle around their electronic devices to steal the warmth off of their over-worked processors because, given how people are spending their money on household services these days, that may be what they resort to this year.

How indispensable have your technology utilities – cell phones, Internet, etc. – become in your everyday life? How would you prioritize these expenses among traditional utilities like water, gas, and electricity? Tell us your thoughts in the comment section.

iYogi, a research initiative that examines the technology issues of today, has conducted a study that found that, among the 1100 people surveyed, 63% of people spend almost 35% more on technology bills than utility bills. For the purposes of this study, the services filed under the “technology bills” category are Internet Service Provider bills, mobile communication services, and multimedia services (cloud storage, subscriptions to Netflix-like services, etc.).

The importance of having a reliable Internet service in the home isn’t incredibly hard to grasp when you consider that “the average American home with two family members own as many as 7 IP devices.” Phones, tablets, laptops, online streaming services – these technological implements add up quickly. As you can imagine, the quantity of IP devices increases as the amount of household members grows. Households with 3 to 7 members may have upwards of 11 IP devices. That the quantity of devices doesn’t increase commensurately with the amount of household members suggests that some of these IP devices are likely shared, the Internet (since you can connect multiple devices onto one wireless network).

iYogi explains how the constantly increasing inventory of PCs, tablets, printers, scanners, cameras, and digital music players “is driving a new consumer demand for tech support services.” Add to the mix “smart phones, gaming devices, and Internet-enabled televisions and set top boxes are becoming a critical part of the home.”

Indeed we are in the thick of the digital age, so now that American households are beginning to fully weave Internet and mobile communication into their everyday lives in such dedicated ways, have online services become as necessary as water and electric utilities? Considering how many households have become seemingly dependent on the Internet, it looks like it could shape up that way.

Perhaps the biggest aspect to consider now that Americans are wired to the teeth these days is: how much is all of this costing us? iYogi says that “the average monthly expense [on mobile services] was found to be $94.” Add to that the average $19 per month that people fork over to download games, apps, music and the like and you’ve turned a pricey bill into a more pricey bill. As you can imagine, “the increasing popularity of mobile devices including smartphones and tablets is only likely to see increased spendings on mobile communication in the future.”

And then there’s the actual ISP bill. iYogi found that 58% of people can spend anywhere between $20 and $180 on monthly ISP service bills. (An aside: it’s probably not surprising that people would spend a lot of money on their Internet service, but that’s a really big range of expense. That’s like the difference between saying “I want to eat one hot dog for lunch” and “I want to win the Nathan’s Hot Dog Eating Contest.” But I digress.) While the cost of subscribing to an ISP will depend on the data plan, the sum of money spent inflates as you include Internet-based services like Netflix. Corroborating what we have previously reported, this change in habit “has seen TV take a backseat as an entertainment medium.”

As if the technology tab wasn’t high enough, now people are beginning to pay for yet another service: cloud-based storage. While 30% of people currently spend an average of $10 per month for cloud services, iYogi expects this figure “is only going to increase as comfort levels with these new services go up.”

So given all of this habituated use of online services, is it valid to say that the Internet is an essential utility – at least inside of what iYogi describes as “digital homes” – as opposed to an elective commodity? Granted, nobody needs the Internet to stay alive the way they need heat to cook their food or water to drink and bathe. But people, I’d argue, have re-created the Internet as a need insofar it has become the linchpin of our communication infrastructure.

And it’s not as if people have recently realized they have stacks of extra cash laying around and decided to get themselves a Home 2.0. I don’t think you can make the case that people have more expendable income because economic growth has been near-flatlining in the United States for several years now. There’s been a nudge of economic recovery in the past year or so, but hardly enough to generate enough excess income in American households where they can spend the money on “superfluous” amenities like smartphones and high-speed Internet.

It’s not that people want the Internet anymore; more and more, people need the Internet.

Whether technology finds a space in an updated version of Maslow’s hierarchy of needs doesn’t matter: people are increasingly becoming dependent upon the Internet. And given how integrated the Internet is to our lives, a lack of it would drastically change the way we live these days. Sure, some bugbears will contest this notion with antiquated protests like, “We were getting along fine before the Internet so we can easily do without it now.” That’s true, we were doing fine, but we were also getting along fine before indoor plumbing, penicillin, and a national highway system but does anybody truly want to return to a way of life when those now-standard amenities don’t exist? I doubt it. It’s not about the bare minimum of resources on which humans can continue to survive – it’s about what improves the quality of life.

As for the future, iYogi doesn’t foresee the proliferation of Internet-enabled households slowing down anytime soon, so again, at what point does the Internet become a necessity and less of a luxury? Could you go without the Internet these days or is it as necessary as warm water and reliable light sources? Do you see the prevalence of Internet in our way of life as a good thing or a bad thing? Share your opinions in the comments below.

Hostess Brands, the maker of Twinkies and other sugar-laden treats near and dear to the American waistline, have announced that they are prepping to file for Chapter 11 bankruptcy, reports the Wall Street Journal today. So how deeply into the red is Hostess, whose sweet stash also includes Ding Dongs and Ho-Hos? $860 million.

That’s a big Twinkie.

Despite the megasweet treats from Hostess having precisely zero redeeming health value, people are saddened nonetheless about the news of the impending absence of Twinkies on their grocery shelves. Many people expressed their lament today on Twitter:

Ever since Cyber Monday kicked off the blitzkrieg of online shopping this year by becoming the most lucrative shopping day ever, the amount of money spent by shoppers has consistently trumped every corresponding week from 2010. In this year and last, sales steadily increased leading up to the big Day of Unwrapping (i.e., Christmas Day) with the penultimate week seeing a huge gush of money from consumers. I’d suspect that the week before Christmas is a huge shopping day for online retailers because those present-buying procrastinators wanna make sure the gifts arrive in time. This year, however, has seen a pronounced increase in money being spent for each interval that comScore recorded.

Increases in online retail sales have been observed to increase with each passing year recently so the fact that people spent more money this year than 2010 isn’t completely surprising. What makes this year so significant is just how crazy Americans went with their holiday shopping. It’s like everybody wasn’t quite content with merely spending some more money this year, so Americans decided that they didn’t like too many figures in their bank accounts and spent a lot more money. $6.3 billion worth of a lot more!

I guess some people think this is good news, but that more money than ever is being spent online raises an interesting question: given the tax loophole associated with online sales, how much tax revenue was lost in last week’s boom (and for the total $32 billion spent this holiday season, really). I’d like to see that analysis. I bet the different tiers of government want to see those stats, too. A loss of tax monies like that might not matter so much at a federal level, but that could have some heavy impact on struggling municipalities.

Anyways. So how’s your holiday shopping going? Anybody out there contribute to last week’s eruption of online shopping? Let us know with your comments below.

Aside from the general economic malaise felt world-wide and, more immediately, the future awkwardness of their teenage years, kids now can’t even count on Santa Claus for a little dose of emotional rescue.

In addition to the general training that Mall Santas receive such as beard maintenance and preparing those gleeful dispositions for interactions with hopeful children, now Santas are receiving training to quickly assess the financial status of a child’s family in order to impose more realistic expectations of what the kids can expect to find under the Christmas Tree on December 25th.

Predictably, the Twitterscape had some sentimental paroxysms:

How do you even attempt to minimize the expectations of a young human to whom, aside from the possible exception of birthdays, Christmas Day is the most exciting day of the year. It’s one thing that Santas have to explain on the fly how they defy the space-time continuum by visiting each house on Christmas Eve or what they feed their reindeer; it’s another to economically profile someone who can’t really even conceive of money beyond the limits of an allowance. Awful. In my polluted and despondent imagination, I envision this kind of exchange:

Santa: So tell me, Phillip, what would you like for Christmas this year?

Phillip: I really want the new Zelda game, Skyward Sword. It looks awww-some!

Santa: Oh-ho-ho, well, that’s a pretty big request there!

Phillip: I know, I’ve been thinking about it everyday!

Santa: Hm, well, Phillip, I don’t know if my elves are going to be able to find that for you this year. What about this stick with a string tied on it?

Phillip: ….What?

Santa: Or how about this inner tube? It hasn’t been used too much.

/cue shattered dreams.

Godspeed, you cherub-faced saints.

For two solid decades, Apple lost out to the Microsoft dominance achieved by the Wal-Mart approach. One has to wonder if personal computing—and as a result, the Internet and ebusiness—would have reached the level it is now if Microsoft carried Apple’s snootier, accept-no-substitutes attitude.

Think back to the Nineties. How many people did you know with a Mac? Here’s the list: people with money, journalists, anybody who designed anything—tech geeks were explosively split. Microsoft conquered the rest of the world on price points. Apple rested on its heels with geek credibility until the iPod brought the brand suddenly back into worldview.

It just so happens this was the right time in history for geek cred to transform into the new cool. Apple’s ridden that wave, too, the new cool, pumping out the Jesus Phone and some funny and effective anti-PC commercials. Apple was onto something also a couple of years ago by integrating Intel chips, hastening a would-be Apple revolution.

But they stopped there. Why? Stubborn devotion to branding? The same devotion to a luxury market that stymied them in the Nineties while Microsoft made it to 90 percent of desktops? Some proud sense that quality is expensive and exclusive? Yeah, it’s certainly worked with the iPhone, all those early adopters in line for a realization a couple of months made a big difference price-wise—nice repayment for loyalty, there.

Those hardware margins are what have floated the company all the while—their last quarter was a record-breaker, Apple says. So was Microsoft’s, by the way, reaching $60 billion last year.

Apple is so focused on the "one more thing" in their presentation, they’re missing a prime opportunity to strike another, very lucrative market. Here is the current climate. Apple investors are concerned about Jobs’ health, non-life-threatening or not, and about Apple’s future without his resident coolness. Microsoft is preoccupied with Google at the moment, and with convincing the public Vista is a good deal after all, that their longing for the days of XP are misguided—even flat-earth thinking. What Microsoft isn’t saying is that XP lovers won’t have much choice to upgrade as the Vole stops selling or supporting XP. Why will consumers and businesses put up with that type of manipulation?

Simple. Macs cost too much. Mac isn’t on a pallet at Wal-Mart when your daughter’s begging for her own machine.

So, who else besides Microsoft is filling the low-end computing gaps? Well, Dell initially won the race to the bottom and we see how that worked out for them. It went from "Dude, you’re getting a Dell" to "Dude, customer service could be a lot better at fixing this thing for me." Acer? Perhaps a machine that thinks it’s overheating all the time is what one gets for less than $400.

But it shouldn’t be that way.

Basic business economics says you can sell a lot of a cheap thing or few of an expensive thing and come out roughly equal. Here’s the truth about this market: the number of people who can buy expensive things is getting smaller—what used to be a pyramid is more of a pear-shaped model these days, with the base of the pear getting bigger and bigger.   

Add that up: General, widespread frustration with Microsoft; general respect, love, recognition, and—most importantly—coveting of Apple products; hardware companies dropping the ball in low-end computing; shareholder uncertainty; increased acceptance of cloud-computing; and shrinking middle and upper classes. 
Now’s not the time to be stubborn on price points because of some snooty, antiquated ideal. Now is the time to strike a market while it’s hot and ready.

Due to some interesting wording by Apple’s CFO in the last earnings call, those who follow Apple closely are expecting an announcement of something new by September.

It could be a third incarnation of Apple TV, which the market isn’t completely ready for, again fueling the early adopters and geek chic status machine. It could be a new iPod Touch or Macbook Air—yawn. It could be putting to use the company’s acquisition of chipmaker PA Semi—no doubt for something else cutting edge and expensive. A game console? What for? Just to provide a high-end alternative to the already high-end PS3?

Why not drop a $400-$500 complete, high-quality Mac system on the market just in time for Christmas? They can do it; they have the technology. If so, watch the world explode, and watch Apple put a severe dent in Microsoft’s desktop dominance, something open source could never do.  And wouldn’t that be a coup?
 

The "Web of Misery" is an online research project that invites people to predict how much traffic will increase to sites focused on topics surrounding economic distress, such as religion, guns, substance abuse and gambling.

The project was developed by Donna Hoffman, co-director at the Sloan Center for Internet Retailing.

"People have always been judging the likelihood of certain events in the online retailing space – how much will sales growth be on the online holiday season, to what will be the most popular online holiday shop and the most successful promotions," Hoffman told the BBC.

Hoffman says as the economy began to become weaker, she thought it would be interesting to look at Web sites as an online indicator of economic distress. "So, by actually seeing which website’s traffic was going up, might indicate things were actually getting worse," she said.

There are ten categories in the project and each one has a Web site related to it. Predictions are taken from Web sites that include Foreclosure.com which tracks the number of foreclosed homes that are for sale across the U.S., Impactguns.com, a large online retailer of guns along with BibleGateway.com, a site that allows visitors to read and research scripture in multiple languages.

The growth of the Web sites are monitored by the number of unique visitors the sites receive on a daily basis. From those figures they ask participants to predict how much growth in traffic the sites will receive.

Participants have the chance to win cash prizes for registering and for taking part in the research.

Currently the Web of Misery has over 480 members who are participating in making predictions.

"People are pretty bullish on bad economy, they are forecasting that these sites are going to grow significantly in terms of traffic over the next quarter and some sites are expected to grow even faster," said Hoffman.
 

The "Web of Misery" is an online research project that invites people to predict how much traffic will increase to sites focused on topics surrounding economic distress, such as religion, guns, substance abuse and gambling.

The project was developed by Donna Hoffman, co-director at the Sloan Center for Internet Retailing.

"People have always been judging the likelihood of certain events in the online retailing space – how much will sales growth be on the online holiday season, to what will be the most popular online holiday shop and the most successful promotions," Hoffman told the BBC.

Hoffman says as the economy began to become weaker, she thought it would be interesting to look at Web sites as an online indicator of economic distress. "So, by actually seeing which website’s traffic was going up, might indicate things were actually getting worse," she said.

There are ten categories in the project and each one has a Web site related to it. Predictions are taken from Web sites that include Foreclosure.com which tracks the number of foreclosed homes that are for sale across the U.S., Impactguns.com, a large online retailer of guns along with BibleGateway.com, a site that allows visitors to read and research scripture in multiple languages.

The growth of the Web sites are monitored by the number of unique visitors the sites receive on a daily basis. From those figures they ask participants to predict how much growth in traffic the sites will receive.

Participants have the chance to win cash prizes for registering and for taking part in the research.

Currently the Web of Misery has over 480 members who are participating in making predictions.

"People are pretty bullish on bad economy, they are forecasting that these sites are going to grow significantly in terms of traffic over the next quarter and some sites are expected to grow even faster," said Hoffman.