Tuesday, May 18, 2010

How Much Money Are These Apps Really Making?

This is the article I mentioned at yesterdays meeting...

How Much Money Are These Apps Really Making?

Quantifying the app economy is hard. Research reports seem to appear every week, yet most developers continue to have little idea how much their peers are making. Unlike publicly traded technology companies, whose income statements are bared quarterly for all to see, startups specializing in apps withhold financial data from one another, even though that data could shed more light on a nascent market.

TechCrunch took a nice step toward offering some disclosure, with a guest post authored by Alex Ahlund, whose company AppVee was recently acquired by its competitor Appolicious. Ahlund surveyed 124 developers of all stripes. 96 of them responded. Among the highlights:

The average total number of units sold was 101,024 copies within an average period of 261 days. The average number of units sold per day was 387. The average price was $5.49, although the data skews due to the $49.99 outlier. In most cases, the price point was $0.99. The average number of updates released was 3.89, with the average total development cost amounting to $6,453... [On] average here, iPhone developers are seeing a return of more than 15 times their initial, albeit small, development costs.

However, when the top 10% of the most successful apps are removed from the data set, the numbers skew much lower, giving a far better impression of what the iPhone industry looks like for most developers. In this scenario, the average sales were 11,625 total units, averaging 44 copies/day. Approximately 23% of apps sold less than 1000 units from launch (ranging from 12 to 370 days in the App Store). Further, 56% of apps sold less than or equal to 10,000 units, while 90% sold less than 100,000 units, with the remaining 10% achieving sales of 127,000 – 3,000,000 units.

Other interesting points Ahlund makes in the post: You can market an app as much as you want on Twitter, Facebook, and forum posts, but the level of promotion by Apple in its App Store is by far the paramount factor determining an app's success. But success remains a fickle and elusive prey for most developers. It can come and go in the space of a week and seems to be bestowed almost randomly, so having a carefully designed app isn't a guarantee.

TechCrunch also included a detailed table of 50 of the apps surveyed and the number of apps sold, as well as the price. But it stopped short of the most interesting piece of data: How much revenue is each of these apps bringing in? A bit of simple math reveals the answer: Bejeweled 2, the wildly popular iPhone game, made nearly $9 million in a little less than two years. Two other iPhone OS apps, the game Flight Control and the music app Pocket Guitar, also topped the $1 million mark.

A table with revenues from the 50 apps mentioned

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