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I am considering making a smart phone app. Before I start, I want to see whether it is worthwhile at all. Unfortunatelly, I find it very hard to find any hard evidence on how much the developers of such apps actually earn either via application purchases, or in-app advertisement.

The best research I have found so far states that the average IPhone app earns 682$ per year. Then again, there are loads of apps some of which might not even work and their earnings also count towards this statistic. Therefore, I am after some specific examples of an app and its earnings.

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Unanswerable question. Does your app solve a need? Is it any good? Do people like it? Are you lucky and have it pop up at the top of some list at exactly the right time? –  Brian Knoblauch Mar 24 '11 at 14:42
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@Brian Knoblauch - the question isn't asking to predict, but to find historical data with actual sales figures. I don't know if those data are available, but it is answerable. –  JeffO Mar 24 '11 at 14:45
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3 Answers 3

up vote 11 down vote accepted

As others have pointed out, every application and developer is a different story, just as they are for desktop software products. You can develop an approximate feel for a marketplace, but how your particular application will sell depends entirely on what it does, its price, the overall user experience, whether or not you are promoted by the platform holder, how you advertise, and how you support the application, among many other factors. Unless you find a case study that is exactly like your own intended application, exact sales figures might not do you more good than the approximate numbers already out there.

I've been very open with my own experiences in selling an iOS application, which I describe in detail in the "Selling iOS Applications" session from my advanced iOS development course. The video for that class is available for free on iTunes U. Additionally, I had three guest speakers talk in the previous semester, each with successful applications that used different revenue models: Steve Glinberg with for-pay educational applications like KidCalc, Justin Beck with their in-app-purchase-supported MMORPG Parallel Kingdom, and Neil Mix with the ad-supported Pandora application. Steve and Justin go into great detail about how their applications have performed in their areas, including financial details.

I lay out my personal take on the App Store as a market in the course notes.

For about the last two years, I have been selling a $10 visual calculator called Pi Cubed on the App Store. To date, its net revenue (after Apple's cut) is $50,700. It currently brings in a sustainable ~$1,700 in net revenue a month, which is off its high of about $3,500 a month simply due to the fact that I have not sustained regular updates of it lately (my day job has cut into my time for this).

This application has never appeared on any top list, but I've sustained sales through the use of regular advertising. At a $10 price point, I can use banner ads to drive regular sales at a net profit, and therefore do not need to rely on spikes in sales to get on the top charts or on Apple's grace in promoting the product.

I've experimented with making money through advertising using iAds in a free Lite version of this application. However, I didn't want to crap up the main interface, so the ads are somewhat hidden on a secondary screen within the application. Since October, over 60,000 people have upgraded to or downloaded the version of this application with iAds. In that period, I have seen 54,000 ad requests, 7,200 impressions, and $116 in revenue. This is significantly less than the $12,000 my for-pay version made over that same period. Again, I didn't have the most in-your-face ad placement in this application and it isn't a game that you spend hours within, so another class of application may do far better.

I have no experience with any other mobile platform, so I can't comment on how Android, WebOS, or BlackBerry compares with this for my case. Anecdotal evidence seems to indicate that it is significantly more difficult to get users to pay for applications on Android, but that advertising works well there. WebOS hasn't taken off yet, and the one company I know with a product on the store there has been very disappointed with the platform. I don't know any current BlackBerry developers, because the ones I did know moved to Android or iOS. The Playbook may change this.

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This story should be corrected to say that the Pi Cubed app has appeared in the top 200 popularity and top 100 revenue lists in the Education category of the U.S. App store for several days, multiple times. It's hard to say whether this position on the charts helped it or not. But top 200 out of around 30K apps in a category is not a very "average" experience. It's top 1%. –  hotpaw2 Mar 26 '11 at 0:06
    
54000 ad requests and 7200 impressions. Can you explain? –  Jim Thio Nov 13 '12 at 3:48
    
Also where do you advertise your ads? –  Jim Thio Nov 13 '12 at 4:15
    
@JimThio - In regards to your questions about iAds, there isn't a 100% fill rate for ads, so only a certain portion of requests to display ads actually get ads returned to your application. At the time I wrote this, that was only a ~13% fill rate. In response to your question about where I placed my banner ads, I do so on a variety of sites and kept the best performers. I describe some of the places I used in my iTunes U video, I believe. –  Brad Larson Nov 13 '12 at 17:41
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Some have actually earned over $1M, and posted such on their blogs, but read further.

Look at the iPhone App store app categories sorted by "top revenue". You will see several free apps supported only by in-app revenue among the top 200. Apple has paid out well over a billion (USD) to developers, with a healthy portion going to those the top revenue app categories.

But, you should ignore all the average income numbers, as the iOS app store sales distribution is nowhere near a normal bell curve. The average (median) paid app usually makes zero sales per day, rounded to the nearest integer. Recent word was that an app usually had to be in the top 20% to 10% (in popularity) to average $10 (USD) or more per day. But above the top 5%, revenue starts going up toward the stratosphere (a few top app developers have posted some of their download numbers on their blogs, Rovio for instance).

So, it is clearly not worthwhile to bother doing any "average" apps, only marketably unique, or potentially top percentile apps (exactly which percentile depending on your goals).

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I am really looking for hard-evidence. –  David Mar 24 '11 at 15:44
    
@David - Such as the Rovio blog? That's a hard number. All app sales numbers are private financial information, so the only hard numbers will be from a few individual developer blogs willing to expose portions of their income statements. –  hotpaw2 Mar 24 '11 at 15:51
    
@David - Here is one hard number: I have seen the iTunes financial reports for an app above the bottom 90K paid apps in popularity (e.g. it's not in the bottom third) that has a sales per day averaging much less than one. –  hotpaw2 Mar 24 '11 at 16:06
    
As I mention in my answer, you don't need to be on the charts to have a sustainable application on the App Store. You can set a higher price for yourself, target a niche, and advertise to create more solid revenue. –  Brad Larson Mar 24 '11 at 18:44
    
@BradLarson - Pi Cubed has appeared in the top 200 in category (out of around 30k apps in the Education category) popularity according to appannie.com. So it is an example of a successful app that has been "on the charts". –  hotpaw2 Mar 24 '11 at 19:04
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This guy from several android app, only from ads earns ~1300-~1700$ each month. You can read his income reports here.

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