Apple App Store as developer business model

Apple App Store as developer business model

Summary: How to make $364 a month writing software: One good app in an app marketplace could bring in thousands of dollars a year. Imagine how this is reshaping the software industry.


In previous posts at this site, we talked about the phenomenon of "Micro ISVs" -- small software shops, enabled by service-oriented technologies and cloud -- building and posting individual services and making a few cents or dollars on each download of the service from some type of app marketplace. Soon, it all adds up.

Recently, Mark Maunder, founder and CEO of Feedjit, made an effort to add up all the possibilities, calculating the potential income a developer shop could make from posting an app at the Apple App Store.

He calculates that on average, each app posted brings in $4,000 to $8,000 to its publisher. He bases this calculation on the $3.64 average price for each paid apps, along with 244,720 paid apps, published by 85,569 unique developers.

Get up to 100 apps in the store, and you have a decent-size startup. In fact, we have the potential for creating software startups that no longer require bank loans and venture capital funding -- just a lot of micro-streams of revenue.

Apple is riding the wave of a new realm.  We're evolving into a technology economy in which companies and individuals alike are accessing on-demand services from a range of providers, including one-person development shops, small ISVs, large ISVs, systems integrators and consultants, and even the IT departments of non-IT companies.

(Photo: Wikimedia Commons.)

Topics: Apple, CXO

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  • RE: Apple App Store as developer business model

    Keyword: Average. It averaged the high priced app with low prices app and ended up with $3.64.

    Which means if you set your price for $3.64 an app and publish 100s of Apps, you would still not making $364 a month. So 100s of App for maybe about $100 a month if you're lucky?

    Not just it doesn't sounds like a good investment for a programmer's time, it sounds even worst if you start comparing all the time and effort to, like say, the minimum wages with all those MacJobs.

    Good for Apple to brag their App number thought, BTW.
    • Unfortunately


      That's the difference between being a starving "artist"(entrepreneur) and having an actual "job" with a steady check and benefits. Ask anyone who writes, paints, sings or opens a restaurant and is just starting out about the "fairness" of the market.
    • RE: Apple App Store as developer business model


      "Which means if you set your price for $3.64 an app and publish 100s of Apps, you would still not making $364 a month"

      Yeah, if each one of your apps was downloaded just once.
      • RE: Apple App Store as developer business model


        Yup, you're lucky if each one of your apps was downloaded just once *per month*.

        With a sea of free apps in the AppStore, those 100s of $3.56 apps gotta be really, really good.
    • Luck has nothing to do with it

      Skill and an understanding of what people want is what counts. So, if your app fails, it's your fault. Period.
  • Average vs. Median

    The "average" app may make $4-8k over its lifetime, but the MEDIAN app is a loss after factoring in the submission costs. Unless you are at the top of the heap you will lose money.

    The Apple App store is designed to be very top-heavy. If you aren't a top seller (or at the very least a top category seller) your visibility is zero. The search function resets itself constantly when browsing apps by keyword so only the first page or two, even with a keyword search, gets much visibility. Top 100 or go home.

    WP7 has a different problem as far as it's games store goes: It is deliberately designed to give the XBOX Live games all of the eyeball time. Since XBOX Live is invitation only and has nothing to do with the quality of the game (mostly developer name), everyone else is left to squabble over the free ad-supported game revenue.

    Mobile development is much more like the Art world than the traditional software world. A lot of people fancy themselves artists and do it in their spare time. Maybe they sell a painting or two at an art fair and cover their paint costs if they are actually good. A tiny handful make enough to actual scrape a living on, and a tiny percent of those actually make it big.
    • Exactly


      But IMHO it's always been this way. What digital media has changed is it allows those with talent to maket their wares directly to those with money, bypassing the usual vetting system of publishers/marketers/proofers/etc. But overall the game has not changed. Only the very few will make it, only the MOST talented or those with the most financial backing to hire skilled coders.

      Go to the Kindle publishers forums and see the crying "I poured my very SOUL, and years of my life, into this book and people don't want to pay $10 a copy." The natural response is: Go to project Gutenberg and look at the 30k+ free books out there, that's what you are up against. Same thing with apps, etc. The mountain of free, instantly available stuff grows.
  • App store ecomonics works against programmers

    Apple payout = $2,000,000,000 / 500,000 = $4,000 / app. Sounds good.....

    Except that the great majority will get nowhere near that, let alone break even. A very, very few apps with low development costs will be runaway successes. Many will easily use up $4,000 in developer's time and money.

    It is good for Apple because they make money on EVERY app sold. They rely on getting programmers to buy into the dream. Rather like the lottery (might be same odds!), but you will do a lot more work to most likely lose much more than the price of a ticket.

    Estimated costs for basic apps are $15,000 development costs, and some enterprises paying $50,000 or more. Mickey-mouse programs are not likely to ever make money for their developer.

    Many popular apps are no cost because they support a business' existing income streams.

    The fact is while smartphone apps are the glory target, they are a very small part of the whole phone market. Many businesses may reach a much higher market by aiming for devices with WAP.

    There is a professor who has explained all this phone app economics, but I could not find a link in time for this post.

    In a way, the app store glamour reminds me of the music industry, full of starry-eyed wanabees, but with no chance of success unless they keep a level, realistic head on their shoulders and are willing to do the hard work themselves.