Which apps are making money? It’s no secret app revenues vary across mobile platforms, but there are factors that determine how much money an app makes. Here are some tips, along with a look at who the top-grossing developers are.
It’s no secret that smartphones and tablets are the “it” devices when it comes to mobile app downloads. Nor does anyone dispute that it’s essentially a two-horse race between Apple iOS and Google Android; the two combined have more than one million apps available in their stores. But which apps make money, and what is the secret sauce for generating revenue?
Market analysis firm Vision Mobile delves into all things app development in its “Developer Economics 2012” report, and is chock full of interesting factoids. For example, it found that the highest revenue generators are in social network and communications apps, such as Skype or WhatsApp, which garner about 20% more app-month revenue than the next best category: medical and fitness apps. Coming in third are apps related to location and location-based services (LBS), such as mapping and navigation.
Depending on the platform, the average per-app revenue ranges between $1,200 and $3,900. Surprisingly, Blackberry is on top in terms of average revenue, with developers earning nearly $3,900 per app per month. The study found that on average, Blackberry developers generate 4% more revenue per app per month than do iOS developers, who generate about 35% more than Android developers. Windows Phone developers don’t fare nearly as well: The study found they rank last, earning slightly less than half as much revenue per app-month as Android developers.
But averages don’t tell the whole story. iOS has the lowest percentage of developers (42%) below the “app poverty line,” and the highest ratio of developers who generate more than $5,000 per app-month in revenue. The reasons include superior demographics, superior content, tablet domination, ad revenue and frictionless payment, according to the study.
iOS also wins the who-makes-the-most-money debate. Based on figures of 50% for half of developers, iOS developers, on average, generate 37% more revenue per app-month than Android developers. “The gap narrows when we look at high-earners, as both platforms have massive scale and the potential to generate huge profits,” the report notes.
One striking finding is the great revenue disparity among Web developers. Among those “wishing to make money,” the Vision Mobile study found that 17% “actually make no money at all on mobile Web development, a higher percentage than any other platform. At the same time, mobile Web developers in the $5,000 to $100,000 range pocket 91% of mobile Web of app-month revenues.”
Although you can create mobile software on your own, working solo is apparently not financially beneficial. “Developers working on their own projects reported average app-month revenues of just 30% of revenues reported by commissioned or employed developers,’’ writes Andreas Pappas, Vision Mobile senior analyst, in a company blog post, with the caveat that “developers working for clients may not have visibility of their clients’ app revenues so it may be the case that they reported estimated figures or that they, instead, reported their own revenue.” By comparison, producing an app for a client generates an average of $3,172 per month while working on their own app generates $952 per month, the report found.
There is also a big gap in revenues by industry. While IT services and games garners about $1,500 per app in monthly revenue, apps for banking/finance or real estate generate over $5,000 per app per month. Willie Sutton knew what he was talking about.
Not everyone is making a full-time living by writing mobile apps – or trying to. Some 29% of developers were not sure how much money they made. Among those that knew their income, an app has a 35% chance of generating under $500. “One in three developers live below the ‘app poverty line;’ that is, they cannot rely on apps as a sole source of income, even if generating multiple apps. Additionally, 25% of all developers generally don’t earn any revenue. Among those that do, 14% will make between $500 and $1,000 per app, while 13% will generate revenues somewhere between $1,001 and 45,000 per app, per month. The survey also found that less than 7% will make more than $10,000 per app per month.
Of course, key decisions developers make influence per-app revenues, such as revenue model, app category, marketing strategy, and target region. And monetization also varies significantly by platform.
The more time you spend to develop an app, apparently the better revenue potential. Apps that take up to one staff-month earn an average of $484, while those that take 7-12 staff months earn $5,400.
Regardless of platform, in terms of what revenue models they rely on, the study found that developers generally use fewer than two revenue models concurrently: pay per download – which is used most frequently by 34% – closely followed by 33% of advertisers who use advertising. The study notes that in-app purchasing has also gained popularity since last year.
Another survey finding worth noting is that developer platform selection is not based on money but reach; 54% adopt a platform because of user reach while 43% cite low cost and 30% cite revenue potential. “Reaching users, eyeballs, or wallets is the root cause for platform selection,” observes the report.
iOS and Android may currently rule the roost but developers aren’t ignoring other platforms: 57% plan to adopt Windows Phone, regardless of which platform they primarily use today; and tablets are now a mainstream screen for developers (more than 50% now target tablets, and iOS developers are most likely (74%) to do so).
The online survey was conducted between April and May of 2012 and had over 1,500 respondents from 83 different countries and seven major platforms: Android, iOS, mobile web, Windows Phone, BlackBerry, Qt, and Java ME. Vision Mobile says each platform was represented by at least 50 developers who reported spending the majority of their time on that platform. To remove platform bias, all results were averaged across these seven platforms, the firm says. The majority of respondents were from Europe (42%) and North America (28%).
A separate but related survey from research firm Canalys (PDF press release) found that the majority of revenue at the leading app stores – Apple’s App Store (iPhone only) and Google Play – is generated by a small number of developers who come from mostly gaming companies, according to a company release. Just 25 developers accounted for 50% of app revenue in the U.S. in both stores for the first 20 days of November 2012, according to Canalys, which based its figures on daily App Interrogator surveys. With the exception of Pandora with its Pandora Radio app, the rest of the top grossing developers are game developers from the likes of Zynga, Electronic Arts, Disney, Kabam, Rovio, Glue Gameloft, and Storm8’s TeamLava.