A recent survey by a marketing firm called App-Promo shows that 59% of developers don't manage to make enough money from app sales to break even on costs, and 80% don't generate enough revenue to support a standalone business. 68% earned $5000 or less from their top app, while 12% earned $50,000 or more. Those top earners have around $30,000 set aside for a marketing budget. 64.5% of the apps created by those surveyed were paid, while 39.5% relied on advertising and 32.9% were freemium or lite versions of full apps.
The sample size of the group was only 102 developers, plus the marketing firm has a vested interest in scaring devs into pouring money into marketing, but even in that light, the figures still paint an interesting picture. There are a lot of disposable apps out there that I couldn't imagine any iPhone owner spending good money on. The few companies that can churn out really high-quality apps tend to have sizable budgets and a big, established business in the app world. And when developers do make high quality apps, they're often faced by an App Store customer base which no longer puts a high value on quality apps.
You can take a deeper dive in App-Promo's white paper, below,, or check out the short version in the snazzy infographic. Developers, do you have a hard time earning cash in the App Store? How much time and money do you spend on marketing and promotion?
Source: App-Promo, White Paper via TUAW
Reader comments
59% of iPhone and iPad app developers don't break even on costs
Well, at least 59% of the apps I've tried are **** so it's not a shock is it? That 41% make money is amazing. I have a lot of apps, and I have tried 100's more. Lots of them just fall short - the competition is fierce. Everyone wants to make that one app they can retire on - many have.
I see a bubble about to pop.
Apple taking 30% of everything certainly does not help small developers.
Apple's 30% isn't the problem. Apple take 30% in return for providing the AppStore and the review process (which does have some problems, but on the whole works well), distribution costs, etc.
The problems are with the number of apps available and the difficulty for finding apps, not being able to have a "trial" version for free and then people expecting all apps to be free anyway (oh, and without adverts too).
There seems to be a growing trend with people expecting to find an app for free and not having to pay for it. Yes you can put adverts in them, but they don't really generate enough revenue unless you have a really popular app and even then people complain because there are adverts in it.
A 30% "tax" is very hard to live with, unless you have a very good and unique product. No one asked Apple to build a walled garden, users could have been given the option of downloading apps from external sources. What Apple do is akin to extorsion, Soprano style. They force you to live on their walled garden and give a cut. You want to sell your stuff? I take one third, and its my way or the highway. And the review process is build with the sole purpose of defending Apple's business interests, not screening apps for quality or protecting the developer or the user. I know Apple is not the only one, Microsoft does the same, and after a while it will meet the same difficulties with it developers.
I do agree that there are just too many apps and they are hard to find. When you get that quantity and variety, almost everybody stops making money. That is why I say this is an app bubble. The gold rush is over, very few people made money on it, and new apps now serve mostly to feed statistics in the petty battles of iOS x Android x WP7. Now the quality will slowly decline, as developers will stop making new apps, and it will be mostly business or marketing related apps, like the Coca-Cola or the NFL app.
Not sure how this is a sustainable business model.
Agreed, it is not.
Jeez guys it was only 102 developers that was surveyed. I'd take this with a grain of salt just because of that fact.
Yeah the sample size of 102 devs is just too small to mean anything substantial. 1000 dev sample size might bring a bit more accurate representation but that's still small considering how many devs there are total.
hardly a surprise especially when it comes to smaller devs. there are so many apps and they aren't all appealing to enough people, like novelty or i think as you put it throw awy apps.. Most of my apps are free. And many that i use like a starbucks app aren't from some small developer trying to live off an app they are from some company like Starbucks trying to offer a service like electronic payments that enhance the consumer experience. Like last week i was getting alerts from the draft from the NFL app. The NFL isn't trying to make a living off the app. It's just one more way to interact with customers. and it gives news, fantasy football and accesses the nfl shop, etc. It's probably worth it to them. but as for the smaller guys. i'm just not surprised. It seems like a tough way to make a living.
When I click "Purchased" in iTunes, it says I have 1397 apps and yes, I have tried all of those. How many apps are on my phone right now? Less than 50.
If we go by that rate, I'm not surprised that 12% of devs are making good money.
+1
You want to make more money, make better apps.
I agree. I try new apps all the time but at the end of the day, I end up deleting over 75% including some of the paid ones because they don't measure up. As for Apple charging the devs 30%, that's just the cost of doing business. It's their app store, their rules. If you can't live with it, just get out or don't get in to start. It's like taking a job as a garbage man for $10 an hour knowing that you have to handle trash and it only pays $10 then getting pissed about it. Makes no sense to me.
Nah, its like getting paid 10 an hour and having to hand over $3 per hour to the driver because you can olny collect the garbage on his truck.
How many of those 102 Devs were teenagers trying to escape their Fry Station Job at McDonalds? How many are college students working on their dissertation? If we go by what this company says, developing for the iPhone and iPad doesn't make any real money, so then why are so many developers developing for a platform that isn't making them any real money? I guess they should all switch to Android then? Better yet, let's all switch to Windows Phone.
I don't think so.
This article is worth a quick read, but no more than that. Almost anyone can create an app these days, so I'm not surprised only 40% of devs are making a profit. Not every business in the world succeeds and becomes the next big thing. Companies flop all the time. I think it's incredible what companies like Rovio, OMGPOP, & Instagram have able to accomplish on the mobile platforms. But these are the exceptions, not the norm...
Like many others who have commented on this, most apps are pretty crummy. I am very cautious of buying apps where I have to pay for them, often times only buying them when they are on sale, or after trying a free version.
We at Appzilla have developed an app for iphone and ipad called Vowel Movement. It sells for 99 cents. We tried promoting on Facebook and also on Google with the same almost impossible opportunity to make a profit. In each case they charged 30-40 cents for a download. Not even a buy, just a download. How can you advertise in this manner and pay 30-40% along with another 30% that apple gets and make a profit?
Sadly, it looks like we are going to end up in the percentage that loses money. It's too bad because the game is really good.
This article makes me feel great because I am one of the 'few' developers who makes a good living off my creations! I have products that have been generating consistent, and in most cases, increasing revenue for over 2 years.
Firstly, I think these numbers are off - the sample size is WAY too low, and this company has an agenda. I do think this scare tactic article is helpful though in retaining the quality of the apps on the market. By that I mean, scaring away potential developers who don't have what it takes to make great stuff.
Regarding luck, you make your own luck. Mobile products are products, most akin to things you pick up right before checking out at the grocery store. Anyone who says it is ALL luck is making an excuse for their lack of action. That's like saying meeting women is all luck. Pshhh! You can't win if you don't play!
I find this article to be very negative. I must admit, I am always skeptical about articles that try to point out everything that is wrong with a system before explaining what is right with it. Millions of people didn't start app business for no reason. There obviously has been some success from individuals otherwise they wouldn't be wasting their time. Why don't you explore that aspect of the story? Your sample size is way too small, there is no provided context, and you have no reason other than its hard to find apps in a sea of other apps which is a fixable problem. Doom and gloom reporting helps no one and it just kills peoples innovative spirit. Good job.