How Do Apps Make Money?
Don’t you suddenly feel that every company, regardless of what business it might be in, wants you to download the app? What is the point? How do they make money if the app they are promoting is already free?
Well, we are about to be enlightened.
Get this: Apps have money. Billions of dollars, in fact.
(Well, only some of them. But still)
Smartphones have taken the world by storm. The mobile market continues to grow at this rising rate even today. With the advent of smartphones, mobile internet usage beat desktop usage way back in 2014! This is no surprise considering that 80% of the internet users in the world own smartphones.
The mobile market is definitely the new place to be. It’s no wonder that EVERYBODY is trying to get in on the action.
But how exactly DO apps make money?
That’s a very valid question. It’s not easy to build a great, sharp looking, simplistic app. It takes effort, money, expertise and time.
Let’s start with first exploring the various platforms for your app.
The platform you choose for your app is very important in determining your earnings (if any).
This is where we dwell in shallow marketing waters.
Each app has a purpose: the purpose of satisfying a need. And every need cannot just be met on ANY platforms. Afterall, why would you get the Uber app on your Smart TV? You need it on your phone! Hence, why would anyone pay for services on a medium they don’t need the services on!
The relevancy of the platform for your app invariably affects your earnings based on market penetration and the popularity of the platform.
If we were to calculate which platform gets you more money, we can maybe try calculating this based on how much do the app developers earn in each platform.
By this measure, Apple’s iOS platform is the highest earner since 25% of its developers earn more than $5,000 per month. Android is not too far behind – 16% of its developers earn over $5,000 per month. What’s interesting is that much of Android’s total revenue is being earned by the few top developers. On the other hand, the earnings are a lot more spread out on the iOS platform – meaning that you are more likely to make money making an iOS app!
Blackberry OS and Windows mobile platform are a strict no. As we all know, barely anyone uses Blackberry leaving it market penetration to a meek figure. Blackberry’s parent company, RIM is now deteriorating with diminishing earnings and market value.
The next lost bet is Windows. Even though it backed by financial giant Microsoft, it lacks overall market penetration and popularity.
Even if your app is earning you profits on one single platform, it can only be deemed legit if it does well on a more widely used platform. And then only do you think of expanding on to other networks.
But how much can an app earn?
Back in 2014, apps made a total global revenue figure of $25 billion. And in 2016, a whopping $46 billion! Everyone knows that video games are big money. But some apps are known for their big bucks too.
Apps earn money simply through their in-app purchases. Even though the app is free, some things might not be. The highest in the category is Developer Supercell’s “Clash of Clans” spawning $1.2 million per day in revenue. The infamous “Candy Crush” makes about $884,676 per day via its in-app purchases alone. Since all games are usually free, the developers solely rely on the in-app purchases for revenue.
Now, if your app isn’t a game, there are surely other ways of earning money. The Joke app iFart earned $100,000 within a month. iFart even managed to make over $25,000 one Christmas! One of the Android apps, Car Locater apparently makes $13,000 per month. Another such app, The Advanced Task Killer earns the developers over $10,000 per month with the help of the $1 selling price up front and by renting the ad space available on the app. The app, Beautiful Widgets is also an interesting successful case. It costs about $2.49 per piece and has over 500,000 downloads. With this calculation, the developers have earned over $1 million in revenue.
Right now, cellular platforms are the craze. But apps are soon starting to branch out as there are more integrated smart devices in the market. One such platform is Smart TVs. When Smart TVs came in, no one ever used the internet connectivity feature. However, now 34% of internet users are slowly starting to take advantage of it. But one only tends to use apps that are suitable for these platforms, like Netflix and Hulu. It is usually much easier to promote your app and get people to download it if the platform makes it easier to use. Expanding your app to other platforms has many advantages; two of them being more usage and more means of revenue. The latter would only make sense given that it makes sense to even be on this new platform.
Another such platform is video game consoles like Xbox One, Playstation 4 or Wii U. These platforms have their own platforms. Note that there are apps that are available on every platform, like Netflix, Amazon, Youtube. And then, there are those that are exclusive to these platforms. For example, Spotify and BBC are exclusive to PS4. This is a successful means to make your apps available and convenient to use. However, this method is certainly not meant for the masses.
Apart from TVs and Video Games, Smart Watches are really breaking into the market. Currently, only 9% of the internet users are utilizing this new product. But big companies like Samsung, Sony and Apple are now entering the market.
So, what’s the conclusion?
Who would have thought that apps would be this big a business when they first started coming in? I personally initially thought that they would soon become obsolete. But here I stand corrected. Like I had mentioned earlier, 25% iOS platforms developers earn over %5,000 per month and 18% of the Android developers are not faring too bad, either. There are still lots of money to be made in simple productivity apps, while video games are certainly making the big bucks right now. As far as Smart TVs and Smart Watches are concerned, these are platforms certainly to be looked out for.