Consider this scenario. You in wonderland. Your app among 200,000 other apps in one store. Plenty of customers: More than 3 billion downloads confirmed. A great new iPhone with brisk demand. An iPad that is breaking sales records and is already beyond what many analysts had predicted initially. Soon there may be 100 million customers that are directly connected to the App Store as their only resource for software. You may already be thinking about an early retirement. Think again.
Well, never say never. If you have a great app with mass market appeal becoming a millionaire with a few weeks is not out of the question. There are enough success stories out there. But, of course, there are enough apps out there that get hardly any downloads as well.
So, how exactly do you predict the sales of your future iPhone App? I mean, reasonably?
What should you expect?
Do you aim high or do you aim low?
Heck, what should you aim for at all?
Let’s ignore all those fairy tales of mega-sellers that create instant millionaires for as moment. Of course, it takes a great app, a lot of work, marketing and quite a bit of luck to strike it rich. And if you depend on a very successful app right now while you would be screwed otherwise, you may want to look elsewhere. As it turns out, if you aren’t already a big player, betting on a successful iPhone/iPad app may be a bit like gambling. Or like launching a website that promised gazillions of dollars of ad revenues.
On a reasonable level, there has been a recent article that has caught my attention. It takes a much more conservative look (a very conservative look, in fact) at what the average app earns. It could be a bit frustrating to read, but it may help to adjust some expectations.
The BSN article dives deep into publicly available numbers and draws conclusions by using numbers that may not be accurate, which is why we should take them with a grain of salt. The foundation for the calculated revenue is Apple’s publicly disclosed figures of currently $542 million of revenues in the first half of the year. The app average does not sound too bad, but this is, of course, a distorted view since, as so often, 5% of the paid apps are generally believed to account for 95% of the revenues. 200,000 apps and $542 million would mean that the average app author gets $2710 every six months, which is not that great, but then we know that the majority of downloads are free downloads (according to BSN about 85% of downloads are free, while they represent only 27% of the App Stores stock), but a few apps rake in millions while others just a few dollars.
BSN quotes market researchers who believe that the average price paid for an app is somewhere between $1.90 and $2. The average app gets less than 1000 downloads over a 2-year period and if we apply a median number of $1.95, then the media revenue would be about $1950 per app over two years, or $682 per year after Apple’s 30% cut. Building a business on that would be kinda foolish, of course.
But then, this is really a very conservative scenario. If you are enthusiastic about your app, and you have a powerful social network that can help you market your app, or have other resources to get you going, you may very well end up north of that median. BSN also noted that each iPhone/iPad is estimated to generate about 7 paid downloads and 40 free downloads per year. With 100 million outs in the market soon, that is a substantial opportunity. And it is up to you how you take advantage of this opportunity.