The mobile app market is ubiquitous, and regardless of whether you’re developing an enterprise application or a prank app, there’s plenty of opportunities to create a money making app that earns you a sizeable return. Learning how to make money from apps depends on a number of factors well beyond the product itself. With that said, not every app makes money and not every app achieves virality. In fact, the app development market is pretty saturated with over 2.8 million apps to choose from in the Google Play Store and 2.2 million in the App Store. Everyone from established Fortune 500 companies to everyday laymen have created apps for everything from banking to relationships. With such high competition, creating apps that earn you money is much more difficult than many investors initially think. For those who are new to app development, we’ve provided this neat guide and infographic to help you understand how to create apps that earn you money. Global App TrendsThe mobile app market continues to explode all across the world, despite what you might hear over the internet. Not only was 63% of total web traffic in the US mobile in 2017, but out of the US consumer’s average digital consumption, 71% is spent on mobile devices and 90% of that time is spent in apps. For a greater picture of the mobile market surge, here’s some telling statistics:
- Global app revenue was greater than $60 billion in 2017 (Source: TechCrunch)
- Global app revenue increased 35% between 2016 and 2017 (Source: TechCrunch)
- There were 178.1 billion mobile app downloads in 2017 (Source: Statista)
- Global app revenue is expected to reach $188.9 billion by 2020 (Source: Statista)
- The average US app developer salary is $75,323 annually (Source: Glassdoor)
- In-app purchases totalled $37 billion in 2017 (Source: Business of Apps)
- App purchases totaled $29 billion in 2017 (Source: Business of Apps)
As the app market continues to grow, it should be noted that app usage is split categorically, although social media takes the crown at 20%. Facebook, Youtube, and Messenger remain the most trafficked apps, and studies have shown that users spend 77% of their total app usage in their three favorite apps. So what apps are dominating the charts in terms of usage and revenue]? Top Money Making Apps for Android and IosCategorically, gaming apps top the list in terms of revenue. Mobile games accounted for 88% of total revenue over Google Play and 77% of global revenue over the App Store. In terms of the top grossing apps over the Play Store and App Store, these apps currently earn the most:
It’s clear that a majority of app revenue comes from subscription based apps, as well as in-app purchases. Fortnite and Candy Crush serve as perfect examples of a successful freemium model that provides incentives for additional purchases outside the scope of the core product itself. Understanding Your MarketThe first step to predicting your estimated revenue is understanding your target market, demographics, and spending habits. Consider that only 5% of users make in-app purchases, but those purchasers account for more revenue than any of the other 95% of users who interact with an app. This conforms to the Pareto principle and marketing to early adopters. If your business sells products through an app, it pays to know that 63% of millennials shop on their phone everyday, even if they make a majority of their purchases in-store. In the same vein, a survey found that 74% of millennials in the US leverage banking apps to conduct financial transactions and 44% use apps to complete retail purchases. Demographics and psychographics drive purchasing decisions and understanding this will help you build out forecasts to understand how much money you can make off an app. Ios or Android: Which Platform is the Best?Diving deeper, you’ll discover that user habits differ pretty substantially across platforms. While Android’s Play Store boasts more users, App Store users tend to make more purchases and more expensive ones at that. When designing an app, you’ll need to choose a platform to launch your first alpha release. Understanding user habits on these platforms will help with market penetration and identifying early adopters of your brand and product. In terms of average salary, it’s pretty split among ios app developers and android app developers. Evaluating each platform by revenue, Ios apps make 75% more than Android apps. In fact, in the first half of 2018 alone, the App Store pulled in nearly 2x more revenue than the Play Store at $22.6 billion and $11.8 billion respectively. While it’s clear Ios is the money machine, this doesn’t mean that Android doesn’t present some advantages of its own. Being installed in more devices, commiting to a freemium model over Android can be just as lucrative as marketing on Ios. Choosing Your Business ModelNow, for the most important consideration: your business model. There tends to be three strategies to monetize over the app market:
- In-app purchases
- Pay-for apps
- Subscription models
Close to 90% of Apple Store apps are free and run off of a model that incentivizes users to make in-app purchases to either upgrade their feature listing or gain access to additional content. There are also alternative revenue streams available, such as advertising and customer referral programs, but these can be intrusive to UX.Of course, you can take the road less taken. If someone makes a purchase for your app initially, they might be more likely to make in-app purchases to upgrade their experience.
Subscription based models are also hugely successful, if, there’s enough content and features to warrant a monthly membership. This is typically referred to digital tools and businesses with extensive content libraries. Developers might also want to consider offering a free demo if they choose a subscription or pay-up-front model. Generally, most developers choose the freemium model in order to acquire initial downloads and then market additional features to users who are already in the app. The Future of App DevelopmentFinally, before you develop an app to earn money, it’s key to note that the market is changing. For one, many skeptics believe that there’s a glut in the market that will lead to self-correction. While this remains to be seen, new technologies are also opening up new paths for monetization. Apps are becoming ubiquitous and able to be served on multiple devices, including computers, smart TVs, tablets, video game consoles, and new operating systems. One of the biggest areas that people are paying attention to are wearables. Everything from headsets to smartwatches are opening up new ways to give value. Other areas impacting mobile devices are the introduction of IoT technology, machine learning, and even AI, which are expected to transform the way we interact with our phones. ConclusionDespite what you might hear in the news, apps are still a highly profitable investment if done right. Appek has helped small startups create the apps of their dreams, from the world-famous French Girls App to iFart. For more information about how much it costs to build an app and how much you can expect to earn, contact one of our experts today!