The market for paid iOS apps isn’t dead | Hacker News Reader

The market for paid iOS apps isn’t dead

marco.org

78 pointsnikunjk66 comments

It's not dead, but discoverability is a huge problem. I still make decent money ($5-6k per month) on an app I first released in 2010, but the two additional ones since then are probably not even collectively over $1000 for their lifetime. Unless you're featured, have significant word of mouth, or are on Top Free/Top Paid/Top Grossing, the number of people that actually find your app is small. It takes significant publicity to get enough momentum in sales to where word of mouth even works.

Edit:

This isn't to say I won't make anything else. I have other apps in progress, but I'm going to apply the lessons I've learned to make them work. They are somewhat niche apps, but I've found those work for markets that are accustomed to paying for tools/software. None will be under the $14.99 price point. It's unlikely I'll ever make another one that is -- it's just not worth the effort.

I'm curious. What kind of marketing have you done? Or do you only rely on the app store?

I'm highly ranked on organic search (#1 for most terms), have paid ads, pursue articles when the opportunity arises (these have historically helped a lot), limited giveaways, and watch google alerts for mentions of the app and respond as appropriate. The main app is generally in the top 30 grossing for its category, and I've found being high in that to be self-reinforcing. Being in the primary field the app is for has definitely helped since I have friends and contacts there.

One notably potential source I have not really pursued much is social media, Twitter in particular. I'm one of those people that pretty much never uses it and doesn't understand the allure.

What App is this? If you don't mind me asking?

I'll have to think about it. I'm not sure if disclosing it puts me at any disadvantage, but I want to make sure I'm not overlooking something.

It wouldn't hurt considering it would be free advertising. If I generated steady income off a popular app, I would be letting everybody and their momma know about that app. I would even throw a sales pitch right now!

It might cause more competitor apps to be made, which might put that constant stream of money to danger.

I think you've already disclosed it a few years ago. It's already a mature app for all I can see.

Looks like I did -- I'd totally forgotten about that.

The app is Portfolio: http://ipadportfolioapp.com/

It's a tool for presenting visual or audiovisual work to others (e.g., prospective clients) and is used by photographers, designers, sales reps, florists, and pretty much any other field where that presentation is a key part of the job. The customer-facing appearance can be completely customized to match a business's branding while leaving the management bits out of sight.

It started out life as a tool for our photography studio to present more recent work to prospective clients since it's incredibly expensive to keep the print equivalents up-to-date. The original price was $9.99, which was bumped up to $14.99 after a couple months if I remember right. The current $12.99 price is only a few months old and is a result of the market leveling out a bit. In its first year or so the revenue was $10-15k per month, but the saturation of the App Store and the introduction of new app possibilities that dilute the ratings (e.g., magazines) has lowered it to its current revenue. It definitely won't last forever, but I believe it will continue to be worth my time for a while yet.

Where do you put ads?

AdWords. They're the only ones I've ever personally had a positive return from. At least as near as I can track it.

I've considered that, but the last time I tried you couldn't use the words iPhone or iPad in a Google Ad. Has that restriction gone away, or how do you work around it?

wouldn't iOS be a better term anyway?

Highly depends on the market. If you're aimed at tech geeks, maybe, but I'd guess that your average iPhone/iPad user doesn't really know what iOS is unless they've jailbroken.

You can use those terms if you get permission from Apple. I can't remember the email address offhand, but there is one you can contact for approval.

And for the less performing apps?

Similar but no articles since there seemed to be much less interest from writers and publishers.

I don't see Twitter being a good place to market your app. Google+ would be fantastic because it's been adopted by your target market.

Your app is a little different than most because your price isn't in the basement. That means you can afford to spend a little bit to acquire a customers. The 99 cent app can't afford to spend much at all to acquire a customer.

$5-6k each month is certainly decent for the original time you spent programming. Now you can just collect on earnings and maybe release updates as needed, but it's definitely more lucrative than other markets. Thank you for sharing your own personal anecdote. It's one of the main reasons I value HN's community over others.

Pay-before-play is a dead revenue model. The money flow in apps these days is in in-app purchase (pay for power ups), pay-after-trial, and in-app advertising.

The parent post just stated that he made 5-6k per month off of a single iPad app. Can you back up your claims with facts?

The parent also said that particular app is well established and that his newer apps do not fair as well. While paid apps might not be dead, they are significantly harder to get noticed these days as he also mentioned.

> The parent also said that particular app is well established and that his newer apps do not fair as well.

Wrong. The parent post claimed that the higher cost app $12.99 led to much higher revenue than the lower priced apps at FREE with ads and $.99 to $1.99 cost. In fact so much so that the parent post wrote that no more low cost premium or premium apps would be developed.

Please, do your research so as to not waste people's time correcting you on this website.

Marco seems to make this unjustified and unelaborated assertion that price has no bearing on popularity, and the only differentiation between prices in free vs. paid. I'm not sure why this would be so for the App Store. Purchasing software, like purchasing any product, is necessarily a balance between utility and price. I, as a value-oriented consumer, have a finite amount of money that I wish to conserve, yet want to maximize my utility from the product. I could buy a BMW, which would make me happy and increase my utility, but would also put me massively in debt and be fiscally untenable. Because of this, I'm more likely to purchase a low-end sedan, which will function adequately but not break the bank. At the more minute level, I have to decide between superior name brands and cheaper generics. This also entails evaluating cost and utility. The same is true of apps. If I'm presented a choice between an app that does 100% of what I want but costs $3 and an app that does 70% of what I want and costs a single dolar, I will be forced to evaluate the utility of that added utility of that app versus the larger price. That is how decisions in commerce work.

People make purchasing decisions based partially on price... I'm not sure why (or how) Marco is trying to refute that fact.

I agree with you. I also think the "evaluation of utility" of Apps is poor. IMO, You can't really evaluate the utility by just the screenshots and reviews. It would be great if just like a car, you could "test drive" the App. Download a version that would work for x mins and would automatically present you an option to buy or delete after x mins.

Google play lets you return apps within 15 minutes. Does the app store not have anything similar?

http://support.google.com/googleplay/bin/answer.py?hl=en-GB&...

There is no official way to get an App Store refund, but it does apparently happen, here is a guide on how one might do so:

http://gizmodo.com/5886683/how-to-get-a-refund-from-the-app-...

That's how the Windows Phone and Windows 8 stores work – paid apps can offer a trial version.

I think you're right that most people evaluate app prices this way but the problem is that the net result of scrutinizing such inexpensive purchases so carefully is that all prices are pushed to rock bottom.

The biggest issue with the app store is that apps are undifferentiated. They're all lumped into a big uniform grid and psychologically this communicates that they're all units of some kind of uniform commodity, when nothing could be further from the truth on the production side. At least in the old shrink wrap world you had a lot more ability to physically differentiate your product.

It also doesn't help that any random moron can post an inaccurate or unfair one star review of your app and that's the very first thing any prospective buyer sees.

i believe, utility and price decision makes more sense for prices larger than impulse buying seed (>>$120). From $120 to $5, $5 to $1, $1 to 10cents and below 10cents have all different consumer behavior dynamics, for a cosmopolitan american buyer. So apps below $1 and $15 are all different stories for consumers. For <1$, visibility, jumping to leaderboard matters more. For a $15 product utility mattes more, but still an impulse buying decision can be forced.

Here is my app. Location based time tracking. https://itunes.apple.com/us/app/onsite-time-tracker/id470803...

Here are my sales https://docs.google.com/spreadsheet/ccc?key=0Asp1Qlg4fVlzdFk...

what did you do (if anything) to get 270.2 in apr (apr is not even finished yet)? and 155 in mar? why are some months missing?

I am putting the months I will collect the money. The 270 collected at the begining of April was from sales in February.

I got picked up on app advice in February, and got about 10,000 free downloads. That had positive effects.

The missing months is cuz i made the app free for a few months.

Thank you for sharing - for me ,this was an interesting view of the economics of a niche app.

I happen to be a user of your app myself, which makes it even more interesting. I downloaded your app as part of your free promotion that you mention in the spreadsheet. I have since recommended your app to several colleagues, of which several paid for the app, so your promotion was probably successful.

I also use a similar app, "TimeSheet". This app is ad-sponsored. I found this app by browsing the app stores lists of most popular apps, and because it was free, this was the app I started using.

Seeing the economics of your app seems to be barely viable, I would offer some food for tought.

You have minimal expenses already, so you can't boost profits by minimizing expenses. You can however do what you seem to be doing and just "wait" until the app is profitable. Your app has a decent focus and is streamlined to do one thing and do it well. You can improve the app by doing customer interviews, but that will be costly and may not provide a ROI. You could change the price of your app. If someone is using your app, it doesn't matter if the price is $1 or $5, it's peeanuts for anyone using it as a business app. This would hurt the "I'll try it out-downloads" though. You can expand your user base by promoting your product more. This seems to me to be the most attractive option. What are your own thoughts about increasing the revenue stream for the app?

Glad you like the app.

Short term plan is to add invoicing features. Long term plan is to add a cloud team backend that has a subscription.

That's low. My sales yesterday: http://i.imgur.com/9GxBLCX.png

You actually created an account, just to put down the op and share that you made 1300 bucks yesterday?

I agree. Sales for my app are low. I make way more as a contractor. I suspect your app has to be in the top 1%, it's exponential more money.

I once had someone pitch me an idea for an app, which coincidentally I had actually built and was selling on the app store. He wasn't willing to pay 99cents for it (but had previously been willing to quit his job to make it hypothetically with me).

It is a weird world.

(for the record I like marco's work)

What's the app or idea?

I hear app ideas all the time. I think at least a third of the time I can pull out my phone and find an app that does that already. If they haven't even looked at competitors, they're not serious. I've learned that one quick way to filter people is to ask to see what apps are on their phone. If it's just Facebook and Angry Birds, they're useless.

Out of all the app pitches I've heard, I'd say 33% are already done reasonably well by other apps. Maybe 25% or more are not possible to do on the iPhone (but sometimes on Android). At least 90% have a marketing plan of "just put it in the store and wait for the sales to explode."

Translation: Sure, the odds have gotten longer. Ticket prices might be higher. Consolation prizes might be smaller. But don't worry. If you pick your numbers just right you too can still win the lottery!

I understand things look different from his vantage point, but I just don't see a healthy market in what he wrote - I see a dying one. With the climb getting steeper and the asking prices getting higher, that just shrinks the potential market for paid apps more and more. That helps a culture of not buying apps (other than games) keep growing. To me, it seems clear where this will end.

You're mistaking the micro for the macro. Sure, the odds have gotten longer and ticket prices might be higher -- but from the app buyer's perspective, that's because there are just so many rides and they're so damn good. Can't try 'em all!

As an iOS developer I speculate that it's not the price that hinders people from downloading an App, it's the psychological barrier of paying for something (regardless of the price) that they haven't experienced yet. Sure reviews and screenshots help ease this tension as well as the standard $0.99 price tag, but I don't think it's enough. It would be really great if users could download the App and play around with it for a couple of minutes to "test drive" it and then be presented with an option to buy it.

This is a huge shortcoming of the current app store model, I agree. That Apple hasn't done anything in this direction for years strengthens my suspicions that they don't really care if the typical dev makes money on the store as long as the big players earn and the users keep buying phones.

I agree. If not for the dev, they should do it for the sake of the user experience. A "Try It Out" option would prevent customers from feeling duped when they buy an App that they think looks good but turns out to not be of their liking. Which right now contributes to the customer to be more hesitant of purchasing the next app tomorrow.

I suspect try it out would only reduce sales further, it adds a delay in the process and gives the customer more chance to change his mind.

It might help for expensive software but for something that is a few dollars I'd see it as a negative as a developer.

What's happened in practice is that the market is moving towards free apps + IAP to make money. I think this tends to ruin most games but for a lot of other categories I don't think it's a bad model.

As a consumer, I like this model when it's done right. I like being able to "test drive" an application and then paying for the app.

For example with a business app like Grafio, I want to test drive it to see if it works for me. Then I can pay a significant price for the app - if I am using it in a business setting my time is worth hundreds of dollars per hour and the prices of apps are not really a significant expense. I would want development of Grafio to extend further towards supporting my business needs, which is Visio import/export, and I would gladly pay for that feature.

I dislike when the free app is missing important functionality (this defeats the test drive aspect) and I dislike when the in-app is a subscription. I find it obnoxious when apps have too many in-app purchases. It becomes an annoyance to have to pay $1 to read, $1 to write, $1 to save. Just ask $3 for "full functionality" from the start. Don't be silly.

I like when the app is fully functional and I can choose to pay different amounts to support further development.

As a developer, I also prefer to have test drive option. Some apps can't be test drive (for example, casual games), but for productivity apps, it is a must have feature and windows phone has it from day 1.

I don't see this as being an Apple issue because a lot of apps should be offering a lite version as well as a premium version with no ads and additional features.

You used to be able to test drive for 24 hours with Android and get a refund within that time period. Some people abused it such as playing games and completing them within 24 hours and getting the refund.

Google then changed the period to 15 minutes which is far too short. Many games start off with large downloads that won't have finished in that time. I'm currently looking for a podcasting app and there is no way you can evaluate one within that time (little details matter).

Some try to solve this problem by having separate free versions that have less functionality, or various complex schemes involving paid unlocks, but neither solution is perfect.

The Site has an almost unreadable font for me. Its ugly when in normal size:

http://browsershots.org/http://www.marco.org/

(Check the Firefox 22 shots)

And gets worse when I increase the font size:

http://i.imgur.com/jU1swoq.png

Why is that?

your browser has issues.

It looks great here. Change your browser, or perhaps change your font rendering settings if you're on Linux or Winblows?

I experimented with one of my apps (www.TommyTeaches.com). I made the mistake of releasing it as a paid app at first. It didn't do so well. I switched it to free and it took off. Everyone at my kid's school got it and they let others know. Through analytics I can see it is being used for long periods of time by many kids every day. Tried the teaching approach with kids with mild learning disabilities and it made a difference in a number of cases.

All of that is good, however the problem is that in order to be able to justify completing the series I have to show revenue. Placing ads in apps for 3~5 year old kids is not an option. One thought was to place ads in screens off the main game (Settings, etc.) to at least capture a minor revenue stream. I have that build but haven't released it yet.

The problem with the expectation of everything being free is what it does to the ability to innovate and explore. Apps don't cost zero to develop. As much as it hurts me to think it, I am not sure I can justify attempting to innovate at the early education market because there's virtually no money in it for the vast majority of developers. Even paying for logo and graphic design is impossible when your revenue is zero or near zero.

For me at least there seems to be far more traction and revenue in the specialized utilities segment.

On the other hand, it is hard to pay the iOS software world attention when we can charge $250 to $350 per hour for mechanical, electronics hardware and software development in certain verticals.

Just a thought, without knowing your app very well or the usage the kids make of it, but it sounds like some kind of new feature unlocked via an IAP may make sense.

Right now it looks like you're releasing each content pack as a new app, that's also free. There's your problem. Release content packs as IAP, give 3 away for free and charge $1 each for new content packs. There's your revenue stream. If the app is really teaching the kid stuff, parents will probably pony up and pay a few bucks now and then, since they care about their children's education.

I put my first app into the App Store last July and had it selling for free until 2 months ago when I set it to $1.99. People continued to buy it even though I don't advertise it.

After that success (2 figure revenue!), I built another app and put it on the App Store for $9.99. People are downloading that as well. I admit that I am making more off of contract work, but based on my estimates the App Store converts really well, even at >$5 and has the potential to be profitable with paid apps.

(anecdotal evidence based on my sales of http://free2goapp.com/download)

Do many people sell their app for free first, and then increase the price? Interesting model. Can you provide some more specific data about the sales? That sounds like a good idea to get some traction and reviews. Were people upset at all with the price increase?

Congrats on the success!

I have an app in the iOS photography category ranked about 100 in sales on iPhone and iPad. My monthly sales are $6000.00 US (after apple's cut) selling for 2.99. Not bad, I'm happy and all, but it's disappointing to think that there are only 100 developers in the photography category making more than 6000.00/mo (assuming that they have only one app)

The user interface that iTunes provides on the phone, tablet and desktop is super clunky and slow for exploring apps. Click, wait, click, wait. etc. Why no tabbed browsing so users can load and look at 50 app descriptions in the background?

wow, this is amazing!

And don't forget that many of the top 100 are Apple, Adobe, and large magazines.

A very thorough analysis. I think it's lacking an important category, though: the free apps that generate revenue by (usually compulsive) in-app selling, a la Farmville. They seem to be common among the top grossing.

Does selling an app at $2.99 vs $1.99 reduce app sales? I can see where that might not affect sales in the US and Europe but what about Asia and other emerging markets?

Easy to say for the one man company.

I have a very niche app that brings in a small but fairly consistent revenue stream, whenever I hear crickets in the sales department I raise the price from .99 to 4.99 and slowly come back down every week tripping the "app on sale" wires. Usually works.

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