How to Choose a Profitable Niche | Hacker News Reader

How to Choose a Profitable Niche

trevormckendrick.com

260 pointstrevmckendrick36 comments

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Hey Trevor,

great second post.

I agree with most of what you say but have to point out that you left out a big technique: search trends.

what you describe is finding apps that are already there and competing against them.

A different approach would be analysing search trends and match against niches with no apps.

For example, I remember discovering that paddling was a huge "industry" (as a sport) with ZERO apps.

For this, you would use services such as SearchManSEO or mobileDevHQ to identify niche "hotness" or the oldschool SEO way using GoogleTrends/Keywords.

hope it helps, Giacomo

Excellent point. There is a lot of data out there for sure. I just wanted to cover in this post how to identify profitable niches.

How exactly would you use GoogleTrends/Keywords to identify niches?

I think they mean if you have a hunch on what might be a trend, check out the search trends on Google. If it's going up and to the right, you might be on to something.

You can also use something like Market Samurai to do keyword analysis. But by god, do NOT give them your daily email address, they will spam the crap out of you. Handy tool though.

Also check out https://appstorerankings.net for App Store Optimization services.

The model Trevor used for DL estimation is pretty good, actually.

Trevor, after reading this article I wanted to subscribe to your list because it was interesting, and you sold the future content well. Apparently I was already subscribed from a previous article which I liked as well, so consider this a huge compliment, you're doing great!

Thanks!

I agree. Thank you for this topic series. I look forward to every Tuesday's email!

I have to ask though, why bother calculating the daily revenue? If a paid app is in the top 25, isn't that enough of a sign that it is profitable?

The high school stats student in me really doesn't like that regression line plotted against two datapoints.

Fair enough. I was just doing an example with two data points. Of course the more points you add the more accurate the line.

It's not a matter of accuracy in this case, it's a matter of whether the regression has any meaning at all. Any regression can fit two data points, even a parabola. Of course, there are intuitive reasons to suspect that that is not the actual form of the distribution, but you can't actual show it from data with just two points.

But I have to assume that you did more data points when you actually performed this study yourself. Up to that point the methodology is really useful, so don't take this as criticism of the entire post.

Got ya. I did do more data points myself. Thanks for the commentary.

Even with more data points, I'm not convinced that App Store ranking is a good independent variable. At best, this seems like a very poor proxy for ad store impressions or downloads. However, I would be very, very surprised if the relationship between those legit metrics and app store ranking were anywhere near linear when you're comparing the top 5 or so to the rest of the top 25.

Paid App Store rankings are determined by # of downloads, so not sure why that doesn't work as a reasonable (albeit not perfect) proxy.

And agree 100%, def not linear.

This. You have an implicit assumption for exponential decay or a polynomial. Why isn't this linear? Some other function?

The more data you plot the more you'll find an exponential increase in sales for every increase in Gross Ranking.

And if you watch the App Store rankings that makes sense. The apps at the top stay there, in the same relative order, for long periods of time. This suggests larger gaps in sales, vs lower ranking apps whose rankings fluctuate constantly.

The purpose of this exercise was to make reasonable estimates, not to get it exactly right.

What I found most interesting about this is how outdated the Distimo data is. I have a couple game apps in the Games Trivia category, which is conveniently less popular. According to Distimo, in May of last year it would take roughly 600 dls per day to reach the top 25. We're averaging 1000 downloads a day with each game and neither has cracked the top 60. Amazing how much a difference a year makes. Anyone know if Distimo has done a followup more recently?

Thanks for another great article Trevor.

I'll have to ask them. I would love an update as well.

The good thing is that app downloads have only increased since then, so any estimates based on this data will be conservative.

http://webcache.googleusercontent.com/search?q=cache%3Awww.t...

Thank you. Definitely going to be tweaking my WP config after this week...

Quick Cache is lightweight and superb, I highly recommend it.

http://wordpress.org/extend/plugins/quick-cache/

Or run the DNS through Cloudflare's free plan... you get protection against a range of WP exploits then too.

I've actually never seen this caching plugin before, thanks for the reference.

Write your expected-high-traffic blog posts out to an S3 bucket and send that URL out.

use Syte instead! https://github.com/rigoneri/syte

Agreed, Trevor, good content. And maybe you're going to address in part two, but how does the presence of IAP factor into your considerations. In other words, not just profitability but doesn't business model also matter? Or do you just assume free/paid/freemium apps will be required in any niche and plan accordingly?

Great question. My first app wasn't free with IAP, but that's what I highly recommend to do now. It gets you a lot more downloads which helps you rank higher in search results.

If you do go with a paid app I'd recommend something people will pay at least $5 for.

I wonder at what point there is a backlash here?

I know myself, personally, I almost never download "free" apps anymore, because the IAP is so obnoxious.

Depends on the IAP and the app really.

More importantly we should be careful to extrapolate our behavior to the iOS masses. There's tons of apps I would never spend a dime on that are doing extremely well.

Trevor, great work, I got another approach performed on Android market. The problem with categories in app markets is that they are high level classifications. Therefore, considering them as niche doesn’t tell us much. I performed a functionality-based analysis. I think this gives us a more precise niche definition. Here is my analysis: http://www.drdacademy.com/?id=an-analysis-of-the-android-app...

By the way I don’t think fitting a curve on two points on your result plot is right. Normally, we need a reasonable sample size.

This is a really interesting companion to Trevor's posts. Google providing those download "bins" lets us get some great insight into more accurate metrics. Thanks for sharing!

I feel the need to commend you on a very elegant and resourceful way to reasonably approximate an important piece of information!

Thanks. I hope it wasn't a pain to read. Took a long time to boil it down to the bare essentials.

I'm curious, has Trevor McKendrick ever built a business from a niche he identified using this method?

Sure have :)

Check out this post from last week: http://www.trevormckendrick.com/my-first-year-in-the-app-sto...

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