Now that the initial gold rush era of app stores is winding down, the economics of the app store have settled down. The idea of downloading and using apps has become so normalized for the average smartphone user that we can now see a clear picture of the state of app stores and how app developers need to operate in order to be financially successful.
There are currently more than 3.1 million apps available across the various app stores, with 1,600 new apps submitted daily. In other words, it’s a competitive market. But the standardization of app downloads has opened up the potential for a “middle class” of independent app developers with apps that cater to users who demand more choice and variety. While it’s true that only 5% of apps accounted for 92% of downloads in 2013, it’s significant to note that more than half of total app revenue ($2.3 billion) is generated by apps that are not in the top 100 apps as ranked in the app stores. This means that apps do not have to be supremely popular to make a developer money. In fact, there are over 20,000 apps that are set to make over $100,000 this year.
The problem for many app developers is getting their apps discovered. Search has been proven time and again to be a primary way for users to find new apps. 67% of app discovery is related to search. This means that the name of an app is essential, which is where solid branding and marketing comes in. However, that is a significant cost factor to consider. This is especially challenging considering that cost-per-install has dramatically increased in the last few years. The cost of developing an app that a user opens at least three times has jumped to $4.04 per install. It’s also worth noting that the lag time between an app purchase and a developer getting paid can be as long as 60 days, which can have a big impact on the ability of an app to survive on the market. These stats show that app store optimization and retention are more important than ever for an app developer.
This is the current landscape of the app development market. It can be tough to succeed as a small developer, but knowing the lay of the land can help prepare you for the arduous road ahead.
Read the full article here: The Changing Economics of App Development