Making Money on Mobile Applications

Tim Bray had an interesting and timely post recently regarding his view on a developer’s ability to make money creating mobile applications.

As a developer who is in the process of publishing my first application to the App Store, I have spent some time examining the various mobile platforms and looking at paid vs. ad supported applications.  I am in no-way suggesting Tim is wrong nor am I supporting his view.  He brings up great points and I wanted to give a bit of my own feedback from the perspective of a developer who did a bit of research to choose a platform to support.

Tim does bring up some good points and his view is probably reflective of many mobile application developers.  Keep in mind, Tim works for Google so his Google Goggles may be on and he is not seeing very many developers making money selling Android applications.

One point which keeps sticking in my mind is, at least in the Apple App Store is when selling an application, you get the sale once and that’s it:

…I deeply believe that the app-sales business sucks. Selling anything on a one-time basis at a price below $10 is historically the kind of business that’s been owned by companies like Walmart. I acknowledge that it’s working for some people, but it’s just not where I’d want to be.

So, which platform makes the most sense to start with?  I really don’t know but can make a best guess and say Apple.

iOS vs. Android

The intent is not to start a flame war here but just calling it like I see it from a very high level as well as from a user level, owning both an iPhone and a Motorola Droid X:

Android has a ton of handsets out there so the market is very attractive for developers.  The barrier to entry is also extremely low and the process of submitting applications virtually non-existant.  This leads to a lot of really low-quality apps, which people are not interested in paying for.

iOS whose barrier is considerably higher here, with a $99 annual fee and fairly stringent review process before an application can see the light of day in the App Store, this leads at least to a lower number of bad apps getting to market.   The early days of the fart app are gone and now we are seeing good quality.

Ad Sales

I think it would be interesting to be able to have two identical apps, one is paid and the other is ad-supported, in order to find out which is better.  The question could become, do I charge $0.99 for my app or give it away and put ads in the application.  It seems many Android developers are going down the ad-supported path.

Tim says:

I work for Google, and this is obviously one of our strengths. I don’t have the strong positive vibe about ads that I get about the relationship selling, as in upgrades and in-app. Having said that, I know for a fact from talking to developers that ads are starting to work pretty well for some of them.

Since he is employed by Google so I will therefore assume he has been speaking to Android developers, I have to think ads are what works best for them.

Upgrades and In-App Purchase

I think there are folks who are very successful with in-app purchases but I’m not sure to what extent.  Do developers turn on features in applications based on a purchase?  I can see this being very effective way for additional revenue beyond the initial $4.99 sale.

Looking at the history of the Apple App Store paid upgrades seem to be non-existant.  I have bought a lot of apps for either the iPhone and iPad and have never once been asked to pay for an upgrade from version to version.  This seems like something developers have secretly agreed on and nobody does it.  I can’t say it happens on Android, since I have never paid for an Android app, all the ones on my Droid X were free.

I wonder what would happen if charging for an upgrade was attempted?  In the Apple App Store it would have to be a totally new version and it would not be an upgrade at all but totally new.  Didn’t Tweetie try this?  I bet it doesn’t work.

In-app purchases does seem like an attractive option.  Produce new versions of the application which can only be accessed by spending more money.  I like it from a developer perspective, but probably not from a consumer one.  If the features were big then may they would be worthy of paying a fee but a clear distinction would have to be made between an upgrade and something considered a new purchased feature.

Rich Client on a Web Service

My intention is simply this; create a headless (no UI) web applications, all web service, where I can create any client I want to access and consume the web service(s).  This way the client could be an iOS device, Android tablet or maybe even a Windows Mobile Phone 7.

The web service would be a SaaS model which charges monthly for the privilege.  The client application would be given away and with recurring monthly revenue the problem of making money on mobile solved.  Another variation worth considering is selling the application for a small amount which is fully functional standalone but adds functionality when used in conjunction with the web service.

One aspect of this model which bothers me is what happens when the user doesn’t have good service or the web service was down for maintenance?  I think the ability for applications to store data locally to later be synced back to the cloud gives the user the best of both worlds.

Conclusion

I am interested in learning more.  I know very little about being a successful mobile developer but I have been marketing software for a long time.

How can one make a living differently from what I am suggesting?  Are app sales dead and only limited a few developers?  I don’t think so but these are hard numbers to acquire.

 

  • Anonymous

    I am of the mind its not bad practice to diversify – some iphone apps, some web apps, etc. Certainly 2.99 app or ad based app is thinking small for some, but I think the process might open doors and make you wiser, leading to more discoveries and scalable approach.

  • http://www.accidentaltechnologist.com Rob Bazinet

    I agree, I think it’s important to mix it up. Web apps are probably the best bet to ensure the biggest audience and likelihood of making some money. The post of this post that if you are going to go mobile, here are some ways to do it.

    I think there is plenty of money to be made, but like anything else, devs need to be smart.

  • April Harned

    You should look into AppLeads, the free mobile ad platform from Pontiflex that enables developers to embed in-app, signup ads from leading brands in their apps. Apple and Android app developers are seeing eCPMs 100x the industry average and it takes only a few minutes to deploy. The company is at AnDevCon this week and hosting a breakfast workshop for developers to learn more about the product on Tuesday at 7:30 a.m.