Ask the Experts

How Do Apps Make Money?

My company is looking to create a mobile app, however we have some internal debate on where the ROI comes from with mobile apps? How can we make money by building a mobile app?

Step One: Build a Mobile AppStep Two: .......Step Three: Profit

If there were only one right answer to this question, and we had it, we could pretty much mint money.But since nobody really knows the precise formula in life to make money, we can share with you some facts and figures and then give you the highest probability choice for making a successful, profitable app.

Stats for Mobile Apps
  • Analysts estimate that anywhere from 56 to 82 billion apps will be downloaded in 2013; 90% of these will be free apps (Gartner)
  • In Q1 of of 2013, there were 13.4 billion downloads of apps generating revenue of $2.2 billion from paid-for-apps, in-app purchases, and subscriptions (Canalys)
  • It’s estimated there are 800,000 mobile apps available through both iTunes and Google Play (Canalys)
  • Number of apps responsible for 10% of total revenue:
  • Apple – 7
  • Google Play – 4
  • 26 – Percentage of mobile apps downloaded and used only once (Localytics)
  • 76 – Percent of revenue in US Apple App store generated from in-app purchases in January 2013 (That’s up from 53% just one year earlier) (Distimo)

According to Gartner, “in order to make money from apps, publishers must win and maintain customer loyalty/satisfaction through superior app performance and designer, then hope to make revenue through in-app purchasing.”

That is pretty much in line with how we approach mobile app development and what we advise for our clients. It’s a huge uphill challenge to promote an app and get someone to download it, even if it’s only $0.99. By making a free to download app that is user-friendly and compels a user to continue to open and use the app, you can create a reason for them to want to purchase from with-in the app and/or subscribe for a monthly/yearly service in order to continue using the app.

Other successful ways to monetize applications to build an app that enhances another product or service, or create enterprise mobile applications, which will generally give the greatest return on investment for mobile applications.