Some Brutally Honest iPhone App Sales Numbers: $32k Spent vs $535 Revenue

http://www.streamingcolour.com/blog/2009/03/09/the-numbers-post-aka-brutal-honesty/

by twampss • 17 years ago

128 53 17 years ago

tvon• 17 years ago

The note at the end about the lack of advertising, the lack of a free "lite" version and the $4.99 price point are, IMO, the red flags (aside from the whole "not everyone is going to get rich off of the app store" thing). Honestly, the advertising could probably be skimped on if there was a free version and a lower price point. I'll drop $2 on an app if it seems decent, but I probably wont' spend $5+ unless there is I think it will be exceptional.

TomOfTTB• 17 years ago

I agree that the issues you raise probably contributed to this apps failure. But I think the underlying point is still an important one. For some reason many in the development community seem to see the iPhone as some great untapped market where you can make easy money. When the reality is the iPhone/iPod Touch platform is probably the most competitive market out there right now.

There are already 25,000 iPhone apps after just 8 months and all reports seem to indicate that the growth rate is quickening. So you better have some significant resources behind you if you want to get noticed.

wallflower• 17 years ago

Some different perspectives/more optimistic experiences:

(1) "I never made close to the amount of money iFart did, but my app LifeTimer paid 2 mortgage payments (therefore paying for the dev license AND the iPhone.) My suggestion is to download the SDK first, play with it, and if you get a good start on an app then pay the $100."

(2) "I have 41 cheap and simple (but useful) apps on the App Store right now and have been growing my catalog since late July. Each app took me less than a day to do. Some days I've cranked out five apps (and no, they are not the stupid "Countdown till Easter, Countdown till Christmas" apps). I easily have pulled $10k/month for the last 6 months in a row, quit my day job, and now do iPhone stuff full time. I have no employees, no costs (besides tax), minimal no-cost marketing, and no time schedule. I work MAYBE five to ten hours per week on this stuff."

http://forums.macrumors.com/showthread.php?t=621564&page...

The reality of the iPhone app store is sobering. If you build something average or maybe a little above average, they will not come in droves. I believe if you build something truly kick-ass and inform the right influencers - word of mouth via Twitter will get you on TechCrunch and its ilk in 24 hours or less.

I also believe, however, that there will always be a small market for iPhone apps that are relatively novel and/or useful on a daily basis (useful: Tweetie is the best paid Twitter client in my opinion - integrated Summize search).

For example of something that is novel, iPhone Pano (guides you through taking six photos and stitches them into a fairly impressive panoramic photo - you used to need Photoshop/Gimp to manually stitch them together). I use it quite a lot. It cost $2.99 and I think I've gotten way more out of it (friends wondering what the heck I was doing with the iPhone and being wow'd by the resulting picture that I emailed once I sync'd with my MacBook).

Should I quit with learning iPhone SDK since the market is so competitive? I've rationalized to continue the learning curve (more off than on though) because I want to write some apps that I would personally use. I will probably get the $99/yr license just to deploy my own apps once I make it up the learning curve. It's not about an embarrassment of iPhone app riches - it's about an interesting new hobby - one that your non-geek friends (who likely have an iPhone) might appreciate eventually.

Zev3• 17 years ago

What makes that extra $3 more important then the initial $2? Its still less then how much you spend on a coffee or a lunch during a single morning/afternoon.

//edit: Real question here. Especially since I'm (and I'm assuming others are) looking at doing iPhone dev at some point in the future.

Brushfire2• 17 years ago

I do not spend $5 on coffee, and it should be a bother if you do.

Now, if you get a mega soy chai latte blah bullshit, then whatever. But black coffee? Really?

whughes• 17 years ago

There isn't much of a reason. It's a purely psychological barrier, but it exists, and you have to account for it. Prices are getting lower and lower for mobile apps, and that's just what the market accepts now.

barrkel3• 17 years ago

When I buy coffee when I'm out and about, it's because (1) I'm tired and I want to sit down and be perked up a little, (2) I'm thirsty and (3) I don't have the option to go home and have much better coffee in comfort.

In other words, coffee from somewhere like Starbucks is a pricey respite from pain, albeit only a little less painful.

For applications at the 5 USD price point, I'm simply not feeling the pain.

sangaya• 17 years ago

The difference is that on a $5 coffee or lunch I'm getting something that I know I will enjoy. It will also last for a reasonable amount of time while subsiding hungry/thirst/tiredness.

With a $5 app I might enjoy it for maybe a couple of minutes if it's not crap. I've seriously downloaded free apps, played them for 30 seconds, thought "this is not fun", and exited the app. I'm personally scared of having that same experience with a $5 app. With a $0.99 app I could try out 5 different apps instead of just one, while putting the same amount of money at stake.

If I spend $5 I want to be fully aware of what I'm getting for it. I hope that the author's new Lite version helps achieve this.

jimbokun• 17 years ago

I'm guessing part of that psychology is set by prices of songs and TV shows in iTunes. Songs $0.99, TV shows were $1.99 (think it's more now for HD?). So if you are in that range, it's like impulse buy of a song or TV show. Out of that range, people will take some more time to think about it, which means they probably won't buy.

As to rationality, I think the impulse buy works because people know if they buy 5 or 10 things, some will turn out to give them a lot of enjoyment but others not so much. Buying $1.99 apps instead of $3.99 apps means you have twice as many "tickets" to spend in the hopes of finding a few things that are actually fun.

(If you are not selling fun, but actually eliminating some real pain people are experiencing, you can probably price more aggressively.)

patio112• 17 years ago

I'll drop $2 on an app if it seems decent, but I probably wont' spend $5+ unless there is I think it will be exceptional.

You are hardly alone in this point of view among iPhone users I have heard from. I mean this as no disrespect to you personally: software writers who intend to make something with a little more functionality than "farts, belches, and wiggles" should probably choose a customer base which pays a wee bit more money for applications.

(A little bird mentioned "grown women" to me.)

I have a lot of difficulty doing the math on how advertising is supposed to make money at the $1.00 price point. It took a bit of work for me at $25, even though my clicks cost a few pennies. Are the conversion rates for iPhone apps just stratospherically high (10%+ of clicks on an ad) or are people just hoping the advertising kicks off the snowball to get you on the most popular list?

DenisM4• 17 years ago

Eh... what's with grown women?

cubicle67• 17 years ago

From my (very limited) experience, price has little impact on sales. I have conducted a few experiments with my app, and found sales the same regardless of pricing (tested $1 and $2).

What makes a huge difference, is how far from the front page you are, meaning the absolute best thing you can do for sales is release regular updates.

eddylu• 17 years ago

From my app store experience, pricing an app $1 or $2 doesn't make that big of a difference, but pricing an app in the $3+ range causes a huge sales drop off.

ssharp• 17 years ago

While I agree completely with the updates comment, I don't think you're in a position to comment on pricing given that your only experience is with testing $1 vs. $2.

Pricing is a game of reward and risk. If the perceived reward is in line with the risk of getting the reward, you've found a starting line for your price. The thing with the app store is that there seems to be a very steep price/reward curve. At the low-end, the $1/$2 level, iPhone users seem to be okay just throwing their money around. When you start moving from there, the app is going to need something to push it over the edge. While I don't follow the available apps very closely, I'd venture to say the competition in the $5 level is a little steeper. You're probably dealing with large software companies (who's name reduces perceived risk), established brands (again reducing risk), and a decent promotional mix of advertising and PR.

A "lite" version should be on the radar of EVERY game developer. I don't see a good way around it unless you can consistently get good online reviews and coverage. You need a way to reduce that risk to the consumer and giving them a demo product is a way to do it. I'd package the lite version with some sort of messaging system too so that if you decide to do another game, you can pump ads into your old lite versions for the new games. With the lite version, you need to convert people to the full version, and drive as many marketing messages to the users as possible without becoming ridiculous.

nikblack• 17 years ago

that is exactly why it isn't converting well. he should have noticed that after the kotaku review - but instead he submitted it to slashdot and burnt through 100k potential users.

all those people who have already visited won't take a second look after he lowers the price. its too late for that - he should have realized the price was wrong and that he needed a lite version after the poor kotaku conversion rate.

wmf• 17 years ago

Flagged for blogspam (the original link is http://www.streamingcolour.com/blog/2009/03/09/the-numbers-p... and I don't see much value added by the Mobile Orchard post), yet it has 11 points. Something is not working here.

jrockway• 17 years ago

Yeah, the app isn't even written in Erlang!

(Seriously though, I don't think this is spam.)

petercooper2• 17 years ago

I'm an editor at Mobile Orchard. I didn't post this here or encourage anyone else to post it. It is not spam (come on, the #53 ranked user submitted it!). Get your facts straight before slandering others in future.

Mobile Orchard's value is that it provides iPhone developers with summaries of the latest news relevant to them as well as editorial content. This post is a summary. It still has value to our audience (2000+ iPhone developers).

And, clearly our headline was of value.. except it's now being used without credit to link directly to the poorly titled original. Ethics? What were they again?

gojomo• 17 years ago

So, it's not a first-month slam-dunk instant-payback project.

What if a trickle of further reviews, word-of-mouth, and incremental low-cost marketing (minor updates, free 'lite' version, half-off promos, light SEO) results in ~$500/month revenue for many months or years with very little cost in time?

What if some of the code or lessons learned mean the next similar app only takes $10K investment to make, and makes more than $500/month from the get-go?

The only problem here -- if any -- is sky-high expectations for the first step up to the plate.

JabavuAdams2• 17 years ago

Yup. What I'm seeing again and again is that developers under-estimate what consumers are willing to pay for (i.e. devs do too much, too soon).

My first app did about 340 sales in the first month, for a development cost of $0 + 6 hours of time. I haven't had a day of 0 sales yet, and I'm not nearly played out in terms of updates and improvements.

swombat• 17 years ago

Can you adjust the price and test whether the sales respond to changes of price? If you can do one-week experiments at different prices, you might get some very interesting data.

$5 isn't much for an app, but you have to remember that this is a game - a very special kind of app that's not actually useful. It's perfectly possible that your sales will increase enough by decreasing the price so that you'll find yourself profitable. Of course, there's no guarantee of that.

JabavuAdams2• 17 years ago

> Can you adjust the price and test whether the sales respond to changes of price? If you can do one-week experiments at different prices, you might get some very interesting data.

Yes.

tlrobinson2• 17 years ago

The (easiest) path to riches on the App Store seems to be lots of quick little apps that may or may not be hits, rather than spending 6 months and $32k on one app and assuming it will be a success.

Unfortunately this leads to a lot of crappy applications.

Ironically (?) this guy will probably have a huge spike in sales of the app due the attention he's receiving (and people feeling sorry for him)

barrkel3• 17 years ago

Yeah, a whole 4x ( http://www.streamingcolour.com/blog/2009/03/11/the-slashdot-... ), up to 17 from 4!

I would have bought it myself if it was <2USD, considered it for <3USD. At 5USD, I would need to be in some kind of pain of boredom to consider buying it.

tlrobinson2• 17 years ago

True. I suspect if he temporarily lowered the price to $2-3 while he was getting all this attention he could have gotten a lot more sales. I have very similar price thresholds to yours.

He missed out, and perhaps that says something about why his product isn't doing too well.

netcan• 17 years ago

Sounds non startup-friendly. ;)

yesimahuman• 17 years ago

You can't justify $4.99 unless you are touchgrind or you have a really awesome game. No one is going to know your game is the shit unless they can try it, and $4.99 is past the compulsive threshold.

Oxryly• 17 years ago

So he's on the the low end of the long tail. Where the vast majority of iPhone apps dwell....

petercooper2• 17 years ago

By the way, thanks to whichever moderator thought it was cool to steal our headline but change the link. Finally, a headline of mine that wasn't changed because it sucked, just the URL ;)

Lerc• 17 years ago

I once made an argument for a standardised disclosure of platform performance. My argument was targeted at game portals such as RealArcade, Big fish and the like. The same thing would apply for iPhone app sales.

The publisher (in this case apple) should state the median (and possibly percentile points for 75% and 25%) return for developers on the platform.

People didn't think much of the idea when I proposed it for portals, but I still think it's a fair thing to ask. It lets you know how much you can expect to make if you do better than average. If the numbers are good then publishers should be proud to state those numbers. Refusing to disclose such information in the face of requests should be seen as a warning sign to all developers.

Some Brutally Honest iPhone App Sales Numbers: $32k Spent vs $535 Revenue

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