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How Much Money Can You Earn With an App?
The app economy is worth billions, so how much money can you earn with an app? We explore the earnings potential for different platforms and…
How Much Money Can an App Earn?
There's a lot of money in apps. Billions of dollars. But most of this money is earned by certain kinds of apps, and many apps make no money at all. The top-grossing apps in the world may not be the ones you suspect. This article will explain the ins and outs of how apps make money, and give you some ideas for how your app can become an earner.
The mobile market has grown substantially over the years and industry experts predict continued growth. Mobile internet usage surpassed desktop way back in 2014, and 80% of internet users now own smartphones. With such impressive numbers, it’s no wonder that Fortune 500 companies and entrepreneurs alike are trying to get a piece of this modern-day gold rush.
If you’re new to the market, looking to enter it, or just have a really cool idea for an app, one of your first questions is likely to be profit-related. Building apps is a difficult task and you will want to be rewarded for all of your hard work. The following overview of mobile app earning potential should give you a clearer picture on how much you can make off your app.
Our agency, Fueled, has experts that can help you determine how to earn money from your app, and how much it can potentially make.
Which Platforms Make the Most Money for App Developers?
First and foremost, you need to decide what platform (or platforms) you want to design your app for. This can greatly affect your earning potential due to differences in market penetration and platform popularity. For the purposes of this metric, we’ll be rating platforms based on the percentage of app developers earning $5,000 or more per month on their apps.
The leader in this category is Apple’s iOS platform, with over 25% of its developers earning over $5,000 per month. Android is also a well-regarded platform because of its continued market penetration. Sixteen percent of Android app developers earn over $5,000 per month in revenue. However, it is worth noting that Android is much more "top heavy” in terms of earnings, with much of its total revenue being earned by its top developers. The iOS platform has a wider spread of overall earnings, increasing your odds to make money via their app market as a newcomer.
Platforms that aren’t as favorable to app prospectors include Blackberry OS and Windows mobile platform. Blackberry doesn’t have the market penetration of Apple or Android, and its parent company RIM has seen its earnings and spotlight in the market diminish year by year. Windows has strong corporate backing from Microsoft but lacks overall popularity among cellular end users. While more niche platforms can be profit earners, they should only be considered once your app has proven profitable on a more widely used platform. Once an app is a proven winner, porting it to other platforms becomes more viable.
What Kind of Revenue Do Apps Generate?
There's no denying it. Apps are big business. In 2016, global app revenue hit an estimated $52 billion. This was a $10 billion increase from 2015. Business Insider predicts an 18% increase in global app revenue between 2017 and 2020. By some calculations, the app economy will be worth $6.3 billion by 2022.
Gaming apps dominate the list of top-grossing apps. Bandai Namco Entertainment's Dragon Ball Z Dokkan Battle makes an estimated $2 million per day in revenue. King Digital Entertainment's Candy Crush earns $1.6 million daily through in-app purchases. Supercell, the company behind Clash of Clans and Clash Royale, makes over $2.3 billion annually. Most game apps are free to download, but the real money is made through in-app purchases. Kim Kardashian’s virtual shopping app has brought in a reported $100 million since 2014 from 42 million downloads. So if you’re not a game designer, don't worry — there are other categories with impressive earnings.
How Much Do Subscription Apps Make?
With over 1 million paying members, Match Group's Tinder is a great example of an app that is a tidy money earner due to in-app purchases. The Tinder dating app is free to download, but makes money by charging users for bonus features like unlimited swipes, which give users endless opportunities to match. Tinder’s "passports" add-on allows users to match with users in other locations, while "boosts" allow users to bump their profile to the top of the pile of users in their area. In 2016, Match Group reported generating over $285.3 million in revenue. Tinder charges $9.99 monthly for a Tinder Plus subscription, and $14.99 for a Tinder Gold subscription. This approach has made Tinder one of the highest-grossing apps worldwide.
Pandora, Spotify, and Tidal are also high up on the list of top-grossing apps. Subscriptions generate the majority of these apps' revenue. Users pay to listen to music uninterrupted by commercials, share playlists with other users, and gain access to exclusive material. Video-streaming apps like Hulu and Netflix operate on subscription-based method as well.
AnchorFree's Hotspot Shield is an app that has proven useful on a number of globally important issues. The app allows users worldwide to access a virtual private network (VPN). This technology was crucial during the Arab Spring, as it allows users to bypass government censorship. Subscriptions cost users $6-15 monthly. Hotspot Shield reached 5 million installs as of January 2017, making it one of the top-grossing apps on the iTunes App Store.
On a smaller scale, privately owned apps are also generating a significant amount of revenue. The Telepathic, Inc. app HOOKED makes about $2 million dollars annually and is a relatively simple idea. Users gain access to suspenseful stories in the form of text message conversations through weekly, monthly, and annual subscriptions. The app hooks users in with compelling stories but requires them to subscribe in order to find out the ending.
Personal trainer Kayla Itsines' Sweat with Kayla is a top-grossing app that serves as a great example for beginning app developers. The app provides subscribers with 28-minute workouts and a diet plan. This app quickly gained a cult like following and generates $45,100 dollars in revenue and approximately 9,000new users every day. Itsines and her husband are worth a combined$46 million.
Apps Aren’t Just for Mobile Phones
Apps have branched out from the cellular platform as more integrated smart devices have entered the market. Smart TVs are a staple in the homes of over 34% of internet users. The most popular apps used on Smart TVs are ones that are appropriate for the medium and already have a very large, existing user base such as Netflix and Hulu. If it makes sense on the platform, it is worth keeping Smart TVs in mind when designing your app. Expansion of platform offerings not only increases exposure for your app but also opens it to new revenue streams.
Similarly, video game consoles such as the Xbox One, PlayStation 4, and Wii U have their own app stores. A number of apps can be found on each platform. These apps include Netflix, Youtube, Hulu, and Amazon. Some apps, however, can be exclusive to the consoles such as Spotify and BBC to PS4. These are successful apps offering their services on new platforms to make it more convenient for their users. It’s a great option, but not really for most people.
Another intriguing platform to pay attention to is smart watches. As a relatively new device, the current numbers are small. Only about 16% of internet users report that they make use of one. However, with popular companies such as Samsung, Sony and more recently Apple entering the market, smart watches will be interesting to watch for future growth opportunities.
What’s the Next Big Thing for App Development?
As you can see there are plenty of opportunities for fortune in the app market. The app market has experienced substantial growth since their first conception and it shows no signs of slowing down. The market may be a bit oversaturated but it's promising to see that over 25% of app developers earn over $5,000 per month on the iOS platform and Android sees 18% of owners fare just as well. Video game apps are huge multi-million dollar earners, but there is still a lot of money to be made in less-complex novelty and productivity apps. Finally, the growing market of smart TVs and the emerging market in smart watches will further expand the app environment.