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‘Average iPhone app costs $6500’

‘Average iPhone app costs $6500’

Industry expert observes app trends through analysing current sales data

Alex Ahlund, former CEO of AppVee and current adviser to Appolicious, has published a detailed breakdown of recent iPhone app sales on startup profiler site TechCrunch.

The survey utalises detailed financial information from 96 developers, with Ahlund looking at the success rates of market applications from major studios and single-person authors “ranging in price from 99 cents to $79.99.”

“This mining of data was intended to cover the entire iPhone app industry as a whole, without allowing outliers to skew the data too much in one direction,” Ahlund said.

On the general cost/sales results, Ahlund found that:

“The average total number of units sold [per App] was 101,024 within an average period of 261 days. The average number of units sold per day was 387.”

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“The average price was $5.49, although the data skews due to the $49.99 outlier. In most cases, the price point was $0.99. The average number of updates released was 3.89, with the average total development cost amounting to $6,453,” he added.

Ahlund qualified these results by noting that “several developers omitted development costs and most did not include their personal time in these figures.”

“It is safe to assume the cost would be at least five or ten times more when using a contracted team,” he said.

“But on average here, iPhone developers are seeing a return of more than 15 times their initial, albeit small, development costs.”

Ahlund went on to note that when the top 10 per cent of the most successful apps were removed from the data, the numbers skewed much lower.

“In this scenario, the average sales were 11,625 total units, averaging 44 copies/day. Approximately 23% of apps sold less than 1000 units from launch,” he noted.

“56% of apps sold less than or equal to 10,000 units, while 90% sold less than 100,000 units, with the remaining 10% achieving sales of 127,000 – 3,000,000 units.”

Other interesting discoveries included finding out that application updates do far less to boost sales than previously thought.

“Some developers reported that updating the app gave only a small—and brief—spike in downloads,” Ahlund said.

“What did seem to have a larger impact on sales was a drop in price, although this also tended to taper off quickly.”

Having an app featured by Apple was discvered to be a much greater sales-boosting event for studios.

“The level of Apple promotion reflected what sort of increase the developer would see. Areas such as ‘New and Noteworthy’ produced slightly less gains than ‘Staff Favorites’ or ‘What’s Hot’,” Ahlund said.

“Generally, it is safe to assume a 2-20X sales spike following being featured, with the effect lasting roughly a week before returning to average numbers.”

Ahlund went on to breakdown the most ‘traditionally’ succesful marketing techniques, with an emphasis on social networking sites seeming the surest route for developers to take.

“The iPhone app market is something that is still in its infancy when one considers what it will look like only a few years from now,” Ahlund surmised.

"Although we are at more than 200,000 apps released, one million doesn’t seem so far fetched given the rate of growth thus far. Time to get crackin’.” he concluded.

Very insightful article

posted by Singh May 09, 2012 at 2:13 pm
1
Singh

Its very nicely written, insightful information. Just want to contribute more for the readers, that based on my experience in this third-party app development domain while working at Agicent Technologies (agicent dot com), which is a specialized third party app development company, the results seem same. Any simple App (with no or minor backend) costs never more than 5 K USD (which makes more than 50 % of the total App development requests), and then another category is of the Apps which involves dev costs of more than 15 K to 25 K (Including mid level complex games, DB backed social networking apps, some innovative utility apps), these kind of mid-level apps make around 35 % of the whole third-party app dev requests coming to my company, and finally there are few very large apps (or I'd say Mobile based solutions, though having bigger modules at the backend/ server side as well) that cost in the lines of 25 K to 50 K, and such kind of app requests make around 10 to 15 % of the total App dev inquiries we receive.

But again, these are just the development cost idea; and since every new project is different than another(and being developed by people sitting in different geographies, by using different level of process/ methodologies), the cost is always subjective.

Whatever cost Ideas I shared, are based on my experience in dealing with such inquiries at Agicent Technologies, and please note that we are sitting in India and selling services under $ 20/ man hour rate mostly; so if we change the development location to the US, then average development cost will go beyond 30 K USD instead of 6500 USD per App.

Bottom line, be it an App or any other software product, it involves a formal development process and should adhere to all Quality standards and seriousness of the same degree that you need to have for any other software product development campaign (for enterprise, web, desktop based solutions for example). So if your business idea is really worth, and have a good business/ marketing team then look for a longer term ROI, App dev cost is just a part of the whole investment anyways.

Thanks for the nice article once again, and for giving opportunity to contribute further.

Jai
Agicent Technologies
sales at agicent dot com

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