Everyone loves to see how much money iPhone apps earn so I thought I would share how much money I made with Beer Pad.

A Typical App

I like using Beer Pad as yardstick to try to project how much an average iPhone app can expect to earn. Beer Pad is a simple app that appeals to a very niched-down audience and it simply follows the typical app revenue model; Beer Pad’s cost varied between $1.99 to $3.99 throughout the year.

Another reason I like Beer Pad is because it represents a sort of coup for me personally: the idea for the app came right from the market itself, the code was repurposed from Wine Pad and the app has been well received in reviews. To keep things in perspective, the initial time it took to develop Beer Pad was about two weeks most of which was spent on doing research into the niche itself.

No Dreamy-Eyed Earnings Report Here

Finally, as you will see in a bit the earnings from Beer Pad are modest. If you are expecting to see the dreamy eyed “I made $100,000 in only five seconds on the App Store” you will be disappointed. However, I do believe that Beer Pad probably fits the profile of a relatively successful app. This hunch has been backed up at a recent conference I went to were the developer suggested that most successful apps will bring in about $10,000 and mostly in the first month or two.

So – How Much Already?

So, without further ado to date Beer Pad has made $8680 in total revenue. Most of that was earned in the first three months. The average revenue over the past year is $18. These numbers are after Apple’s cut.

Here you can see the break-down of Beer Pad’s earnings in three month increments:

Finally, here is the graph from App Viz detailing the sales over the past year:

Some Thoughts-Analysis-Lessons

The Long Tail

The first thing that is striking from the graph above is the head of the tail seems to be were most of the money was made. In the long tail, sales dropped down to only $7 per day. Every app that I have worked with involved a similar pattern and as the App Store gets older the head of the tail gets shorter.

Update Effects

It is not all that clear from the chart here, but updating Beer Pad would result in a sales boast for a few days. This is usually a significant but minor increase.

Will This Keep Your Kid In Diapers?

The other striking part of these numbers is the overall revenue. You will need to ask yourself: will one app like this be worth your while in time. For me, the answer is yes because I simply leveraged code that I already had in place. However, if you are looking at two to three months of development time then the question is a bit more difficult especially if you have more than one partner involved in the project.

Can You Afford to Maintain, Upgrade and Support Your App

So this is the unpopular discussion about whether you can afford to keep adding features to your app to keep it fresh. At some point I will need to take a look at that $7 per day figure and decide whether I can really afford to spend a week or two adding new content to the app. Many developers simply believe that you should keep on loving your app regardless of its performance no matter what and at any cost.

But, when you look at numbers like this and realize that most of your money will be made in the first month then assuming you have bills to pay you made need to consider releasing a new app instead of sticking it out.

Take-Away Message

I consider Beer Pad to be a successful app for a few reasons, but financially Beer Pad would not work on its own. The reason that it is a viable product for me is that it is part of a suite of apps (I had 9 apps out at one time last year). Simply releasing an app on its own and doing nothing else probably will not cut it for most developers.

Something I would recommend that you consider is to think a little outside the box when planning your app business. Think of supplementing your app sales with consulting, a desktop app, speaking or even ad supported apps. The app store is competitive: 85,000 apps and prices are falling to 99 cents. This is the time to be a bit more proactive in our business models so we can find a way to make this work. The app business can work, but we can’t just expect to build something, use Apple’s business model and assume we will make millions.

Any Ideas to Make It Work?

Given these numbers I’m curious about your thoughts. Can you make the mobile app business work for you? What new and crazy ideas do you have to make it work? Comment below!!

Apple App Store Stats

Source: Apple Insider, Apple announces App Store downloads top 2 billion

Source: 148Apps.biz, App Marketing 101: Pricing your iPhone App – Art and Science

Numbers like two billion downloads, four and half million app downloads each day and 85,000 applications available for iPhone OS are staggering. The App Store is clearly a huge market where people are seemingly printing their own money. Apple has essentially created a new billion dollar industry almost overnight using iPhone OS as a platform to sell software.

Even more enticing to people like myself is the dream of being involved in this market as an independent developer. That is, a developer who works either alone or with a friend or two to compete on the same turf as the big guys like Google, Microsoft and Electronic Arts. Our feeling is that with such a huge market we only need a very small piece of the pie to turn our hobby into a sustainable business.

However, taking a closer second look at the numbers above paints a more sobering picture. If we assumed that each of the 85,000 apps had an equal number of the 4.5 million downloads each day then each app’s share of that pie would be about 53 downloads each day. Since the most common price point on the app store today is 99 cents then that works out to about $37 in revenue each day after Apple’s cut. This works out to a $13,500 a year job before taxes. And of course, each app does not have an equal piece of the pie…

Here Is What This All Means For You

What you need to know about all of this is that if you are planning on simply releasing an app at the 99 cent price point then the odds are stacked against you. You are going to have to break out of the mindset that you can just build it and hope to magically get rich. You need to find a way to stand out.

How Do I Stand Out?

I’ve been spending some time with developers recently learning about how to stand out. Three themes have been repeating themselves over and over in terms of standing out on the app store: polish, Apple and pricing

Polish

Essentially, you must have your house in order for anything to happen for you on the App Store. This is means having an app that works well and looks nice. Everything that faces the customer must have a nice coat of polish, including things developers do not always think about like the app icon, description, support website and screenshots.

Apple

Apple can be your best friend or worst enemy on the App Store. Part of your strategy must be to become friends with Apple. You can do this by intentionally adding features that you know Apple is promoting, meeting Apple engineers at conferences and making sure all your contacts with Apple are positive. Most of the successful app developers I have met have cultivated contacts at Apple and have jump-started their success by being featured on iTunes.

Pricing

99 cents has become the de-facto price on the App Store for one reason: to get to the top 100 lists. This is becoming more unrealistic and developers need to start dealing with the reality that pricing apps at 99 cents is not sustainable. If you have a niche app or an exceptional app (aren’t they all?) consider raising your price point to $2.99, $4.99 or even $9.99. At those prices you may be able to support your app in the long run.

For what it’s worth, my app that sells as $4.99 has always had more revenue that similar apps I sell at $1.99 and $2.99. Sometimes, a higher price has actually increased sales for me since and I believe that some people assume that higher priced apps represent a higher quality. NOTE: right now I am experimenting with all my app pricing so it is not $4.99 right now, stay tuned for the results of that…

Recap

There are two answers to the question of standing out: make friends with Apple and offer a truly polished product. The other thing we need to think about is not about standing out at all, but simply creating a sustainable business supported by an appropriate price point.

How Do YOU Stand Out?

What tactics/strategy do you use to stand out on the Apple App Store? Comment below!

Rana Sobhany’s Keynote from 360iDev

I thought that this keynote from last week’s 360iDev was great. Rana works for a company called Medialets which helps developers do analytics for their apps (like web guys get with Google Analytics). She is talking about moving away from gaming the Apple App Store and moving toward quality in apps. Rana also has a bit to share in marketing apps which I think will be a key to success moving forward.

What struck me about her talk is the realization that we know almost NOTHING about the app store and how it works as a market. This means to met that there is still a huge opportunity for serious business to thrive in this medium.

What Did You Think of Rana’s Talk?

Please comment below!