Tuesday, June 19, 2012

Want to get rich by creating a killer app?

Well, you most likely won't.
There aren't many companies making direct money from selling app in either iOS or android devices.

Let's do the math.
Suppose your app costs a buck per user.
Now suppose your app has a million paid downloads.
This means 1000000$ in revenues.
An average app would cost you 100000$ to make. (Most cost more, some less)
Now take out Apple's 30%, your of making the app and taxes, and all that's left is ~300000$.

While no small change, this isn't exactly retirement money.

However, if you could sell your app to 1 million users, you're probably doing something right - and get the attention of some big companies, or easily fund your next app.

Still not convinced? Let's do some simple math then.
Apple has given app developers (Up to now), ~4 billion dollars in revenue share. Divide that by 4 years since the store exists, and assuming that the cost of a developer is 100K$ per year, this means that in average, 10000 people (A year) are making their living from this revenue.

The others are losing their (Or other people's) money.

But now let's think of a different strategy:
Make it free, and earn from... well... um...

Not everyone could make lots of money from apps. Actually, except for high end games or the occasional hit, no one does. Most companies have app driven services and value, which generate revenue - That's a more probable model.

So the next time you've got a brilliant idea for an app and want to consult the techie that would invest 6 months of work for 50% shares, think what you're really offering him, and don't be offended if he politely says 'no'.

;-)

1 comment:

  1. Good point Mani.
    Might also be an idea for a post - the good & bad in off shoring your ideas :)

    ReplyDelete