Market Realities on the App Store

Much digital ink has been spilled over the economic and social ramifications of Apple’s App Store. On the face of it, the App Store is a revolutionary platform connecting the users with its developers, doing so with an unprecedented degree of closeness. And while many developers have chafed (to put it mildly) against the fact that a capricious Apple stands part-way between these two parties, there can be no doubt that the vast majority have not suffered for it.

I am one such developer. Around this time last year, I decided that I would, once and for all, start and finish an iPhone app. My goals were modest — learn enough Objective-C and Cocoa Touch to get a useful, working app on the store. I picked an idea that was equally modest: a source code viewer to help patch a deficiency of Apple’s Mobile Safari browser.

While the initial proof-of-concept — pulling source code from a web page and displaying it in an iPhone app — proved trivial, building a useful, working app around it ended up taking many months, punctuated by several periods of self-loathing, frustration, re-reading of documentation, commiserating with fellow developers, or working on my book.

But I finally did it. As of late April 2010, Code is now available on the App Store. And insofar as I wanted to meet a particular set of goals, I would have to say that I succeeded brilliantly. I now grok iPhone programming, to an extent that I am confident that I could learn the bits of the API that I haven’t used yet. When the iPad was imminent, I had the confidence to delay my launch for a couple weeks so I could prep the iPad version, and the code for that platform was cleaner than the iPhone version.

Having done all this, there have been unexpected lessons from my experience on the App Store, and it’s these that I want to share today.

As you know, most apps on the store are set at bargain-basement prices: mostly 99 cents. The iPad lifted the trend to a small extent, but anything over $5 appears to be reserved for apps with near-desktop-like functionality. Consequently, I priced Code at $1.99. I was originally planning to go with the herd at a buck, but with my app available as a universal binary (it works both on the iPhone and iPad), I figured the extra cost was justifiable.

With over a month’s worth of sales under my belt, I realize how laughable my concern over pricing has been. There’s really only one way to adequately express how little money a developer can make, and that’s to show the numbers. I don’t know of anyone else who’s done this, but as you’ll see, I gain little from keeping it a secret. Here, for your education and amusement, are my sales for the month of May (which hasn’t ended yet, but hey, you get the idea):

DateSalesRevenue
2010-05-255$7.00
2010-05-241$1.40
2010-05-233$4.20
2010-05-224$5.60
2010-05-212$2.80
2010-05-203$4.20
2010-05-191$1.40
2010-05-181$1.40
2010-05-171$1.40
2010-05-161$1.40
2010-05-150$0.00
2010-05-140$0.00
2010-05-130$0.00
2010-05-121$1.40
2010-05-110$0.00
2010-05-101$1.40
2010-05-090$0.00
2010-05-082$2.80
2010-05-074$5.60
2010-05-061$1.40
2010-05-051$1.40
2010-05-042$2.80
2010-05-032$2.80
2010-05-023$4.20
2010-05-010$0.00
Totals39$54.60
The great power and promise of the App Store is that it exposes you to the many millions of iPhone users. The allure for the users is that they get access to “The Long Tail”. Well, one thing they never talk about is how being a creator supplying the Long Tail is a thankless, poverty-inducing task.

While the media and Twitterati focus on the smash hits of the iPhone world, where indeed, you could make millions, it’s equally clear that the vast majority of developers could never make more than an hour’s wages in a month. And be told that their app is too expensive, to boot!

I want to be clear right now: I’m not bitter. Honest! I never planned to become independently wealthy off Code. But seeing these numbers makes it clear that developers need to do some hard, honest math when they consider pricing their apps.

When you price low, you need to sell more. While it’s easy to tell yourself that pricing with the average will help people buy your app, it’s harder to face the reality that most people are simply not going to see your app to make the decision anyway. After Code launched, I went through the motions, sending promo codes to every review site and blogger I could dig up. I ran the gamut of blogs, seeding any relevant forum with a mention of my app. I have Google search notifications and Twitter notifications, letting me know when anyone is wondering about viewing source code on the iPhone, so I can jump in with a helpful hint.

The fact is, there are too many others doing the same thing; consequently, my app hasn’t been reviewed, and likely won’t be. And given the numbers, yours probably won’t be reviewed either, nor mentioned by some influential blogger.

So, you’ve priced your app so you make a buck a sale. That means you need to sell at least 500 a month if you want to make it worth doing (your tolerances will be different, of course, but I’m just throwing out a number here). As you can see, I’m nowhere near 500 sales a month. We’re orders of magnitude away from that.

Moving on

Is that it? Abandoning the iPhone as the failure it so clearly is? Naw. There are certainly planned features that I may not have the time to implement for Code — as you can see, the economics make it hard to justify doing more than bug fixes at this point — but I’m not ready to say that the App Store isn’t worth it.

I’m not seeking limitless riches on the App Store, but I do want to prove that with intelligence (and the right idea) one could make a good living.

As I began by saying, much digital ink has been spilled over the App Store. One of my favourite opinions on the App Store was written a long time ago now, so long that I can’t remember who said it (hopefully you can help in the comments!). The essential point was that the economics of the App Store favour only two kinds of app: the “fart app” class of apps, that provide a very quick feature, and is quickly discarded as the useless trash it is. And the productivity app, which provides real depth, a set of features that will be useful in the long term. Only the latter apps, of course, can justify a higher price.

Code certainly belongs more to the latter category than the former. But when moving on to the next project, I have two goals in mind:

• Quality and utility first
• Priced to reflect the cost to make it

There is no step three!  I’ll be talking more about this project soon. Stay tuned.