Gartner: Most mobile apps don’t generate profits, but there is still a payoff for developers

January 14, 2014

In fact, a new report by Gartner even goes as far to predict that through 2018, less than 0.01% of consumer mobile apps will be considered a financial success by their developers.

But that’s not all bad news, particularly for app developers who don’t have profits as their primary goal. Gartner analyst Ken Dulaney that “many mobile apps are not designed to generate revenue, but rather are used to build brand recognition and product awareness or are just for fun. Application designers who do not recognize this may find profits elusive."

One of the problems app developers, particularly, smaller ones with little to no marketing budget, face is simply getting exposure on an app store. The other is the flood of free apps means devs have to create apps with a clear or distinct value to justify charging.
"There are so many applications that are free and that will never directly generate revenue,” said Dulaney. “Gartner is forecasting that, by 2017, 94.5% of downloads will be for free apps. Furthermore, of paid applications, about 90% are downloaded less than 500 times per day and make less than $1,250 a day. This is only going to get worse in the future when there will be even greater competition, especially in successful markets."

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But someone’s making money

The fact that Apple’s App Store alone generates billions of dollars in revenue for app developers underscores how many more free apps there are as well.

Of course, free apps can generate revenue via upgrades to paid apps and in-app purchases (e.g. buying virtual accessories for a game app).

Apple recently reported it paid developers a whopping $5 billion in 2013 alone including $1 billion in December 2013, the traditionally busy holiday season when  users are especially eager to try out apps on new devices.

Developers receive 70% of sales revenue when they publish on either Apple’s App Store or Google Play. Microsoft pays the same 70% for Windows Store, however after an app generates $25,000, Microsoft drops its fee on subsequent revenue to 20%. 

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