UPDATED: The Apple App Store Economy

105 Comments

Update: Thanks to everyone for weighing in about the infographic. The data used was given to us on an exclusive basis from analytics firm Flurry. Indeed, three-quarters of the apps in the App Store are “paid apps,” which was used to calculate the average app price and the subsequent revenue figures in the previous version. However, only one-quarter of the apps actually downloaded are “paid apps,” so the average price per transaction (paid + free downloads) is actually much lower than the average app price in the store. The graphic has been updated to reflect this price. Also, some of the averages in the Flurry data were calculated using projected user numbers from the first quarter 2010; that has been corrected to reflect only data up to the end of the year.

For clarification purposes, here is the math:

According to Flurry, Average listed price of a paid app: $3.63

74% of apps listed in the app store are paid.
Average listed price of an app (including free): 3.63 x .74 = 2.70 (with rounding)

Only 1/4 of downloaded apps are paid.
Average price paid for  an app (including free): 3.63 X .25 = .91

While we make every effort to ensure the accuracy of all the information contained in our posts, sometimes errors make their way onto our site, and this was one of them. We deeply regret any confusion this may have caused. Please accept our apologies.

best, Om

[digg=http://digg.com/apple/Apple_The_App_Store_Economy_INFOGRAPHIC]

Related GigaOM Pro Research Report: Surveying the Mobile App Store Landscape

Graphic courtesy of Column Five Media

105 Comments

Carmen

I’d be interested in some details about the methodology used to get the information about the number of paid app of the total number of download. 25% seems to be huge number, I’ve seen other estimates (including my gut feeling) that this ratio is way under 10%.
Anybody knows why this information is not officially available from Apple – suspicious. If it is 25% really, I am sure they would use it in marketing. Seen a report that with all operational expenses Apple have they just break even with what they charge from those 30% revenue split from paid apps.

Daniel Ros

Great idea. So good, in fact, this is how most mobile software worked before the iPhone! Hobbyists couldn’t penetrate those markets, so only the big companies wrote software for them.
Thanks Daniel..

Marc

Good post and excellent idea. So good, in fact, this is how most mobile software worked before the iPhone! Hobbyists couldn’t penetrate those markets, so only the big companies wrote software for them.
Thanks Marc…..

Arunabh Das

I’m thinking Apple needs to open up the iphone SDK to make it possible to cross compile to iphone from other platforms.

Arunabh Das

We need an app which will port an iPhone app to Android. Because Nexus One and other Android phones are going to take away the market share from Apple. Remember – I said it here first!! – Arunabh Das

chacha

Why did they go to the trouble to change it those of us who suggested the update are all idiots, failing the whole word problem thing back in school, and OMG this and Cheeto that? STFU.

Casual Observer

@chacha
Please, don’t take this personally; but, you’re a shockingly incoherent, ignorant individual. Instead of trying to edit your post to make any sense at all, why not keep your tiny brain better occupied with some homework? You sure could use remedial grammar. Does your mother know you are using a computer unsupervised?

Pavel Lahoda

I’d be interested in some details about the methodology used to get the information about the number of paid app of the total number of download. 25% seems to be huge number, I’ve seen other estimates (including my gut feeling) that this ratio is way under 10%.
Anybody knows why this information is not officially available from Apple – suspicious. If it is 25% really, I am sure they would use it in marketing. Seen a report that with all operational expenses Apple have they just break even with what they charge from those 30% revenue split from paid apps.

Daniel

Others are right: the numbers are wrong. Here’s the problem with the math: $3.63 is not likely to be the average price paid for a downloaded app, so $3.63 x .24 isn’t a correct calculation.

It’s very likely that most of the downloads are for the lower-priced apps (eg, $0.99), so the 25% are not likely to have an average price of $3.63. If we use the average of the top 50 as a place to start, their price averages $2.59.

But that’s not the average price of a downloaded app, since the most-downloaded apps,with a few exceptions, tend to be the lowest price ones. (The #1 paid app gets more downloads than the #50, so we would need to weight the average price by download volume to get a better number, and even then it would only apply to the top 50, not all of the other apps.) Instead, think of $2.59 as the maximum realistic price per paid app.

So the maximum realistic price per app, including free, is $0.65 (rounded), and the actual number is something less than that. This means that the revenue numbers ($250M in December) are too high also.

Joe

Problem is 80% of the apps in the app store are “Shovelware”, “Trash”, worthless junk. The good stuff is buried by scammers who have 2000 apps in the store, each of which is a useless SINGLE FEATURE that can already be done by the iPhone/iPod. Apple needs to remove all this TRASH that clogs the system up, perhaps they can do this by having developers PAY a few hundred bucks for EACH APP they submit.

Rene

Excellent idea. So good, in fact, this is how most mobile software worked before the iPhone! Hobbyists couldn’t penetrate those markets, so only the big companies wrote software for them.

Tom Ross

I don’t get your calculation at the bottom of your post, Om. It seems that you are assuming that all apps have equal sales, while in reality cheaper apps tend to have higher sales than more expensive apps, which would put the average price paid per sale lower than the average price asked per app.

Going by your math, I could post 1000 apps for $999 each, and in spite of nobody ever actually buying them, your “average price paid” would go up to $3.

($3.63 x .99 + $1000 x .01) x 0.24 = $3.26

More generally, I believe that these kinds of statistics would be much better if we stopped listening to the ad firms who have never sold an app themselves and actually started polling developers.

If a dozen developers from all over the App Store pooled their data, some with high sales, some with low sales, some with games, some with business apps, some hit-driven, some slow burners… they could assemble very reliable stats. I wonder why nobody is doing that. Is it prohibited under the Apple NDA?

CodeMonkey

Yeah, I agree. That does seem to suggest that all paid apps are bought equally regardless of price, which certainly isn’t the case. (average price listed <> average price paid) However, I doubt there are a lot of apps tilting the scales like your example. The effect of the higher priced apps is probably negligible given the number of apps on the store and their tendency to be at the bottom end of the price scale.

Discussing sales data is not prohibited by Apple, but you’d need a lot more than a dozen developers to get accurate numbers, and again you’d need to speak to the people publishing the apps, which are not necessarily the developers of the apps.

Speaking for myself, when we develop iPhone apps for clients, the financial statements go through their accounts afterwards; we don’t ever see how many sales they actually get or what that comes out to revenue-wise. Even if we did, we wouldn’t share the info; it would need to come from the publishers themselves. I don’t believe that lower selling app publishers wouldn’t be very interested in sharing their numbers, and some companies wouldn’t release numbers either way (just as Apple doesn’t with their software) for competitive reasons.

Of course, Apple knows these figures exactly, and they’d be the best source for accurate data, but they’re not sharing.

Antony Ashton

They should put that on toilet paper: App store facts. Each little bit has 1 fact on it.

CodeMonkey

The comments on this story get more and more bitchy and irrelevant by the day. It might be a good time to close them.

Having said that, it bugs me when businesses use comments on other people’s articles for self-promotion. It has a faint scent of “sleaze” about it. Well.. maybe not so faint.

Okay, there’s MY bitch-moan. “Next!”

Don Levine

If you don’t know how to produce an app to become richer, just buy APPLE STOCK. The end result will be similar.

Stan

Gigaom.com, et al.
Thank you for this Web page and the responses. As a graphic designer responsible for making informational graphics, I found the various responses most enlightening. I must remain mindful of the sub-standard education possessed by the majority of decision-making individuals. My “Don’t confuse me with facts, my mind is made-up” poster over my desk has renewed significance.
I’m not sure that the graphic is a good one. I feel that an informational graphic should clarify and make points more understandable. Otherwise the effort only gives rise to F.U.D. (fear, uncertainty, doubt) which is counter-productive, possibly destructive.
I think a good graphic presentation of data allows the viewer to get actionable information from it. (Definition: If you don’t know what to do with it, it’s only data. Information is something you can use. Thus, you can’t have information overload, only data overload.) The discussion about the graphic(s?) leads me to conclude that nothing was clarified by the graphics. Clarification came in the ensuing discussion. Had the discussion been lacking, several would have come to erroneous conclusions from the graphic(s?) alone.
I disagree that correct grammar, spelling, logic, and arithmetical skills are mutually exclusive.
Thank you, everyone, for this eye-opener disguised as a Web page.

Michael

Thanks for the insightful analysis Stan! My “The World is Filled With Arrogant Bastards” poster over my desk has renewed significance. I would question how many of us sub-standardly educated Americans will be able to understand your fancy rhetoric and logic though. Maybe you’re wasting your time.

Stan

Thanks for that. Your reply shows that Ignorance and apathy trumps education and attention to detail. My job is to make things simpler to understand. You’re the reason I work at what I do successfully and get paid as much as I do get paid.
Michael, I didn’t mention Americans. Do you think that all decision making individuals are only American? How arrogant! Speaking of arrogance, how did you come to that startling conclusion? Since you brought the issue up, one of the reasons the United States of America must import intellectual assets is that there is a shortage of suitable home-grown talent. You might find what you’re after with some humility, yourself.

Michael

The second sentence in your latest response shows that ignorance comes before attention to detail, at least in your mind. Check your subject-verb agreement; oh, and ignorance shouldn’t be capitalized. Also, using the phrase, “get paid” twice in the same sentence is clumsy word usage. As a professor of chemistry, I realize that attention to detail is important, but too much attention to detail and not enough attention to the overall “picture” can become a form of ignorance, in and of itself. You’re doing just the thing I am parodying at the opening of this response. You are picking through responses and finding some detail, small error, or mistyped word. Then you correct the trivial mistake in some half-baked response in which you preach about your own superiority and high-paying job.

Stan

“Too much attention to detail … can become a form of ignorance, in and of itself.” A professor of chemistry. Neat. Which branch within that large discipline? Do you publish? Who proofreads your work? Who illustrates your findings? How credible do you think you and/or your information sources would be with errors in basic arithmetic, spelling, grammar, or logic? You’re bashing the person trained and hired to make folks like you look good in books, journals, and periodicals. I find that astonishing, quite frankly. As a teacher, you must have some opinions about the direction of your flock. Everything going OK, in your observations? All “800” SAT scores?
I’m telling you, and any others that may have tuned in, that I have undeserved job security solely due to things that should be built-in for those able to find a place to express themselves. Tell me you disagree with that. (Don’t, please.) [Not so] “Stupid Irishman” got my attention and others (you included) pulled me out of lurk mode. I would regret the time lost; but, it became a forum for me to rant about the Ignorance and apathy i witness.
We might have different takes on the meaning of parody. I thought it more sardonic. Humour is difficult enough to handle by professionals.

Stan

Michael,
FWIW, I checked with a neighbor of mine who agrees with you that I come across as being arrogant. BTW, I’m not turning my back on you, the “Reply” doesn’t seem to have worked in my last couple of posts. The thread may be winding down. Before I forget, have a healthy (most of all) and happy new year despite the rancor between us, here.

Michael

Thanks. I enjoyed our discussion on this forum and I wish you a healthy, happy New Year as well. Just out of curiosity, what country are you from?

Stan

Born: Portland, Maine.
Moved: Montreal, Quebec (not that far away-many yanks here, also-very different view of the world)
Dual Citizen: 1991

Michael, the pleasure was mine.

Preetham Venkky

Fantastic info-graphic. I keep wondering if there it might have made more sense if it was split into various sections instead on one really long image :) Otherwise, cheers to the work and concept behind it.

Terrence

Forgive me if someone else has posted this, but what is the average monthly / yearly earnings for each developer, based on these figures?

Stan

Thanx alzo for yor Eksellent dysplay of amerycan logyk, math, and speling skils. it explanes alot of thingz goin on in yor wunderful cuntry. an yor the wuns wit fansy compyters. an fotoshop kant fix yor problms.

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