Making a Living in the Indie App Economy
I’m an independent children’s app developer who’s been in the iOS & Android App Stores a little over a year, and I’m going to talk a little bit about the indie app economy. I’ve got four dress-up apps (mermaids, princesses, fairies and ballerinas, oh my!) that I’ve created myself and two puzzle apps (mermaid princesses and fairy ballerinas) that I’ve created with a partner. My apps have over 400,000 downloads between them, are sold worldwide in up to 21 languages, and have even won a couple awards.
Actually making an app is an entire field of study itself but let’s skip that for now and focus on the finances.
Here are five common ways for an app developer to make money:
1. Straight-up app sale. If someone buys your iOS app for $0.99, Apple takes 29 cents and gives you 70 cents. Set aside some of that for taxes, and you come to about 50 cents in your pocket for every app you sell.
2. In-app purchases are when someone downloads your app and you ask them to buy in-game items with real money. Same payment system as above, you get 70 cents, less taxes, so 50 cents for every 99 cents in-app purchase sale.
3. Ads! You’ve seen them—just by downloading the app and having an ad display you’ve given the developer a few cents, and you’ve dropped a few more cents in their pocket if you’ve clicked on one.
4. Selling the app as a property on an app buying and selling marketplace. You can sell your pre-made app to someone who then takes over the reins and sells it themselves (and keeps the profits, of course). Apps go for a couple hundred to a couple thousand dollars a pop.
5. Working for the man! The man being an app development studio, or a client who needs an app. Your cut: whatever you can get up front, and/or a revenue share to split profits down the road.
Now, what about if someone says they got a million downloads, how many drinks should you hit them up for? If they sold a million paid 99 cents apps, they’d have $700K before taxes. If they had a million downloads for a free app with a $0.99 in-app purchase required to unlock the rest of the app and no advertising, not everyone would unlock it (typically around one to two percent of people who download an app will make a purchase), so maybe $10,500 before taxes. If it was a million free downloads with advertising and a pay-per-install model, given a few ad network variables you could hope for around $13,000-$19,000 (very rough figure, the numbers can go up or down depending on how long people play the game and a few other factors).
Never mind the hotshots though, what are the chances of making a decent profit? Everyone loves a bit of schadenfreude so stories of failure on the app store tend to be more common than stories of success, but it’s totally do-able.
While we’re on the subject, let’s talk startup costs. The bare minimum is a computer, a smartphone and some programming knowledge, and you can publish to Amazon for free ($25 and you can publish to Google). To publish in the Apple app store you’ll need an Apple computer, an iPad or iPhone or iPod Touch, $99 for a one-year iOS Developer license and some programming knowledge. To get around the programming knowledge part you can buy software to help you along in your quest (free to a couple hundred bucks). You’ll probably have to pay a bit for code, art or audio assets, marketing and other sundry costs along the way. My first app cost around $600, but subsequent apps cost much less since I already had the software and developer license. Check out this excellent blog post on how to keep starting costs down from Scott Adelman, an awesome indie dev I’ve created a couple apps with.
But down to brass tacks! If you’ve thrown your hat in the app-making ring, how much can you expect to pull in a month? It’s all over the map. (You knew that, right?) Streaming Colour App Studio did an excellent survey and analysis on app developer income (read lots more here if you’re a chart geek, and a little more here) and here’s the scoop: The bottom 25 percent have made less than $200 since they’ve been on the app store. The next 25 percent have made between $200 and $3,000, and the 50-75 quarter are between $3,000 and $30,000. The top 10 percent have made $400K, and the top 4 percent are MILLIONAIRES!
The truth is, that’s over the apps’ lifetimes. My fellow developers bring in a range from nothing to extra spending cash to a couple thousand a month and up, depending on how much time they can dedicate to apps (part-timers and students tend to pull in beer money, full-timers and exceptionally dedicated part-timers can make enough to live on if they hustle).
Right now I’m pretty much living off of app money, and I’ve been at this for about 19 months full-time. It’s helped me pay off some youthful debts, deal with day-to-day expenses, save some cash and pay for my doggie’s vet bills with enough left over for some nail polish, maybe a CD and a couple candy bars.
I’ve been living a fairly bohemian lifestyle for the past eight years, so I’m pleased with my riches of nail polish, candy, and CDs. What I’m getting at here is that if you have a sweet cushy job making $80,000 or more, there might be an adjustment period until you reach your preferred app tycoon income level.
App development is hard work—no sugar coating that—and making it a viable job is a delicate operation. But if you have the passion to make an awesome app and aspire to one day hang around the house in your PJs while you watch Netflix and program, then go for it! It’s totally worth it have hundreds of thousands of people download and use your app, and sometimes it makes you look cool at parties.
Originally published on theBillfold.com, July 19, 2013.