How to make money from apps

Money

Read Kevin Partner's seven top tips for making money from iOS and Android apps

Around a year ago, I launched a range of apps for both iOS and Android devices as a small-scale experiment to see whether these markets were worth investing in.

New products or services usually begin with an idea, followed by the geeky anticipation of doing something novel. But, whereas in earlier days I might have thrown myself headlong into the app ecosystem, bitter experience has taught me to test the waters first.

By experimenting first I get the best of both worlds: if the experiment identifies a money-making opportunity, I can confidently invest time and money in that market; if the trial suggests a market is too small, it saves wasted investment and frees up time for more profitable projects.

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Every experiment should start with a theory to test, and I wanted to see whether using an established web service to market my apps could create significant revenue. Relying on Google Play or Apple’s App Store as my primary marketing resource was never an option, because it’s next to impossible to get noticed among a billion-and-a-half competitors.

I already had an existing, long-established service in www.passyourtheory.org.uk, which attracts the sort of young audience I believed would be most interested in native Android or iOS apps. So I launched apps for both platforms that help learner drivers identify road signs, in each case with a free version and a paid-for upgrade. A couple of months later, I added video-based apps for iOS that offer practice for the hazard perception part of the driving test.

Basing such conclusions on a tiny sample of six apps across two platforms isn’t statistically significant, but the point of the experiments was to see which way the wind was blowing rather than to publish a watertight academic study.

Based on my findings, these are my top seven tips for would-be app developers:

1. Develop separate iPad and iPhone apps

Although Apple might continue to spread the idea that Android is plagued by fragmentation, that doesn’t mean its own devices have fewer problems. The iPad has a screen five times larger than the iPhone, so each device needs its own version to make the most of the space. In fact, developers now need to contend not only with different physical sizes and resolutions, but also with a range of aspect ratios, whereas most Android devices share a common aspect ratio.

Another good reason for developing separate apps for Apple’s two platforms is that iPad owners will pay more – my testing revealed that I could make 35% more income per iPad app, and overall the tablet editions brought in 72% more cash. I recommend developing the iPad version first, then down-scaling it, rather than the other way around.

2. Chase reviews

Getting even a single review will have a big effect both on your ranking within the app store search results and on your conversion rate. If you develop your own apps, you need to build in a strategy for encouraging reviews right from the beginning, rather than tagging it on at the end (as I did initially).

3. Issue regular updates

Each time I updated an app I saw a big jump in sales. It seems that Apple, in particular, rewards updated apps by improving their search-engine ranking, presumably on the assumption that an actively developed app is more likely to please users.

4. Identify niches

I chose the education niche for my apps and achieved good rankings in that category. The bulk of released apps are games and, from a business point of view, aiming for that market is a lottery. I’d suggest finding a category you have expertise in and working out how to make money from it, especially if you can integrate with an existing service.

5. Free apps vs freemium

The freemium model works reasonably well, and I certainly see no business case for developing an entirely free app for which the only revenue source is advertising. If you have both free and paid-for versions, I don’t recommend embedding ads in the free one – this is more likely to irritate prospective customers than encourage them to upgrade. Restrict its features by all means, but don’t look to make money from it.

6. The money is in Android

I hinted at this last year, but, now I’ve had a full year to analyse the figures, I can say – in my case at least, where I had identical apps across both platforms – the Android version made five times more profit than the iOS equivalent. Why? I think in part the reason is that it was once more profitable to develop for iOS, so developers didn’t create as many paid-for apps for Google’s OS.

But, believe it or not, some folk actually prefer to pay for better apps, and don’t appreciate being denied the chance because they’re Android users. As I predicted last year, the launch of Google Play led many more users to attach an active payment method to their phones, and they’re proving willing to buy. If I do create another app this year, it will most likely be an Android version of Hazard Perception, with one version for smartphones and another for 7in tablets (my findings so far suggest this would probably be a profitable proposition).

7. Integrating with a web service works

The majority of my sales were driven from my website rather than the vendors’ app stores. There was a definite trend away from subscribing to the web service (increasingly an alien concept for today’s youth) and towards buying parts of that service as an app. This trend will continue, for my audience at least, so I need to think about how to build it into the business model or else call it a day.

Overall, I think there’s money to be made in app development, and the recent proliferation of high-quality Android tablets will only encourage that. For me, though, there’s lower-hanging fruit to pick before I return.