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Can you still make money from an Android app? How to beat the odds
There are lots of great reasons to become an Android developer and start building your own apps. The sense of accomplishment you get from finishing a game or utility alone makes all the hard work worthwhile, plus contributing something genuinely useful to the platform is also a source of great satisfaction. Most of us would be lying though if we said we weren’t at least a little interested in the financial side of things. It’s not uncommon to hear success stories of people who make millions of dollars from software and it’s hard not to let your imagination run away with you when dreaming about how successful your own apps could be…
Most of us would be lying though if we said we weren’t at least a little interested in the financial side of things.
But how realistic are those dreams? How likely is it that you could release the next Flappy Bird and retire to your own private island? Is this even a viable business model anymore? In this post I’ll be candidly sharing my own experiences as well as discussing some current statistics and different options for developers.
My own experiences
Before we jump into the numbers and the stats, I thought I’d outline some of my own personal experiences. That’s because I can say for a fact that it is still possible to make money from an Android app.
Unfortunately, I’m not a billionaire app entrepreneur with my own island. Rather, I have a small flat in London and still shop at Primark. However, I have made approximately $70,000 from apps over the last six years. Spread out over that time that’s not actually that much (not life-changing certainly!) and I put in a lot of work to get there… but it’s sure better than a kick in the teeth! And if I can earn that much, it is presumably possible to earn a lot more!
The first app I ever released was around six years ago and was basically a slightly edited version of some code I found in the public domain. It was a keyboard and I just changed the size of the keys and released it (I had permission!) to experiment with the process of creating an app and to see if it was something I could get the hang of. It cost me $25 to register as a developer but to my surprise I started getting a couple of downloads right away! I was charging for the app as I didn’t know any better at the time and that meant I was making a few dollars a month from very little work.
This was enough to convince me that it was worth learning Java and getting to grips with Eclipse and the Android SDK. I released a few other things (including a game that I worked very hard on) but never got more than a few downloads for each.
Then I had my ‘eureka’ moment. I had an idea for a tool that would meet a big demand and released a very rough version of it, which I sold for about $1.20 under a name that people would search for. Overnight and with zero marketing, I started to get around 10 downloads a day. With a couple more updates this climbed to 30, 60 and then 100 downloads a day. At its peak, I was earning about $70 a day from the app on top of the money I earned from my other business. The best bit is that this was ‘passive income’ meaning that I wasn’t exchanging ‘hours for money’ and that I could take time off and still have an income. This app sold purely on the strength of the idea and certainly didn’t include any flashy or impressive code.
Overnight and with zero marketing, I started to get around 10 downloads a day. With a couple more updates this climbed to 30, 60 and then 100 downloads a day.
I will never forget the moment I realized it was taking off – I was at a house party and became very unsociable just staring at my account and refreshing the page! It also sent me a little crazy but that’s a story for another time… That app went on to have subsequent successes too as I was approached by an Indian company to make a deal for my app to be pre-installed on their devices. So yeah, basically it became bloatware…
Sales for that app started to trail off eventually though and today it sells about 3-5 a day. Not a huge amount of money but definitely still very welcome.
My next project was to work on an app with a well-known YouTuber which meant we had a ready-made audience to promote it to. We split the profits for that app 50/50 and again sales have been trailing off for that one lately – but in the first few months it managed to get several thousand paid downloads. Now I’m working on several projects that I plan to release at around the same time and meanwhile building my own audience so I can promote them myself.
Then vs now
The first app I created made money despite a) being not very exciting and b) having no marketing. This would not work today however. Unfortunately, the ‘app gold-rush’ is over and the market is now very much saturated with apps. Once upon a time, you could release a parkour app and it would probably be only one of a few apps in that niche. If someone loved parkour, they would probably find your app and they would probably be willing to pay for it. I know because that’s something else I did! Today there are countless parkour apps on the store:
When I released my biggest hit, I was lucky enough to happen upon a niche that still hadn’t been filled – even as the Play Store was getting bigger by the day. Sales slowed down mainly because a bunch of copycat apps started stealing my market share (and they were free).
Today, you’re competing with thousands and thousands of apps no matter your niche which means you need some kind of marketing to stand out. The only way to get around that is to have a completely unique selling proposition (USP) – but in that case you’ll still need marketing simply to communicate what your app is about and to make people aware of it. You can do this by spending money on advertising (in-app, on Facebook or on Google in most cases) but this then eats into your profit margins.
But it’s not all bad news. While the mobile app industry is now much more competitive, it’s also true that the audience is larger and more willing than ever to put down money for downloads. And there are now also more ways to monetize an app than ever before, such as the ‘in-app purchase’ option and interstitial adverts which are becoming more and more popular.
And there are ways you can market your app to a large audience without having to spend money on adverts too. One great strategy is something called ‘influencer marketing’ which means you’ll be working with people who have a big audience online and who are willing to give your app some kind of ‘shout out’. Another option is to try going on Kickstarter and seeing if you can generate some media buzz.
The problem is, you’re still competing with big businesses that have far more marketing clout and that can throw millions of dollars at their marketing strategies. According to a forecast from IDC, the global app market is now worth $34 billion and this is expected to increase to $77 billion by 2017. However, the vast majority of that market share belongs to established names like Facebook and Google.
If you take a look at this (admittedly outdated) list of the most successful apps on Android on Wikipedia then you’ll find you need to scroll down quite a long way to find something you haven’t heard of. But then again, you might take solace in remembering that at one time names like Rovio and Mojang were indie developers. It is now the stuff of legends that Angry Birds was actually Rovio’s last attempt at a game after 51 failed titles.
Monetization options and overheads
Your experiences may vary drastically depending on how you approach app development and monetization. For starters, all of my apps were paid with no adverts whereas some of the biggest earners by far have been free downloads (like Angry Birds).
I will say this though: if you intend on making money from ads then you need to make sure your app is something people are going to want to use regularly and for a long time. Most mobile ad networks such as Google’s own AdMob work on a ‘PPC’ or ‘RPM’ basis. These mean ‘Pay Per Click’ or ‘Revenue Per Impression’ which in turn mean that advertisers pay you only when someone actually clicks on an advert or when they watch a short video without skipping it. This is why free apps like Sonic Runners (one of my favorites) force you to watch videos for extra lives etc.
The precise amount you earn per click or per impression varies based on a lot of different factors. These factors include the popularity of your app, the subject matter, the region and more. But don’t be surprised if to begin with you are only getting a few cents per click. RPM is also often worked out per 1K views – which means you’ll need a lot of people to use your app before you earn anything from it at all. Some ad networks also have minimum pay outs making an overnight pay-day even less likely.
I managed to make $70 a day from my best app when it was at the height of its popularity. In order to get that from impressions I’d have likely needed about 100K active users opening the app every day. Now ask yourself: how many apps do you actually use on a daily basis? In all likelihood it’s probably only a select few, those being Facebook, Twitter, your camera, WhatsApp… Most apps we download get opened once and then ignored. Specifically, 77 percent of users never use an app again 72 hours after installing! Then there’s the question of how you can include adverts in your app without driving away your users. Interstitial ads (ads that show in between screens) are helping developers increase their earnings but they’re also a lot more invasive for users.
Most apps we download get opened once and then ignored. Specifically, 77 percent of users never use an app again 72 hours after installing
And in every case, Google or your ad network will take a cut of your profits. And the same goes for charging for downloads where Google takes a commission of 30%. So if you sell an app for $1, you only take home 70 cents for each sale. And once you’ve made your app free, it’s not possible to change it back to being paid.
Right now, it appears that in-app purchases are where the real excitement lies. A report from App Annie states that: “In-app purchases (IAPs) as a share of app store revenue continued to grow in 2015 as subscription revenue made incredible gains, thanks to strong demand for video, music and dating apps.” Of course in-app purchases naturally lend themselves better to some apps than others, so you may need to think carefully about this before you invest a lot of time and effort into your next idea.
Android vs iOS
The elephant in the room at this point is iOS. It’s a well-known fact that iOS apps tend to make more money as compared with Android. Although there are far more active Android devices and the Play Store gets a lot more downloads, iOS apps still make more revenue and therefore more profit for their respective developers. The report from App Annie found that iOS continued to bring in 75% more revenue than the Play Store despite the much higher number of downloads on Android. This is simply because Apple users tend to be happier to pay a little more for their devices, just as they are happier to pay a little more for their hardware.
This is all about demographics though. You can potentially get around the problem by simply targeting wealthier demographics on Android with your app’s function – a business app for instance can typically charge more than a fun app. Note as well that Apple charges its developers a recurring $99/year fee (although the commission is the same). It’s also much harder to get an app onto the App Store and that means you can invest a lot of time and effort into making an iOS app only to have it rejected…
Of course the best answer is to make a cross-platform app. Simply releasing your app for both operating systems can significantly increase your market and your revenue but again this is much easier if it’s part of the plan from the very start.
Making money from Android apps is definitely still possible but you need to be smart about the way you market and monetize your product. This means understanding the market and having a plan for your business model before you even settle on an idea. In some ways making money from an Android app is harder than ever but in other ways, there has never been a better time to jump in and get involved. The key is being flexible and dynamic and changing your approach to remain competitive. The audience is definitely there, the challenge is just knowing how to reach them. For some advice, check out this article I wrote on how to make your Android app stand out.
Remember as well that we also have some new emerging markets in this field. Android developers can build apps for smartwatches and virtual reality devices and find a lot less competition in these new areas.
Ultimately, a lot of people are going to build mobile apps that don’t get a single download or that hardly earn them anything. Meanwhile though, others will have runaway successes that take the world by storm. Then there will be those that generate a nice little bit of passive income on the side but never reach a critical mass. There is unfortunately no ‘average’ profit that the independent app developer can expect to make, so be smart and don’t give up the day job until you’re sure you have a hit on your hands.
It’s a hard old slog so you need to love what you’re doing but remember: it only takes one big hit for everything to change!
Some people will be more interested in making a great app than they will be in making money and actually that’s the best way to approach development. Create something you’re passionate about and it’s likely you’ll be able to inspire others too. I have released about 30 apps and only 2 of them have really earned significant money. It’s a hard old slog so you need to love what you’re doing but remember: it only takes one big hit for everything to change! And each ‘failure’ will teach you something and help you to become a better developer and better marketer.
If you’re feeling deflated and you’re looking for a little bit of inspiration and motivation, then check out this list of Android developer success stories from Google!