Is there a Business Model for Downloadable App?

[Guest article by Lalit Bhise, Founder of Mobisy]

Every now and then people talk to me about converting their kickass idea in to a downloadable mobile application. The reasoning goes that “Everyone is going  to use it”.  Well here is some light on the actual data from app stores so far.

I have taken some reference data from NextBigWhat.com, readwriteweb and pinch media. As pinch media presentation explains (slides embedded towards the end of this article), making money via in app advertising is an extremely difficult business model to execute. So let’s just stay with the download time fee as a tried and tested business model for downloadable apps. This is the business model of choice for majority of the existing app-stores too.

Let’s take some data from Ovi store.

Apps downloaded per day1600000
Per year584000000
Paid downloads @11%64240000
Avg price($)1.49
Total Revenue($)95717600
Developer share @70%($)67002320
Total apps on store10000
Paid apps @ 85%8500
Avg Revenue/paid app7882.63

As you can see, for international markets average revenue you can hope to earn using your downloadable app is ~$7882, not bad at all.

Please remember the problem with average is that it does not take care of 90-10 rule prevailing in Mobile applications (10% of the applications make 90% of the money). But for simplicity’s sake let’s say that if you can make an app for less than $5000 for international markets, then it’s not a bad idea to sell it on a store like Ovi.

Let’s come closer to India here are some of my extrapolations from numbers published by Airtel App store.

Apps downloaded per month5000000
Per year60000000
Paid downloads @11%6600000
Avg price in Indian context($)0.75
Total Revenue($)4917000
Developer share @28%($)1376760
Total apps on store1000
Paid apps @ 85%850
Avg Revenue/paid app1619.72

So considering that average afford-ability  of Indians is about half of western world, (in reality it’s about 1/5 of the western world) to make money by selling a downloadable app in Indian market, your cost of making and marketing the app should be less than $1619. Which is little over than Rs 60000/-

So in short, if you are a developer looking to make money by selling your application / game to Indian consumers from operator app stores , make sure you can make and market it in less than 60000 rs and are ready to wait for 3-6 months to get that money back.

If you can make an app for international markets may be you can afford to spend some more money.

I am by no means saying that don’t make mobile apps. I think you should make them by all means but remember the business dynamics.

[Reproduced from Lalit’s blog]

Pinch Media Presentation

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