New research suggests that most new mobile applications often find it hard to surpass a monthly median income of $50. A San Francisco-Based firm reached this conclusion by studying over 30,000 apps. The firm attributes this poor performance to factors such as competition, inefficient marketing, or apps failing to meet consumer demands.
To make it to the top 1% earners, an app would need to earn roughly $500,000 in revenue monthly. However, although challenging, profitability is not entirely elusive as a small number of apps have achieved significant success. This study found that games are the most profitable app type, emphasizing the potential and growth of the mobile gaming industry.
The firm behind the study provides a subscription toolkit for apps and reported a total subscription revenue of $6.7 billion. This has impacted over 18,000 developers and nearly 290 million subscribers on Apple App Store and Google Play Store. Besides, the increasing valuation of subscribers indicates a rising demand for subscription-based apps, boosting both platforms’ revenues.
About 17% of the studied apps reported earning at least $1,000 monthly. Once this target is achieved, there’s a high chance that the earnings will rise to between $2,500 to $5,000 monthly. Although this gives hope for significant revenue growth in the app industry, it exposes the existing inequality in revenue distribution. New apps usually earn less than $50 monthly a year after their launch, while the top 5% scoop over 200 times more than the bottom quartile’s earnings.
The study also revealed that even apps with a large user base could still struggle in monetization. Therefore, app developers need to extend their strategies beyond user acquisition to sustained monetization plans. For instance, the top-performing apps incorporate various revenue strategies like paid downloads, in-app purchases, and ad revenue.
Maintaining subscriber loyalty is another challenge for app developers. From the data, it was found that there is a 14% drop in the monthly retention rate a year after subscribing. Some of the strategies suggested to maintain this loyalty include providing continuous value, exclusive benefits, competitive pricing, personalized experiences, or quality customer support.
Despite the hurdles, subscriptions remain the preferred income source for app developers due to ongoing costs such as maintaining an app, customer service, and innovation. In fact, the average cost of mobile app subscriptions is expected to rise in the near future.
The report finally recommends subscription models as they provide steady income streams for businesses while offering customers an easy-to-predict payment structure. Recurring payments improve user experiences and inspire loyalty, thereby contributing towards the company’s revenue generation.
