How Much Money Can Apps Make in 2023?
There are many costs associated with app development, as we’ve previously explored, but what about once they’re up and running? Are apps profitable? And how do you make money with mobile apps?
As It turns out, there’s an awful lot of money in the application business - in 2020 the global revenue from mobile apps increased to $318 billion. This was up by $60 billion from the previous year and by 2025, apps are set to be worth $613 billion. Knowing how they make money and how you can apply this to your own apps is more important than ever.
At ADAMAPP, we’ve put this guide together to help you understand why apps can be profitable, and how you can make money out of yours.
How Do Apps Make Money?
Apps can make money in many different ways. For free apps, this usually involves advertisements or in-app purchases. Paid apps are obviously getting money right off the bat, but convincing people to keep paying for other services can be slightly more difficult.
We’ll go into a bit more detail about the different ways you can make money with mobile apps later on in this article, but it all revolves around understanding the following:
- The purpose of the app: how your app works, or what it’s trying to achieve, will play a massive part in how it can be monetised.
- The target audience: your monetisation strategy should be targeted, and not waste anyone's time. Understanding how much your audience will pay, and for how long, will be incredibly beneficial.
- Your competitors: analysing your competitors’ apps will allow you to see how their previous monetisation strategies performed. You can then apply the best ones to your app.
Are Apps Always Profitable?
With over 3.5 million apps on the Google Play Store alone, and thousands more going live every day, there are bound to be some apps that lose money. But there are ways to ensure your app has the best chance possible. Here are some of the biggest reasons why apps may not be profitable, assuming they were able to launch successfully in the first place:
- Demand: your development may have gone off without a hitch and you may have timed your launch perfectly. But if there’s no demand for your app and you aren't offering anything new, or valuable, then it will likely fail. This is why understanding your target audience is important, and should be a large part of your development plan.
- Strategy: your app needs to have a clear strategy in place to make money. This could be in the form of a subscription service, paid advertising, or selling additional in-app features.
- Branding: you need a clear message or direction that demonstrates what you offer, and how you differ from your competitors. Without a clear voice, your app will just become another face in the crowd.
- UX: you need to create a clear and simple app that’s easy to navigate and directs customers towards what you’d like them to do. This is called a UX strategy.
- Support: If your app launched successfully, well done! That's the first step. Supporting your app post-launch will mean customers continue to come back to see updates, fixed bugs, and new features. An option to report bugs, or provide feedback lets your customers know you're listening.
Which Platforms Are Generally The Most Successful?
There are many different platforms to choose from. In 2021 the global revenue from app sales reached $3.4 billion. More than half of the overall profit came from the Apple app store. But this heavy hitter is not the only one available, and you may find that your app is better suited to a more niche platform. The following are some of the most successful platforms.
Apple App Store
As of 2022, the Apple App Store has over 2.18 million apps available to its users - an increase of 5% from 2021. This is a massive market, but it can also be difficult to stand out. Gaming apps represent the biggest majority, followed by business, and education apps. But while the gap between business and education is less than 1%, there is a difference of over 3% between business and gaming.
Google Play Store
The Google Play store dominates the market in the number of available apps, at over 3.5 million. Gaming apps lead the way, as of 2022, with education apps following closely behind in second place. While the Google Play Store hosts many more apps, the Apple App Store still produces greater revenue year after year.
Amazon App Store
The number of available apps on the Amazon App Store has steadily risen since 2015, going from around 300 thousand to just over 480 thousand as of 2022. As with almost every app platform, gaming takes the lead, at 116,000 apps. This is a massive lead, with utility apps coming in second place with only 31,000 apps available on the store.
Smart TV apps
It isn't just mobile phones that can benefit from apps, Smart TVs can too. Streaming services are some of the most popular apps available. In the UK, Smart TVs were the devices used most to watch Netflix TV shows during the first quarter of 2022.
How To Make Money With Mobile Apps: Different Models
As we discussed earlier, the ways you can make money on your apps depends on whether they are paid or free to download. These are some of the most common monetisation techniques:
This could be a weekly, monthly, or yearly fee that gives your users access to your app’s service. Streaming service apps are based on the subscription model, as are cloud based services such as Dropbox. Mobile gaming holds the largest share, with 11% of gaming apps using this model.
Sections of your app may be freely available, with the subscription model used to access more advanced features. Or the entire app may be locked off to users without one. This model can attract many users, but it also requires persistent support to ensure users are routinely gaining value from these apps.
In terms of revenue, the subscription model accounts for $13.5 billion of user spending in the Apple app store, compared to $4.8 Billion in the Google Play Store
This model is commonly used by free-to-download apps, and may make use of banner ads, text ads, native ads and more. In 2021, in-app advertising made up the largest share in the market, generating over $208 billion. However, in-app advertisements are a fine art, and the type of advertising your app shows can be important.
In 2021 complaints were targeted primarily at adverts appearing on the advertisers’ own websites, apps or social media accounts. Keeping your adverts in line with your target audience's expectations can be beneficial, and too many adverts will turn users away.
Paid and Freemium Apps
Paid apps are perhaps the most basic way of monetising your app. Users are charged an upfront fee, and are then able to use all of the app's features. This model can be difficult if you do not already have an audience, as paid apps can be far less visible to users, making up only 3% of the total apps available on the Google Play Store.
Free and Freemium apps, on the other hand, account for the other 97%. With this model, the app is mostly free to use, with some features requiring either a one-off fee or a subscription to unlock. This could be extra lives or in-game currency in a game, or the ability to block ads from appearing.
Looking Ahead: What Does The Future Hold?
The revenue from mobile apps is getting larger and larger each year - the app boom is in no way slowing down. The number of people with smartphones continues to grow and is set to reach 7.7 billion by 2027, while the average amount of time people spend using their phones will reach 4 hours 35 minutes a day by 2023.
The ability to stand out and know how best to monetise your app is more important now than it ever has been. At ADAMAPP, we’re here to guide your understanding of how to capitalise on this ever-expanding market.
We have the expertise and experience to help you map out your monetisation strategy, so reach out to us today, and let’s work together to make your app stand out.