How to Develop a Profitable iOS App [Part 1]

This post is based on the analysis of profitability and user loyalty of more than 220 iPhone / iPad / iPod Touch apps that Intersog has built and launched to the App Store so far both under own brand and for our numerous clients in different industries and niches. I hope it'll be useful for entrepreneurs who're new to the mobile business, need some expert tips on how to assess viability of their app ideas, and cant't afford don't want to spend any money on hiring mobile strategy consultants.

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So, first and foremost, you need to understand the current situation in the Apple App Store, evaluate the cost of your future app, and take a realistic look at your app's market opportunities in the App Store and own readiness to build a profitable iOS app.

Read more about mobile app development.

1. Explore the App Store

For you as a developer Apple's App Store isn't just a hub where users search and download apps, but rather is a battlefield where you can use intelligence to ferret out what your enemies competitors are doing and whether they're doing it correctly or not. As such, a permanent examination of the App Store should become your day-to-day task. Remember the first thing you see right after landing in the App Store? The Best New Apps listing! Apps that get to this list are few, are carefully selected by the Apple's staff and are advertised in the store for the whole week. If you analyze these apps regularly, you'll always be aware of the trends and be able to solve the puzzle by identifying what these featured apps have in common. What we've observed here is that most of these apps are very simple and user friendly, have a cool UX/UI design and look professionally. No, they aren't necessarily unique in their content and mission, but are always at least a little bit better than their analogs in the App Store.

The next things to examine in the App Store are search and catalogues. In the latter, all apps are divided into categories, and each developer chooses those where their app would fit in best. Category choice is a very important strategic decision! For instance, categories such as books, games and entertainment are overwhelmed with apps, and competition is very tough there. If your app can apply to two categories, better locate it in one with fewer apps, as it'll give your app a better chance to get listed among the Top Apps. To view stats by categories, you can use 148Apps or likewise services.

Use search to check the approximate number of available apps similar to yours (use different keywords to expand / refine your search): if the number is high, you should probably modify or change your app idea.

Check out the following resources for better apps trendwatching: appolicious.com, appadvice.com, appannie.com

Once you've identified your major rival apps, go to each and see what users say about it in their reviews. This may help you identify their strengths and weaknesses to enhance / eliminate in your iOS app.

Note that regular App Store examination WILL NOT help you build a great app, but will help you for sure feel the market, user demands and competition level.

2. Evaluate your app's profitability

Building an app requires time, efforts and money, so evaluating properly your app's monetization opportunities is a business critical task for you!

However, when evaluating app's profitability, you SHOULD NOT consider these two factors:

1. Number of app downloads - there're so many different external factors affecting it that it's impossible to assess it correctly.

2. App functions that can "guarantee" downloads - there's simply no clear tendency to rely on.

First of all, make sure you fully understand what your want to achieve with your future app: do you aim to earn money with it or increase number of downloads? The answer to this question will influence your choice of a monetization model.

There're tons of information about apps monetization models online, but here's my summary:

Monetization Type

When to Use

Free app You need to increase your brand awareness and user loyalty and don’t aim to make money from your app
Free app with ads (in-app ads) Used in popular apps that involve a lot of interaction with user (e.g., Pandora)
Paid app (the most popular type) Developer gets 70% of cumulative revenues from selling an app in the App Store
Lite app Unofficial way of letting a focus group of users test your app before the launch
In-app purchases Provides user a possibility to buy additional features (e.g., power or virtual currency) and functions right within the app
Pro app Lets your users upgrade their use of your free app and get more features / functions in return

3. Price formation

At this stage you need to determine what price tag you're going to put to your app. You've already analyzed and compared your competitor app prices and have a more or less clear understanding of the market trends. For instance, if your competitor sells their app for $3,99, pricing your app at $12,99 sounds like a bad idea, doesn't it? Yet, you may attach a $5,99 price tag if you're sure your app is better.

When defining your app price, do consider current App Store trends - your price will have a direct impact on your app downloads. According to the App Store trends, an average price for a regular iPad app is $4,99.

Be careful of pricing your app at $0,99! A too low price may lead to impulsive purchasing when the user buys your app without understanding whether they really need it or not. As a result, this may lead to your app's rank decrease and negative reviews, since people won't get what they want with it.

If you plan to make long-term investments in building apps for the App Store, you should consider trying different prices before understanding the final one. Let's assume you've priced your app at $2,99 and your app will be downloaded on average 15 times a day. This will earn you $16,370 gross (15*365*2,99), i.e. $11,460 net per annum (-30% commission for Apple). If you increase the price to $3,99, your app downloads will drop by a third (be sure they will!). It seems that potentially you'll still earn $12, 500 net, but this is not true. There're lots of cases when a Top 5 app is "thrown out" of the App Store's Top 25 a week later after a $1 price increase. Due to this, the app's visibility lowers down and, as a result, app downloads decrease significantly which leads to a huge drop in app's revenue.

So, you need to experiment with the price to see which one will ensure your app's sustainability and popularity in the App Store.

Of course, if you only have one iOS app, you won't have such an ample space for experiments, as your income will depend largely on the price changes. However, when you have a pool of apps, feel free to experiment with the price - it's the only solution that will help you stay ahead of the competition and monetize your app better than your competitors.

To be continued...

In the next blog post I'll cover best ways to determine market potential for your app, the perfect time for app's shipment, and own readiness to start iOS app development. Please sign up below to stay tuned.


 

Vik is our Brand Journalist and Head of Online Marketing / PR with 11+ years of international experience in IT B2B. He's also a guest blog contributor to Business2community, SitePoint, Journal of mHealth, Wearable Valley and other IT portals. You can contact him directly on LinkedIn.

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