Stats: App Revenue Share (In-App vs Paid)

Apr 3

Stats: App Revenue Share (In-App vs Paid)

I stumbled across a very interesting report yesterday released in January 2014 by Distimo.

Revenue Share per Business Model

App Revenue Share per Business Model

App Revenue Models

The chart covers the predominant business models (revenue share) for Apps inside the Apple Appstore (Android is lagging on IAP):

  • Free Apps with IAP
  • Paid Apps without IAP
  • Paid Apps with IAP

Thank goodness they didn’t include Free Apps with MASSIVE EXITS TO FACEBOOK as a business model. Its valid but definitely an outlier that you can’t see on any sane chart 🙂

The key takeaway here are that:

  • the “Fremium” business model is killing the other models.
  • comparing with the average revenue per download (chart below). There is a much higher download rate for “Fremium” Apps.
Average Revenue Per Download

Average Revenue Per Download

Aside from Japan and possibly South Korea, it means your optimal way to make money is to:

  1. Have free download
  2. Get engagement with the users
  3. keep them long enough to have them pay (IAP) for extra features inside the App.
  4. keep them longer to help them spend more via IAPs

We all intuitively understand this, which is why the web applications now operate mostly on a monthly or per-transaction model.

So the secret here is to engage with your users and drive down the amount of churn.

Thats why we think that segmenting your users and communicating with them “Right-Time” is your best path to a lasting business.

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