IOS app success is a lottery: 60% (or more) of developers don't break even

That does not make it a lottery. It makes it a business.<p>The business of making and selling apps is not very different than the business of making and selling shoes, clothes, radios, or hardly anything else you can name. Standard business practices apply.<p>If you make one app and throw it into the marketplace hoping to get rich, then yes you are treating your business like a lottery and your business will probably fail. If, however, you understand that 9 out of 10 apps lose money, you should either make sure that you have done your homework on the niche you are targeting so that you can ensure your app is as good or better than everything else in that niche, or you'd better market the heck out of your app via every medium you can afford to do so on.<p>Alternatively you could do what early-stage Venture Capitalists do and spread your risk with the knowledge that most of your investments will never turn a profit, but with the hope that one or more of them will be so successful that they more than make up for the failures.<p>Again, the app economy is not a lottery. It's a business.

These numbers are useless. Things to keep in mind:<p>- This research is provided by a company that sells an app marketing service.<p>- No detail on methodology and how value was assessed. Are part time/garage developers tallying their opportunity cost? Multiplying their hours spent by an idealized consulting rate? What about free/low cost apps that leverage an existing paid service? How does that fit in? What about long-term ad revenue?<p>- Reported backing evidence is anecdotal.

Startup success is a lottery: 82% (or more) of entrepreneurs never succeed. [1]<p>That said, I personally think that 40% is a high success rate compared to other things in work and life, so I pretty much disagree with the op.<p>[1] <a href="http://onstartups.com/tabid/3339/bid/79/Six-Interesting-Stats-About-Startup-Success.aspx" rel="nofollow">http://onstartups.com/tabid/3339/bid/79/Six-Interesting-Stat...</a>

One of the numbers were:<p>"90% of apps don't generate enough revenue to support a standalone business."<p>While it might be true. I don't think it's very difficult for anyone coders on HN to release 8 "meh" apps and make enough to sustain a modest lifestyle. The "app" doesn't have to be the business... The business can be nurturing a number of apps... both big and small.

40% odds would be the best lottery ever.

iOS app success is pretty much guaranteed - if you're smart enough to take your skills and start selling them at market rate to every Tom, Dick, and Harry who wants to hit the iOS lottery.<p>In a gold rush, the guys who do the best are the ones selling picks.

&#62; Much like music or book sales, there are a few huge winners, a bigger handful of minor successes, and a whole lot of failures."<p>Could read, "much like every industry in the history of mankind..."

How many apps are developed by existing businesses that wish to extend their service to the iOS platform? I'd bet this is a significant number. Dropbox, Facebook, all of Google's apps, many newspapers and old media channels, online travel services, and many others have an iOS app to supplement their existing business. How many apps in the App Store are barely more than a nicer mobile interface for an existing website?<p>How does this "study" account for these cases? If you release a free app, how many additional conversions are required via the app to justify the development costs?

We bought our lottery ticket last week. After releasing our app we got picked up by some big blogs but when the buzz died down, we immediately saw a dip in sales. We don't have a budget for marketing but we did notice that when your app is of a sufficient quality and you tell passionately about it, reviewers are willing to write about you.<p>It's a roller coaster ride, but nothing beats seeing people enjoy your product.. America watch out, next week we will targeting you with our marketing :)<p>Plug: www.invyapp.com

To those who think 60% is low: how many apps of the 100,000+ in the App Store were made by a small team of maybe 3 or fewer people? How much could their development costs be? A few thousand? Certainly modest apps can be developed for less than $100,000 (substantially less in most cases). I'd believe that most (say, oh 60%) of these apps can attract a few thousand customers to pay the $0.99 for their app.

A lot of this has to do with the fact that app discovery on the iOS platform is broken. Granted it's a lot better than Google Play (or whatever that market is called now), but it's still skewed. Small indie developers without huge marketing budgets or paid people in China to download their app stands little chance of cracking the top 1000, or 100, where the financial goal of "break even" is achieved.

I think that's because 60%+ (it's definitely more imho) doesn't understand marketing. I made a simple game, not very original to try out the Appstore. It was downloaded 4 million times, raving reviews and it made $100k+ (and makes thousands every month still) while it took me 2 weeks to make and 3 weeks to market (in monetary terms in the Netherlands that would be; 5x5x8x100 = E20k ~ $26k; i'm a developer, so I underestimate, so $26k x π = $80k, still nice profit) . I did do a LOT of marketing and most developers just upload it and wait for it. Build it and they will come doesn't work in the Appstore. Everyone in the top charts put a lot of time/effort/money into marketing; some have more luck than others, but without marketing, you won't get anywhere.<p>Basically I would say if you develop something for the Appstore you need $50k for developing something well built and $75-100k for marketing it. I got lucky as I know the right press to market, but that's basically it. If you don't have $150k to spend, don't expect anything then it will always turn out nice :)

My experience with the Windows Phone Marketplace seems to fit this pattern. A little over a year ago I started teaching myself C#, so I starting creating WP7 apps and releasing them.<p>As of today I have released 10 apps for the WP7 store (and two for Android), making a total of seventeen 99 cent sales for the paid apps and about $2500 in ad revenue for the ad supported apps. The total download numbers for all ten apps is about 17,000 (1500 Android), with about 500k impressions for the last 7 months. At best, when the apps were most popular, I was making $35 a day in ad revenue which has settled down to about $5.<p>However, I must note that the apps are not very good. As I was new to C#, each app took less time than the last, but the first took about 3 months of my free time. It was a cool way to learn to code while giving myself a tiny boost in income. However, now that I know I can write crappy apps, I would like contribute to something bigger/better and work with a team. It would be monumentally helpful to have a designer to work with as that is the hardest part for me.

This seems like as good a place as any to add my own experience. I wrote an iOS card game:<p><a href="http://platinumball.net/hearts/" rel="nofollow">http://platinumball.net/hearts/</a><p>It has made me about ten thousand bucks to date.<p>Certain things I did seem to have helped a lot. For example, I nearly killed myself to make sure my app would be ready on iPad launch day. Being one of only a few native iPad apps at the beginning really boosted my sales for awhile.<p>Probably the worst thing I did wrong: It's not pretty enough. If there are any designers reading that would like to collaborate on a prettier follow-up app, my contact info is in my profile.

How many small businesses don't get off the ground and end up closed shortly after opening?<p>How much higher do you think that number would be if it only costs $100 to get store space in the local strip mall instead of thousands?

I think the main reason for such a high failure rate is the ridiculous number of "me too" apps. This is true of many categories, but especially games.<p>There's some <i>huge</i> market gaps on iOS that are just sitting there waiting for someone to come along and fill. For example, people are always complaining about how the iPad isn't good for content creation. Why not create a product that lets people do some of the stuff like this that they're still stuck to their PC for, instead of making another puzzle game?

What's the percentage of crappy apps on the AppStore?<p>I'm sure that there are less than 40% of really good apps. So if 40% of the apps, including not-so-good ones break even, that's still a goldmine.

Nothing surprising here.<p>- 1149 € iMac<p>- 100 € One year License<p>- daily rate € x amount of days required to develop and release<p>Now how many customers have to buy the app at 1€ to break even?<p>Same thing on the Android side (just the PC is cheaper to get)

In other news, 95 percent of the apps in the app store suck.

I agree with other posters, 60% is a pretty good rate for businesses to succeed. I develop some as a hobby developer and two of my apps - Toy Cash Register -- and Kids Writing Pad have made over $6,000 each -- I develop myself and sometimes outsource design (which could use a lot of improvement) -- as for marketing, it's a waste of money. You need to find the right company to provide the right marketing, and to be honest-- it doesn't exist. There are companies to mass market, but you aren't going to win in the mass market -- it took Rovio years to get a success like Angry Birds--and in the niche markets there isn't enough experts--you need to make it your own way and not lose money on people trying to market you. I wrote apps because I needed them-- and it pays for my Apple device addiction.

Infographic: <i>"52% had $0 set aside for marketing, despite 91% believing marketing is necessary for success"</i><p>Can people talk about their experience using paid marketing for their iOS apps? So much depends on "top 25", "featured", and App Store search. How can paid marketing really help bring about success?

Apps, even those that make very little profit, are great until you factor in customer service. I spend far more time than I'd like answering the same questions over and over again, even though I post several of those answers in the app description and on the website. Sure, I could do a better job of this, but most of my customers don't take the time to read the FAQ and go straight to the customer service email.<p>I can only imagine how many emails arrive for those with apps selling more than a few hundred/day.

High quality apps with high quality marketing will do just fine, just like every other business.<p>You can still win the lottery though. Look at Draw Something. The company was basically out of business, then the app hit it big, it went viral, and they made millions.<p>The app store is great for managing app downloads and updates. It's even okay for showing off popular apps. It should never be the ONLY way that anyone tries to drive sales.

We were thinking of hacking together a simple Android app for sale however looking at huge marketing budgets how would you compete with the big boys?<p>Can you complete on features alone? Do you generate any decent revenue being outside the top 10?

Seems to me the article is trying to portray the iOS app market in the same way I've seen complaints of the Android app market; that users are cheap or want free apps. Has anyone else claimed this because that's a first for me.

How did they come up with the numbers? I may have missed it but I don't see their methodology. (Do they have someone on the inside at Apple?) Until I see the methodology, this article is no better than making a random guess.

when you're donating a third of your revenues to a megalomaniacal corporate cult of personality, you kind of get what you deserve, don't you?

i'd say the number is closer to 90%, not 60%.

So 40% do break even. I'd guess that is better than web or other platforms.

Do they source their claims on anything other than conjecture?

I just gotta say, I think 40% success rate is PRETTY GOOD.

How does this compare with other entrepreneurial pursuits?

Using the term lottery and pointing out that 60%+ don't break even makes a very inaccurate assumption: that all of those apps are equal in quality of production and marketing. They aren't.<p>High quality apps which are combined with a high quality marketing and PR push have a far greater chance of success than the 912th Angry Birds ripoff that was built in two hours.<p>See Instagram for an app this author probably thinks hit the app store lottery. In some respects they did get lucky, however all of the work that went into releasing and publicizing the app gave them the potential to have the kind of luck most apps could never have, because millions of people would not download those apps, use them daily, give them 5-stars and rave to their friends about them even if their app were the top result for every search, chart and list in the app store.<p>tl;dr: the better your app is and the harder you work to market it, the 'luckier' you will get.

This article is silly. The idea that you can't make any money from an App if you aren't in the top of the charts is false.<p>One of my apps has only occasionally and then briefly, broken the top 200 in the US in its CATEGORY. (So nowhere near top 200 overall) and it still reliably pays out every single month. Further over its lifetime-- about 2 years at this point, the amount it pays every month has gone up, not down. The experiments we've done show that several things we could do would make it pay even more.<p>For instance, if we'd done a single bit of marketing that might have helped. The closest thing to "marketing" we do is to give promo codes to anyone who asks for one because they want to review the app. (nobody in the USA has yet reviewed the app.)<p>The idea that you need hundreds of thousands of dollars to develop an app is also kinda silly. A team of two developed our app over the course of a month. In the intervening 2 years, another month or two has been put into the app. At this point, the app has gone well more than a year without an update and it is still earning the same income- in fact, its income has gone up in the past several months.<p>There are somethings that you should do to have success though:<p>1. Have a good UI. The team of 2 was an engineer and a designer and we spent a lot of time on the design.<p>2. Make the app good. The star rating is a factor in the app doing well.<p>3. Make the app useful. Have something unique about it... but this doesn't have to be super unique. (our unique value is quite terrible. Paul Graham would throw me out of his office or a YC interview if I pitched him on it... its barely a differentiator, but its enough.)<p>4. Learn from your app and then do another one. Over time you can build a nice stable of apps and a nice income.<p>5. Update your app regularly. You experience a sales dip when the app is first updated, but after there are sufficient ratings on the new version the update seems to boost your sales. (or at least ours have, though we stopped updating it to focus on other things.)<p>6. Make your app sticky. About %80 of the people who buy our app never use it, and that's unfortunate. But the %20 who do, do for a long time and use it quite a bit. I think not every app is for everyone. But if your app is going to be useless after awhile, there's not much point (remember the vevuzula? lots of apps came out to make that sound. wonder how they're selling now?)<p>Hits come and go, and the big money may go to the hits. But viewing an App as a dividend that pays out every month, in my experience the returns are quite well worth it.<p>Some more points<p>-- Don't spend $100,000 on an app. Or even $10,000. IF you count our cost of living, our app cost us $3,400. We did spend a couple hundred on an outside designer that didn't work out, and about $500 on the app down the road after it was already making good money each month. That $3,400 we "spent" on it-- we get more than half of that back <i>each month</i>.<p>-- If you're a big business expecting to gross $1M a year from an app, then maybe it is a lottery. I dunno.<p>-- A high price is not a problem. We sold our app for $3 the first year, then $5 the second. No real change in income. We experiment with pricing a bit. You get a lot more downloads at $0.99. And you can have a big boost to your app by running a sale... but that also affects the amount of "juice" apple gives you.<p>-- Since we're not in the charts, our sales come because Apple is recommending our app to people. Think about that. The store does work, even if you'd never see us in the store by just browsing.<p>-- I think the idea of focusing on a few apps is a very good one. don't just throw crap out there and see if it sticks. That's the biggest problem with the store-- too much crap. But Apple is getting algorithmically better at figuring out whats crap and what isn't. Make your app good. Doesn't have to have all the features you could possibly want in the first version, an MVP is fine, but make it polished.<p>I think that the app store is a huge opportunity for people who would like to work for themselves but aren't in a position to raise funding to do a startup.<p>I think its a lot easier to get a good app discovered than an obscure website.

That’s impressive, actually.<p>Whether or not you succeed in lotteries is out of your control. There is a certain probability your lottery ticket will win and there is nothing you can do to change that probability. Your success in winning the lottery is independent from you as a person.<p>That’s likely not the case with apps. I’m sure there are some factors that are out of your control (some would call it luck), but others are most certainly not. Put another way: Those 40 percent of apps that at least break even probably are more likely to have certain properties that make them successful and that the 60 percent lack.<p>The success of your apps is dependent on you as a developer. Certainly not completely, but much more than your success in winning the lottery.<p>Given that the barrier to entry in the App Store is incredibly low, given that making apps is so hip, I’m actually surprised by that 40–60 split. Those 40 percent (more realistically you want to aim a bit higher, breaking even isn’t exactly sexy) are a big juicy target, and unlike with lottery tickets you can actually aim for it.<p>(By the way, this headline is perfect for many absurd re-writes to illustrate my point: “Success in school is a lottery: 50 percent or more of students only get Cs or worse.)

That seems to be pretty good odds. What percentage of startups actually succeed? I'm in the wrong app business.

This is wrong in two levels:<p>"Success is a lottery" means that all apps are of the same quality, polish, usefulness or wow factor, etc, and only chance determines the success.<p>What they probably meant to say is that success is RARE (something different than "lottery"), and occasionally unpredictable -- but is not "chance", as to be a lottery. Even the unpredictable hits have explanations (e.g. users liked their concept --even if was just fart noises--, they got a good review, etc), while lottery is pure chance.<p>"Success on the app store is like a poker game" would be far more correct.<p>Also: in actual lotteries, FAR MORE than 60% of participants don't break even. That's how lotteries make money.

"52% set aside $0 for marketing despite 91% believing that marketing is necessary for success."<p>pardon if I'm grumpy, but doesn't this imply that 50% of the devs contacted in the survey were not serious about being in business in the first place? if the main lesson here is "hobbyists are mostly not making money with their hobbies," it's not really such big news.

If you consider making $1 a success, that is amazing odds. Try releasing a software product for any other OS and I'm sure that climbs to around 90% if not more.

If you have the actual numbers, it would probably obey the Pareto distribution. Essentially few rockstar developers make big money and most of them don't succeed.<p>\Didn't read the article.