'Average app development costs $6,453'

May 17th, 2010, 19:47 Posted By: wraggster

App industry expert Alex Ahlund broke-down the iPhone app sales market to determine the ins and outs of succeeding in an increasingly competitive arena
Alex Ahlund, former CEO of AppVee and current adviser to Appolicious, has published a detailed breakdown of recent iPhone app sales on startup profiler site TechCrunch.
The survey utalises detailed financial information from 96 developers, with Ahlund looking at the success rates of market applications from major studios and single-person authors “ranging in price from 99 cents to $79.99.”


“This mining of data was intended to cover the entire iPhone app industry as a whole, without allowing outliers to skew the data too much in one direction,” Ahlund said.
On the general cost/sales results, Ahlund found that:
“The average total number of units sold [per App] was 101,024 within an average period of 261 days. The average number of units sold per day was 387.”
“The average price was $5.49, although the data skews due to the $49.99 outlier. In most cases, the price point was $0.99. The average number of updates released was 3.89, with the average total development cost amounting to $6,453,” he added.
Ahlund qualified these results by noting that “several developers omitted development costs and most did not include their personal time in these figures.”
“It is safe to assume the cost would be at least five or ten times more when using a contracted team,” he said.
“But on average here, iPhone developers are seeing a return of more than 15 times their initial, albeit small, development costs.”
Ahlund went on to note that when the top 10 per cent of the most successful apps were removed from the data, the numbers skewed much lower.
“In this scenario, the average sales were 11,625 total units, averaging 44 copies/day. Approximately 23% of apps sold less than 1000 units from launch,” he noted.
“56% of apps sold less than or equal to 10,000 units, while 90% sold less than 100,000 units, with the remaining 10% achieving sales of 127,000 – 3,000,000 units.”
Other interesting discoveries included finding out that application updates do far less to boost sales than previously thought.
“Some developers reported that updating the app gave only a small—and brief—spike in downloads,” Ahlund said.
“What did seem to have a larger impact on sales was a drop in price, although this also tended to taper off quickly.”
Having an app featured by Apple was discvered to be a much greater sales-boosting event for studios.
“The level of Apple promotion reflected what sort of increase the developer would see. Areas such as ‘New and Noteworthy’ produced slightly less gains than ‘Staff Favorites’ or ‘What’s Hot’,” Ahlund said.
“Generally, it is safe to assume a 2-20X sales spike following being featured, with the effect lasting roughly a week before returning to average numbers.”
Ahlund went on to breakdown the most ‘traditionally’ succesful marketing techniques, with an emphasis on social networking sites seeming the surest route for developers to take.

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