Make money from mobile phone apps

by John Fitzsimons on 19 July 2011  |  1 comment
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Guest blogger Jamie Lyons explains how having an idea for a mobile phone app can see you quids in.

The number of people using smartphones and spending money on apps is continuing to increase – app stores are anticipated to make $7.3billion in revenue this year and this is expected to reach $36.7billion by 2015.

The app market is a great opportunity for people to get their product into people’s pockets quickly. At the moment, people associate apps with smartphones, but there are already many apps for TVs and consoles – technology which is set to be huge in a couple of years.

The app market is still at a stage where it’s not yet over-saturated (unlike web design). Despite becoming a very competitive environment, there are still many opportunities for prospective developers. Quality and execution of the apps is key – get these wrong and you won’t even get a look-in.

So how easy is it to create an app and make money from it?

How will my idea for an app earn me money?

A basic app that’s professionally designed can be developed and distributed for as little as £5,000 and the development timeframe can be short. That said, creating an app that actually earns you money can be a hard task. Apple’s App Store currently has in excess of 450,000 apps available – all built by third party developers – so to say it’s a pretty competitive market is putting it lightly.

Many apps are available to download for free and don’t charge for their services. However, if you want to earn money from your app, you’ll need to come up with some way of generating revenue.

Money can be made from apps in three main ways:

Download revenue

The consumer has to pay to download the app. Simple. Remember, knowing your market is important when deciding how much to charge for your app. The public expects a lot for free, so if you’re going to ask people to pay £1.59 for your app, you have to be able to justify it.

What does you app offer that a free one doesn’t?

Advertising revenue

Many apps that are free to download earn money through advertising within the app.

The developer can choose to sell their own advertising or use an agency such as iAd, Apple’s mobile advertising network, which provides its services in return for a cut of the app’s earnings.

‘Freemium’

This option is becoming more popular. A freemium app is free to download, but comes with options to upgrade the app and its content later on for a fee – Men’s Health magazine recently did this very successfully. The magazine developed a free-to-download workout app which would then charge the user if they wanted to see extra video content – a nice way to make money out of a ‘free’ app.

It’s worth noting that Apple and Google take a 30% commission for distributing an app in their respective app stores. This means that if your app costs 99p to download, only 69p of that would go in your pocket. The same 30% commission applies to any services sold within the app.

How do I grab a slice of the action?

The good news is that coming up with a decent idea for an app is something anybody can do. However, there’s a high level of technical programming expertise required to build a successful, accomplished app. Even a simple app requires a thorough knowledge of programming methods – which most of us don’t have!

Some companies are now introducing the opportunity for wannabe developers to create an ‘app out of a box’ – without the need for any technical know-how. Such systems are based on a template-type format, but the app is unlikely to be unique.

A different option is to pitch your app idea to developers and let them do the techy stuff for you, but obviously their expertise will incur a cost.

For people with no app experience, little time and a very small budget, one way to get your app to market is by using FundedApps. The free-to-download app allows members of the public to suggest an app idea and potentially see it created, developed and marketed with full investor backing. Each app idea costs £1.19 to submit and it is then assessed by a ‘Dragons’ Den-style’ viability committee for potential development. FundedApps will then work closely with its team of investors to select and launch the best ideas. Selected ideas will receive £250 upon confirmation of investment.

Individuals whose apps are successfully developed and launched will earn 25% on all profit earned – which, in the case of Angry Birds – one of the most successful apps ever – would be over £9 million to date!

Jamie Lyons is co-founder and executive director at FundedApps.