How Much Money Can an App Make in 2020
Author : SHAH ANAS
Shah Anas is a Business Development Executive who believes in the responsibility of businesses to give back to society. Away from the office, Shah loves to talk about sports and politics and is always ready to post a long status on trending topics.
- Web & App
- On this page:
- How Much Money Can You Expect To Earn With An App?
- Which Platforms Are Performing The Best In Terms Of Revenue Generation?
- Revenue Models To Earn Money With Mobile Applications
- Which Type Of Apps Have The Potential To Make Money In 2020?
- What Does The Future Of App Development Look Like?
Previously written on Dec 18, 2019, updated on March 27, 2020
How Much Money Can You Expect To Earn With An App?
Apps can potentially rake in billions of dollars each year in revenue. However, most of the apps that manage to do this, are quite low in number. A majority of the apps are duds and literally, don’t make any sort of money at all. So it’s an incredibly difficult exercise to provide a number on how much money can an app makes considering the fact that there are a large number of apps and there is an incredible amount of variance in the amount of revenue they manage to churn in for their developers.
Let’s understand this through the lens of the current revenue earning potential of the top apps in the industry.
The apps that are in the top 200 apps on the app store, manage to earn around $82,500 on a daily basis. If we widen that bracket a bit and look at the revenue figures for the top 800 apps, the daily revenue drops down to around $3,500. This difference is also prevalent in categories as well, for e.g. if you look at game apps, they make around $22k each day, while the figure is significantly lower for entertainment apps, who manage to churn in just $3090 each day. So, having said that, you cannot have a uniform answer on how much money can your app make.
The app market is registering continued growth and industry analysts predict that this growth is going to remain strong in the future as well. Just register this fact: a whopping 52.2% of the total web traffic in the USA came from mobiles in 2018. So one can understand the reason why so many people and businesses are looking to build their own mobile app.
So if you have a good idea that you think will click with the audiences on the app stores, you know that developing it will require a significant investment from your end. So before investing such a huge sum, you might need the answer to the question as to how much money can an app make and especially the one I am going to produce?
Tekrevol can allow you to understand the dynamic behind this model and allow you to gain a path through which you can build an app that can make a profit for you in the long run and on a continuous basis.
The amount of how much money can an app makes varies from niche to niche and if you’re looking to boost your business in the digital world, then the mobile app industry is the ideal market for you to tap.
By 2020, estimated numbers suggest that the global app revenue will reach a whopping $582 billion.
This massive revenue generation is a byproduct of the rise in mobile phone usage. According to Oberlo, 52.2% of all global traffic came from mobile phones. For businesses, this is a gold-mine that can result in massive growth, and industry leaders have already started to use this platform to realize a higher return on investment.
Moreover, according to SensorTower, the top-100 app development firms or publishers generated an average of $130 million in Q1 2019, this figure has risen at a CAGR of 31% since 2014.
But since there is no set average for how much revenue an app can generate, you will need to understand how different niches are performing within the app ecosystem to understand just how much exactly the expected returns on your targeted niche will be.
You have to decide both the market you will target and the business model your app will implement.
To make this an easier process, we’re discussing some of the most trending business models and applications that are generating massive revenue. Let’s dive deeper into these niches for a better understanding of the app development world.
Which Platforms Can App Developers Utilize To Make More Money?
Here, the first question you really need to answer is which platform would opt to design your app. Answering this question is incredibly important since it can directly affect the potential your app will have in terms of gaining monetary returns since every platform has an entirely different market and a different level of popularity among audiences.
Developers conventionally earn well in the app domain since there is a consistent demand for apps to be developed. Having said that, opting to become a developer for Android apps will allow you to potentially earn more since the average salary for Android developers is around $97,600. The higher earning potential here is quite understandable since Android has a lot more users and higher market penetration than iOS.
But don’t think that iOS developers are not adequately compensated. A mid-tier iOS developer can earn a per annum income of around $96,600. This is not much lower than Android developers.
However, you should take these figures with a pinch of salt, since in both the Android and iOS markets, the top developers and development companies are the ones who earn much of the total revenue that these markets generate.
Smaller level developers continue to earn less, however, in recent times, there have been efforts by them to ensure that their apps perform well through initiating skillful marketing tactics through app marketing professionals.
There has been a rising trend in recent times by developers to port their apps to platforms others than Android or iOS in a bid to earn more profits by tapping into untapped markets. However, this shouldn’t be your initial bet when developing an app, and you should first opt for either Android or iOS platforms or both simultaneously in order to ensure that your app is present in the markets where most of the audience is.
If your app proves profitable on these platforms, you can then think of taking them to other platforms too.
How Much Revenue Do Apps Manage To Generate?
Apps are some of the profitable entities out there right now, there are no second thoughts on that. In just four years i.e. from 2016 to 2020, global mobile app revenue is slated to increase by a whopping margin of 200%, and touch $188.9 billion.
These figures are majorly coming from the success of many top gaming apps. Gaming apps are among the top-grossing apps out there. In July 2019, PUBG Mobile managed to rake in monthly revenue of $146 million. That’s more than $4.7 million in revenue each day. The app now has over 100 million users worldwide.
But PUBG Mobile is not just a one-off success. Other gaming apps have equally impressive figures. Fortnite developed by Epic Games earned around $1.9 million each day in 2018.
Pokemon Go, the game which became a phenomenon worldwide, earned around $800 million in 2018. That’s like ¾ to a Billion dollars in revenue in a year.
Most of these apps rely on in-app purchases to make most of their money since they are free to download and use. $71.3 billion was the projected figure from in-app purchases that game apps could potentially make in 2020. If you are developing an app, then do consider adding the option of in-app purchases in there since 98% of the revenue that apps make comes from this very revenue-generating option.
Which Platforms Are Performing The Best in Terms Of Revenue Generation?
How much money your application makes depends a lot on the platform you choose to get it developed on. Android has the largest market share in the mobile industry with 75.82%, compared to iOS’ 22.9%, making the former the obvious platform dominating app revenues in the current environment.
According to SensorTower, between 2018 and 2023, the expected CAGR of user spending on these stores is 16.8%. In 2020, the expected user expenditure for both Google Play and iOS app store is projected to be $123 Billion, with the Google Play app store leading the race at $78 Billion.
For mobile applications, these platforms provide the answer to the question every business owner asks when getting their app developed, “How much money can an app make?”
While there is no definite answer to this exact query, the current projections indicate that the future for mobile apps is on the right trajectory, and it seems that the growth rate is only going to increase in 2020.
Once you’ve chosen a platform and made that decision, how you monetize your application to make millions or even billions is an important strategic decision. For this, we’ve chosen three of the most used revenue models across the industry that you can choose based on your niche.
Revenue Models To Earn Money With Mobile Applications:
One-time payment (Premium Apps):
Premium mobile applications charge a one-time download fee on the Google play store on the iOS app store from its users. While there is a general belief that premium apps don’t make money because users don’t want to spend, that’s actually untrue. In 2017, Paid apps accounted for nearly $250 Billion in revenue.
Education apps are a well-performing category within the paid apps category. Take, for example, WolframAlpha, who uses its computational intelligence to come up with answers for mathematical queries and chemistry-related problems.
In just October of 2019, WolframAlpha made $20,000 in revenue through downloads. Standing at 1,000,000+ downloads on Play store alone, the application is a powerhouse in the educational category.
1) In-App Purchases (Freemium Apps):
In-App purchases are a great way to generate revenue through applications. It allows users to download the application and use its features for free while putting up a paywall on some premium features.
One such application that uses In-app purchases for revenue generation is Fortnite. In May 2019, Fortnite made $203 million in revenue, even though the game remains free to play for users.
2) Subscription model (Recurring Payments):
The subscription model is well known in the industry with applications from services such as Netflix, Hulu, and Amazon being popular operators in this niche.
It requires customers to pay a recurring fee for access to the application’s services.
In this category, Netflix stands as a giant with $5.2 Billion in revenue as of the third quarter of 2019. Similar applications in this category include Pandora, the music streaming application that uses a similar subscription model.
As of September 2019, Pandora’s revenue stood at a staggering $447 million, nearly 30 million more than their standing in September of 2018.
This trend showcases the power mobile applications have in 2020 and how they can help business owners earn money through the digital landscape.
Which Type Of Apps Have The Potential To Make Money In 2020?
Gaming Applications are the largest contributors to global app revenue. The 2018 iOS App Store mobile app revenue exceeded the $33 Billion mark, while Google Play revenue for games stood at $21.5 Billion.
The total growth of revenue in the first half of 2019 was 11.3%, with a total of$29.6 Billion. The advances in gaming technology like better graphics, control, and Gameplay, and the rise of e-sports are seen as some of the major contributing factors for this boom in the mobile games industry.
According to MediaKix, 56% of mobile gamers play games more than 10 times a week, showcasing the addictive nature of this mobile-based entertainment avenue.
Gaming Applications accounted for 77% of the total app revenue in 2018, with the gross mobile game revenue standing at $54.7 Billion. The AR-based game “Pokemon Go” grossed over $3 billion in revenue in 2019, while Clash of Clans’ monthly revenue rose to reach $22 million in October 2019.
On the other hand, E-commerce mobile apps have also been on the rise for a long time, and if existing data is any indicator, the rise is not going to slow down any time soon. The growing tendency among the younger demographic to buy online has contributed significantly to the rise of this sector in apps. By 2021, experts have estimated that the US mobile commerce sales will amount to more than $3 Trillion.
This is one of the niches that has given businesses the ability to become globally recognized brands. In order to cash in on this market, mobile applications require a payment gateway integration within applications, which allows them to sell products and merchandise on their mobile apps.
By 2021, over 2.14 billion people across the globe are expected to by services or products online, which provides businesses with a huge audience to target.
The Internet of Things is also being primed as the next big thing in the area of modern mobile application development. According to Techjury, there are expected to be roughly 64 billion IoT devices worldwide by 2025. By 2020, the market will value at around $2.48 Trillion, expected to grow even more by 2025 to reach an estimated $16 Trillion.
Just as the numbers suggest, mobile applications targeting this industry can expect a huge return on investment. In 2020, the market competition in this niche is quite low making this an excellent time to tap into this market and extract the benefits by capitalizing on the first-mover advantage.
Another vertical that app developers and businesses have to keep in mind is Smart TVs and Smart Watches, as they can also churn out a huge amount of revenue in upcoming times.
According to Adweek, 70 million homes in the US are connected to Smart TVs, which is allowing applications to make more money and expand their user base through diversifying.
Companies like YouTube, Netflix, and Amazon are already making way onto these platforms with their custom applications designed for these platforms.
These applications are already functioning on most video game consoles as well, providing convenience by making sure that their apps are discoverable across multiple platforms.
What Does The Future Of App Development Look Like?
In terms of opportunities, the mobile app market has a lot of potentials that are yet to be tapped.
The final quarter of 2019 showcased this potential with an estimated consumer expenditure of $21.9 Billion on apps across Appstore and Google Play store, with a 22.9% increase from last year.
These figures suggest that the year 2020 is going to be huge for mobile apps.
The question we discussed earlier how much money apps can make, might not have a definite answer but through these stats and figures, you can definitely reach a ballpark figure.
If all the considerations are identified by a business, apps can make a lot of money, especially in the developing world, which is a market where demand is still sky-rocketing.
Tekrevol’s mission has always been to help businesses grow with the help of our mobile app development expertise. If you’re stuck wondering how much investment you would need to get your business booming in the digital market, we’ve come up with an app calculator that can give you an estimated price for your product. Without having to deal with a human counter-part, you can get a quote and compare it to the potential earnings that mobile apps have in the modern world. Do you have an idea that we can help with?
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