This week, we’re focusing on paid applications (for our post on piracy, see here). By providing some analysis of paid applications, we hope to answer some common support questions and give developers a sense of how their application’s performance compares to the ‘typical’ paid application.
Our Estimates
Pinch Media has a model which we use to estimate the size of the App Store as a whole, based on the relative performance of both paid and free applications using Pinch Media, as well as the ranking of applications using Pinch Media in Apple’s App Stores around the world. Based on our pool of data – which covers over 10% of all downloads – we believe approximately 610 million of the over 2 billion App Store downloads so far have been of paid applications, or approximately 30%. We believe this translates to approximately $900MM in overall developer revenue since the launch of the App Store. Paid application downloads drive the large majority of App Store revenue, although this revenue is not evenly distributed among developers.
Although paid applications make up 30% of the downloads we see, they’re about 77% of the 100,000 titles available in App Store. There’s definitely a disparity between the typical downloads of a paid application and the typical downloads of a free application. However, paid applications can still reach a large audience – more than half of iPhone/iPod Touch devices in our database have installed and used a paid application.
The ‘Typical’ Paid App
If we take the data on the thousands of applications running Pinch Media, and weight it so it corresponds to the actual distribution of iPhone applications (our data has a slight tendency to come from highly-ranked applications with more downloads), the average paid app performs as follows:
~9,300 downloads
(vs. average free app downloads: ~71,000)
~$12,100 revenue
(net to developer: ~$8,500)
That’s not to say this is a common result! The arithmetic mean can be misleading. App Store sales and distribution are ‘top-heavy’, with the most popular applications receiving a very disproportionate amount of sales. A small segment of developers do dramatically better than this average. Most do much worse.
Downloads aren’t linked to price
While it’s common wisdom that lower-priced applications are downloaded more than higher-priced applications, we don’t see this in our data. The average $0.99 application using Pinch Media is not downloaded substantially more often than the average $4.99 application. We still see dramatic changes in sales when any one particular application adjusts its pricing – an application selling X units at $0.99 will sell a small fraction of that at $4.99. We suspect that the relatively strong performance of $4.99 applications are a reflection of their quality, and a sign that the App Store will support higher prices for an engaging experience. Users only start to display strong sensitivity to price at price points above $4.99.
Paid Apps are used more than free apps
Paid applications as a whole are used slightly more often and for slightly longer periods than free applications – potentially a reflection of application quality or a consequence of increased user attachment to items that they’ve paid for. Lower application usage by pirates (see our previous blog post) suggests that paying for something does increase a user’s attachment to it. Usage by price point is harder to explain – $4.99 applications are used significantly more than $0.99 applications, but $9.99 applications are used significantly less than $4.99 applications.
The Presentation
Last Word
This post was adapted from a presentation at the last 360iDev. Look forward to more of the insights we shared at the conference in our upcoming posts, by subscribing to our RSS feed and following us on Twitter. If you’re an app developer and are interested in tracking your own user statistics, you can sign up with Pinch Analytics for free.
- Greg Yardley
Wow! That “Top heavy distribution” slide tells quite the story. This dog has no “long tail”.