71% of iPhone apps discussed wouldn’t cost a penny [….] For the 29% of apps that will need to be actually purchased, the average price was a pretty reasonable $2.29.
I really hope, for the sake of myself and all iPhone developers and users, that this isn’t accurate. Some quick math:
- Apple has sold 5 million iPhones so far. I’ll assume that 90% of them are in legitimate use — the 10% excluded are unlocked phones, dead phones that have been replaced, and phones that people will never actually upgrade to the 2.0 firmware with the App Store.
- Assume that 1 in 1000 iPhone owners purchase your application. I think that’s pretty optimistic, and probably more than most people can hope for. There are a lot of people who don’t speak your language, don’t need your application, don’t like your application, don’t know about your application, aren’t willing to pay your price, or aren’t willing to pay for applications in general.
- Remember, Apple takes 30%.
- Assume that you have to pay 28% overall income tax on the rest.
That means that a $2.29 application will net the developer $5,193.
That’s fine for an application that took you a few weeks to make in your spare time. But that can’t support a professional developer full-time — and it certainly can’t support a company with more than one.
Raise the price to $9.99 and the profit jumps to $22,657. A business with 2 developers at reasonable salaries will probably burn at least $15,000 per month, so they would need to make a hit application almost every month to stay afloat.
If the average price of applications stays low, and I’m anywhere near the correct ballpark for the 1-in-1000 sales figure, the platform just won’t have a lot of high-quality software written for it.