App Store synthesis
Q3 ‘09
MARKET SIZING, PRICING EFFECTS, & USER TRENDS
source: taptaptap blog
Ken Yarmosh
Product Strategist
www.technosight.com
www.twitter.com/kenyarmosh

MOTIVATION
There’s been great information shared about Apple’s App
Store on market sizing, developer PRICING EFFECTS,
and insight into USER TRENDS.
It’s hard to sort and navigate all of it, keep track of key
insights and changing trends, and overall, have a quick,
synthesized reference available for iPhone developers.
www.TECHNOSIGHT.com

MARKET SIZING
[A(d ) ( u ) ] x p = Revenue Potential (upper bound)
‣ A = # of total devices (source: Apple)
• if applicable, break out iPhone versus iPod Touch
‣ d = % of devices in a given addressable market (source: industry)
• may require multiple calculations using different sources
‣ u = % of users downloading apps (source: industry)
• if applicable, break out paid versus free
‣ p = price per unit (your variable)
Jonathan Wegener’s “The Definitive Guide to iPhone App Market Sizing
www.TECHNOSIGHT.com

GETTING TO THE TOP
“Here’s what Barnard says are the average prices for
Apps in the App Store:
Top 10 = $1.99
Top 50 = $2.23
Top 100 = $3.18
According to Barnard, it takes about 400 sales per day to
break into the top 100; and about 10,000 sales per day to
hit the very top of the charts.
Assume the average sales in the top 100 to be about
1,000 per day. If the average price for an app in the top
100 is $3.18, that’s about $116 million per year for the top
100 apps.”
http://www.appcubby.com/blog/files/app_store_pricing.html
http://www.cultofmac.com/developers-call-bs-on-2-4b-iphone-app-store-number/15250
www.TECHNOSIGHT.com

PRICING - CAUSE + EFFECT
Free equals the most downloads (duh).* BUT lower
or the lowest prices often result in more negative
reviews and lower ratings,
“Also during this experiment I saw WriteRoom.iPhone’s star
ratings (especially when I was giving it away for free) go from
mostly 4’s and 5’s to evenly distributed between 5 and 1 star. My
conclusions are:
1. Cheaper gets you more users.
2. But cheaper also makes the average user less satisfied.”
source: Pinch Media’s AppStore Secrets
http://blog.hogbaysoftware.com/post/170655672/writeroom-iphone-4-99-daily-sales-compared-to
* I’ve had many discussions with iPhone developers. Making a decent app free typically results in upwards
of 1000’s of downloads per day. Comparatively, even $0.99 can drop it to zero or < 20 per day.
www.TECHNOSIGHT.com

MORE THOUGHTS ON PRICING
Get out of the $0.99 mindset --
http://www.technosight.com/how-to-build-a-non-0-99-iphone-app/
“How to be Unique” Case Study --
http://www.technosight.com/ramp-champ-combining-iphone-play-with-in-app-purchases-and-virtual-goods/
www.TECHNOSIGHT.com

USER TRENDS - DISCOVERY
“Over 90% of users who cite these activities [browsing the App Store rankings or searching for a
specific app] do them on their mobile device instead of their computer. ”
source: AdMob July ’09 Report
www.TECHNOSIGHT.com

USER TRENDS - USAGE
Engagement can be driven by:
‣ Developing applications with long-term value
(e.g., focus on business, utilities, and productivity
categories).
‣ Releasing regular updates. For games, this can
include new levels. For other apps, this will include
highest requested features or market
differentiators.
source: Pinch Media’s AppStore Secrets ‣ Coupling apps with desktop or web-based
counterparts.
www.TECHNOSIGHT.com

THERE’S MORE...
This has been a quick synthesis of available information
about Apple’s App Store on market sizing, developer
PRICING EFFECTS, and insight into USER TRENDS.
Need help developing your iPhone or other mobile app?
Ken Yarmosh
Product Strategist
www.twitter.com/kenyarmosh
www.technosight.com
www.TECHNOSIGHT.com