Some sad data from Giga Om on what app developers are making.
More than 50% earn less than $500 per month and about 80% earn less than $2000 per month. Apparently advertising-based apps do even worse, where 1/3 make less than $100 per month. The split isn’t totally unexpected but $20,000 per month in revenues isn’t really that much. That probably pays 2 or 3 people market wages in this industry.
I couldn’t find a number readily but I’d estimate there have been somewhere north of 400 million smartphones and tablets sold in the past five years. Through 1986 there were about 40 million personal computers sold. By December 31, 1986, Apple Computers, Microsoft, Adobe and Oracle, all of whom built themselves specifically in the PC era, were all public. It doesn’t strike me that there are any mobile-specific companies, with 10 times the devices sold, in the same position today.
Elia Insider 
But — How many of these “app developers” are a single guy or gal working at home after hours for marginal income? Put in that context, an extra $500 – $2,000 per month sounds a lot better. And this “small volume” app market opens up opportunities for hundreds (probably thousands) of niche app products that would otherwise never be developed.
From Eniac I to the handheld PDA — the consistent trend in software development has been toward a diffused market for both talent and capital. Niche financing, niche development, and the increased empowerment of the individual (the exact opposite of the sociologists’ “dehumanization” predictions during the big-mainframe era) have been the results.
Most of these app developers are part-time by definition as there are few places in the developed world you can live on even $2000/month successfully. Every industry has part-timers and the PC industry had millions of niche apps, too. That’s not the problem. The problem is that there is little hope to build a sustainable business in this space, which deter people from building them. I don’t want to rely on hobbyist apps to get my work done. That’s dangerous.
And I’m not just talking about the Adobe’s of the world, there is no hope in building the Panic’s of this world either, at least not focused exclusively on mobile. I’ve advocated for a long time that the only way to build a mobile company is not to. Instead, treat mobile as a node in a broader product offering. With this data, I’m more convinced of that then ever.
I don’t disagre with anything fundamental about your observations — and I certainly am no expert in the marketing dynamics of your industry. But I suspect that eventually (and probably sooner rather than later) there will emerge a multi-tiered app market that prices quality, professional apps differently than the “hobbyist” apps that are currently flooding the market. Part of that process will necessitate some industry shakeout as quality producers try to compete on price — a fruitless strategy in my opinion. Premium products deserve premium pricing. Premium pricing will buy technical support, professional bugless design, and a reliable, feature-rich environment — and that smaller market will be willing to pay for those distinctions. I know I will.
Thanks, Karl. I hope you are right. Currently it is very hard to tell the difference between professional apps and hobbyist apps, which is part of the problem with the way app stores are structured. Given that, this shake-out will need to happen or we’ll need to figure out how to build apps that can be priced reasonably to be supported long-term if companies like ours are to be around.
I vaguely remember a time when mobile apps cost actual money but then we ended up in a world where buyers used to spending $.99 for a song could suddenly do the same thing for an app and developers played along. If everything scales linearly, volume can’t make up for a unit price that doesn’t pay back the customer acquisition and support costs. Not to mention that customer acquisition has become far more of a roulette game than a controllable process.
As you say, sad data. There are a few companies I can think of that really are in the business of selling mobile apps (as opposed to all of the businesses that leverage mobile apps), but they’re exceptions.
We used to average $37/paid app with upgrade revenue and a long-term customer relationship. We now average less than $3.40/paid app with an indirect customer relationship and no upgrades. It hasn’t been an easy transition.