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The Art of the App Store: The Business of Apple Development by Tyson McCann

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BUSINESS REASONS BEHIND REVENUE MODELS

Free-to-play (freemium) and apps using in-app purchases may be taking the App Store by storm. But there are many reasons you may want to consider a paid app, especially because being paid and having in-app purchases are most definitely not mutually exclusive.

As such, you should be aware of some of the warning signs. According to 2010 research by Flurry/Pinch Media (and from just reading forum threads by developers such as on iphonedevsdk.com), the App Store is extremely top-heavy with regard to number of downloads of paid apps and the revenue generated. For example, this study revealed that the number of downloads in the top 10 percent of popular apps was roughly eight times that of the number of downloads in the top 20 percent. By the time you got to the 50th percentile (average app popularity), you were looking at 70 times less downloads than those in the top 10 percent, and 2.5 times less than those in the top 20 percent.

What does this mean for developers? Unless you aim for at least the top 20 percent of popular paid apps (not including in-app purchases), or you have other methods to filter users to your app (such as other apps on this or other platforms), your chances of sustained revenue are significantly reduced. The good news is that this study and others like it do not take into account in-app purchases, downloads of associated lite versions, or their conversion rates.

Essentially, there are a number of ways to mitigate low sales ...

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