The reality of making money from iPhone apps

I previously shared my research into developing iPhone apps. The clear message was making money from iPhone apps is not easy.

Of course, before you can make money from your iPhone app, you need to develop the app in the first place.

It’s hard to get a feel for how difficult this would be in practice – the developers of the iPhone apps on the iStore range from one-man bands to multinational software companies.

• Would I need to effectively start a small software studio to create an app?

• Or could I hire a friend or two to do the deed, taking on the funding, development risk, project management and marketing in exchange, hopefully, for the rewards?

For some answers, I dropped a line to programmer Paul Dias, who created one of my favourite new iPhone apps, Tube Changer.

Paul’s simple-to-use app tells you where to get on a London Underground train so that you’re correctly placed for the exit at the other end of the journey.

It sounds pretty nerdy, but as a true Londoner I consider it my sworn duty to hurtle through the system as rapidly as a banker running towards a bonus. Tube Changer can save you valuable minutes being stuck behind mobs of Spanish students blocking the platform.

Tube Changer is also interesting because it was created by one man in his spare time – the sort of cheap development process I’d require to keep the risks down and to maximise rewards in the shape of a passive income stream.

To find out more, I batted a few questions back and forth to Paul on email. He was kind enough to reply with pretty extensive answers, as collated below.

It’s a pretty long interview, but if you’re considering making an iPhone app but have no experience it’s quite illuminating.

An interview with an iPhone app developer

The Investor: Thanks for taking the time to share some of your experiences Paul. To start off, how long did it take to create Tube Changer, and on what sort of workload?

Paul Dias: Having previously written a small iPhone app for a third-party, I decided that I was going make my own app towards the end of 2008.

I didn’t start work on it immediately, believing that I would have plenty of time and that no-one else would have had the same idea. As well has hopefully making some money, my aim was to write the app that I would want to use, so I wasn’t going to rush it.

From start to finish the project took about six months, but the amount of work I was able to put in varied from a few hours week to getting on for 30 hours per week.

“The project took about six months, but the amount of work I was able to put in varied from a few hours week to getting on for 30 hours…”

However, after about two months of work, not one but two competing apps came out!

Why did you carry on after you saw these rivals?

I could have abandoned my effort, but my decision to carry on writing my app was based on a few factors:

a) I had already spent a lot of time on it and didn’t want it to be wasted
b) It was good development experience for me for potential future iPhone development work
c) My app was the one I wanted to use myself
d) It would be interesting to see how it would fare in the iTunes App Store, and whether it could or would be discovered by anyone, given the dominance of one of the competitors in the ‘top 20 paid travel apps’ list.

I wanted to test the idea that if the app is of sufficient quality it would somehow ‘rise to the top’ of its own accord, via sufficient favourable user ratings or reviews.

In addition I found that to add the kind of polish that I felt was required for a good iPhone app took extra time.

What sort of extra polish?

Well, I generally didn’t accept my first attempt at any of the user interface – this was partly because this was my first substantial app, so I was learning as I went.

Everything was done several times to try and find the best performance and the best appearance. This includes placement of text, the heights of the rows in the tables and the design of the various graphical elements, like the tube line colour-coded line header bars.

How different is the App market now compared to when you started?

The App Store has changed a lot in the 12 months since my first app came out – that app was a custom web browser for a client’s web site, and it was one of the first 10,000 apps in the store (a milestone reached around the end of November 2008).

Twelve months on there’s now an order of magnitude more apps in the store – the 100,000 milestone was announced by Apple at the beginning of November 2009.

“It’s much harder for new apps to get noticed now, at least by users just looking in iTunes…”

One of the big changes I’ve seen is that it’s much harder for new apps to get noticed, at least by users just looking in iTunes.

On the day that Tube Changer went live, there seemed to be about 60 new apps in the Travel category on that same day. My app only ever appeared on page 3 of the ‘most recent apps’ list.

As this list is one of the most important ways of getting your new app noticed, adjusting the release date of your app to make it appear on the first page was one trick that many developers used. Apple has recently changed the way this works, and now the release date of your app is no longer under your direct control and gets automatically set to the date that it goes live in the App Store.

How then can potential customers find your app in the store?

The main way I think is via the top lists. For example, my app has been in the list of top 100 paid apps for the travel category – though I don’t know if users even look at that list, or whether they only look at the top 20 that is displayed on the front page for the travel category in iTunes.

It’s even harder when you’re looking in the store on the iPhone itself, as the small screen size means that only four or five apps can be seen at a time.

With thousands of apps in each category (there are over 7,000 in the travel category) it would make a lot of sense for Apple to add more levels of detail.

For instance, within travel there could be additional categories for the UK, and then for London and other cities, plus categories for apps relating to public transport, or travel planning. At the moment it’s just one big flat list. Games is the only App Store category that has subcategories at the moment.

Apple’s also recently introduced keywords that you have to enter to describe your app. These will be used for searches, instead of the descriptive text that users see in iTunes. This will hopefully improve the quality of search results, and stop the kind of ‘SEO’-style tricks that had been employed in the past (e.g. mentioning the name of a more successful app in the description of your app in order to get into search results).

The new ‘Genius’ feature is also meant to recommend apps based on those you’ve already bought, but again this is out of the developer’s control.

The other places where an app could be highlighted are on the front page of the app store in iTunes, or the ‘Featured’ tab on the phone. This includes sections like ‘New and Noteworthy’, ‘What’s Hot’ and ‘Staff Favourites’. How you can help yourself get into these sections is anyone’s guess, though, I’m afraid.

“The lesson is that you can’t rely just sitting back and hoping customers will find you on the iTunes App Store…”

The lesson is that you can’t rely just sitting back and hoping customers will find you on the iTunes App Store – you’re going to need to do some marketing to spread the word.

The apps I’ve downloaded seem to always be getting updates. Do you have plans for upgrades to Tube Changer?

Yes. Firstly there will be inevitable updates to the tube exits data itself, either in terms of mistakes or typos in the data, or changes in the actual tube network (e.g. closed stations reopening).

Then there are new features: I have a few things in mind, and there are always features that don’t make your 1.0 release, otherwise you’d never ship it.

I’m not aiming to make the app do everything one could think of, though. I agree with the idea that with the iPhone it’s best to do one thing really well rather than attempt to cram every feature you can think of into your app. Many of Apple’s own apps follow this philosophy.

How well has the Tube Changer app done so far?

I think it’s too early to say, after only a couple of weeks. It has been selling steadily though. Some customers have given it a rating in the App Store, but it needs more such feedback before it starts to climb up search results and maybe even appear in the top 100 or top 20 lists.

Also, the free cut-down ‘Lite’ version has just come out, which will enable people to try before they buy. This approach has been shown to be successful on the App Store in the past, and will hopefully stimulate further sales.

Are you making money? Has it matched your expectations?

Yes, in a way: every sale gets me some cash, once Apple has taken its 30%. I didn’t seriously keep track of costs, though, treating this as a spare time/hobby activity. And when those two unexpected competitors appeared earlier this year I had to drastically re-evaluate any expectations I had formed.

As a project it had to be recast as something of an experiment rather than as a potentially large money-spinner.

“Every sale gets me some cash, once Apple has taken its 30%….”

I am still hoping that by spending the necessary time to make my app exactly as I wanted it in terms of performance and quality it will compare favourably to the established market leader. Whether this will translate into sales in the App Store remains to be seen!

Thanks for your time Paul, and good luck with those sales!

(For more on Tube Changer, see Paul’s dedicated Tube Changer website).

iPhone apps not an easy way to make money

From my previous research into App development, and the candid input from Paul above, I’m not inclined to go into iPhone app development right now.

The competition sounds intense. I’ll check back with Paul in a few months to see if sales took off, but it sounds like a crowded marketplace that’s getting worse by the day.

Perhaps this and my previous article on making money from iPhone apps have had the opposite affect on you, in which case I wish you the best of luck.

Indeed, if you enjoy programming in your spare time – as Paul seems to – then why not create an iPhone app? There’s always a chance you’ll strike gold.

Another option would be to look at Google Android, or even the Blackberry, which seem to have less competitive app stores, at least for now.

As for iPhone app development, it looks as risky as starting any other business.

If you’ve got a great idea and you’re passionate about it, then it might be worth taking the risk. But beware of the opportunity cost – and definitely don’t think it will be easy.

All the evidence says that if it ever was easy to make money from iPhone apps, it certainly isn’t now.