Your App Idea Isn’t Going to Make Any Money

App Money

Image Source: Cultofmac.com

 

So you’ve got a great idea for an app. It’s as addictive as Angry Birds and as useful as Google Maps. Once you get it into the right hands, you’re going to be rich. Or at least well on your way to starting your tech empire.

It’s a common entrepreneurial dream. Unfortunately it’s probably not going to come true. According to Tech Net’s recent report: The App Economy, most apps on the market make very little money. There’s very little room at the top of the App Economy and what space there is is already occupied. 

Remember the dot-com boom of the 90’s? During that golden decade, almost anyone with a great idea, a computer and a URL had a fairly good chance of becoming a multi-millionaire; twenty-year-olds were flying around in their own private jets, thirty-year-olds were retiring. It was the land of dreams, the resource-rich Wild West with as much gold as you could grab.

Those days are over. It’s 2012, and the tech world looks very different than it did nearly 20 years ago. Sure, the birth of the smartphone (around 2007) has opened up a whole new world of innovation. A mulit-billion dollar industry has cropped up where there was none before, roughly 400,000 jobs have been created and platforms like BlackBerry are actively seeking developers to contribute.

But the empires have already been built. And most of the billions of dollars of profit to be made will be had by the one percent. For example, The App Economy reports that of the $6.5 billion that Apple doled out to app developers, only 25% of those developers earned more than $30,000 from their apps and less than 4% made more than $1 million dollars.

 

The Growth of the App Economy

Image Source: Appdevelopersalliance.org

 

That means that roughly 75% of app developers will barely make enough to get them through the year they devoted to developing and marketing their app. And when you take hard statistics into account, quitting your job to devote your life to app development is sort of like spending all of your income on lottery tickets.

You could luck up on something like Instagram and Facebook could buy your app for $1 billion dollars. Or you could have the number three most popular photo app and make around $50,000 — if you’re lucky.

So before you head off into the Wild West of app development, you should consider how close you or your company is to the 1%. Facebook, Google and Microsoft are making billions.

Shawn and Stephanie Grime — a freelance app developer couple featured by the New York Times — only made $5,000 on their app. That doesn’t sound too terrible until you factor in the $20,000 they spent which included their potential lost wages, lack of health insurance and other hardships.

 

The App Economy

Image Source: Gigaom.com

 

To make ends meet enough to get them to the $5,000 mark they had to sell one of their cars, rent out their six-bedroom house, have a yard sale and cash in Mr. Grimes’ 401(k).

If you have big dreams of making apps, you’re better off getting a job with the Google, Apple, BlackBerry or another giant of the app economy. You may not make it rich, but you probably weren’t going to anyway. And in exchange for your good ideas, you’ll get enough money to keep a roof over your head.