[socratic]

If I'm reading you correctly, you definitely made money on the App Store. But it sounds like you are still tens of thousands of dollars underwater in opportunity cost. Is it wrong to think about it that way?

You get "more than half" $3400/month, let's call that $1700/month over the last two years, for $40,800. The two of you spent two man-months developing the app originally, and maybe a month or two since then. Let's call that 3.5 man-months. In some sense, your only cost was about $4,100 (cost of living + failed designer + $500). However, you could also have just worked for someone else. Two years ago (when you developed the app), it looks like iOS development was getting billed at about $150/hr (in Austin, SF, and elsewhere, though one guy in Ann Arbor quoted $75/hr) [1]. 3.5 work months is about 595 work hours which is about $89,250. (Put another way, if your contracting hourly rate would have been $70/hour, you would have just broken even now.) If that math is correct (and I've made all sorts of assumptions), you would have done financially better to work for someone else (especially someone at the top of the charts), no? In a sense, did you "spend $100,000 on an app" in opportunity cost? How long do you estimate your app will continue paying out a "dividend"?

It sounds like you are saying: apps don't make that much money, so don't spend lots of money developing them. But apps seem to take at least a few months to develop, so it seems inevitable that apps will cost a lot of money if the developer/designer time is market price. (A <$10,000 app in 3.5 months would be an hourly rate of <$17/hr, for example.) Is that true, and if so, do you think aspects of that will change over time?

[1] http://news.ycombinator.com/item?id=1251155

[mwd_]

You can't just sit down and start coding for your $150 or even $70/hr though. Here are some factors I can think of that change the calculation substantially:

- You have to take time and put in effort to find good contracts. Not all work is billable.

- You will probably want to be able to show clients an app you've already created. If you can make that app a $40k earner then you are in great shape.

- You will most likely have to be willing to put up with less fun and less flexible work for clients.

I think the $40k from 3.5 months of work is amazing and would be a no-brainer for a huge number of people. The big downside is the level of risk involved and the difficulty in duplicating that level of success.

[egypturnash]

That's also time they spent working for themselves instead of for someone else. Which is valuable.

Plus the possibility of this app immediately enriching their life if it's something they developed to scratch their own itch instead of the theoretical itch other people have, or the itch that the person who hired them has that they don't share. (Like the time my not-driving self worked on a promo site for an app designed to crowd source the problem of finding a parking spot in a busy city. Fucks given beyond the minimum to satisfy the client enough to get paid: 0.)

[nirvana]

Most valuable piece of info here for App developers: Make your app universal. It doubled our sales.

If your thesis is that you'd be better off as an iOS contractor than making your own apps, then you might be right. But this was our first app, and my partner went from someone interested in design to being an actual designer as part of this experience. I consider that alone to be worth more than $89,250, because it is a multiplier on what we have been able to do subsequently.

Also, the first months this app was doing around $200 a month. It took effort on our part to change that. We have done multiple things that caused the sales of our app to double as a result. In fact, every major release of our app has caused sales to double. In fact, this leads to one of the big secrets of the appstore. There are 600,000 iPhone apps but only 200,000 iPad apps. We get equal sales from the iPad as iPhone. We stared out as iPad only, then added iPhone- boom, sales doubled. (I was hoping for a triple or more because there are so many more iPhones, but alas, no.) Make a real universal app, you'll do better.

I believe there are some things we could do that would double our sales a couple more times-- for instance adding some social aspect to the app, adding iCloud support might both result in a doubling, which would throw your numbers off for the comparison.

I didn't put this app out as an example because I think its an example of what one could potentially make-- I put it out there as an example of what could happen if you do an app that never makes it into any of the top lists or gets any marketing. It was meant as a minimum example, not a maximum example.

This app is was also an experiment and has been used as such. It would have been easy to put out a revision in the last year (and there's a feature we really need to add) but by waiting a year we've observed how not updating the app has affected sales. Now when we put out the revision we'll be able to confirm our hypothesis about past revisions.

I expect this app to continue paying out this dividend for the foreseeable future, which I'd say is about 2 years.

This "dividend" is completely dependent on the way Apple markets apps to people. We don't show up on any lists. When Apple changes their algorithm, we feel it, much like google changing their algorithm impacts websites. So far, Apple has been changing the algorithm to highlight quality apps, and that's a good thing so this has benefited us, but at some point we may run afoul of one of the rules in the algorithm. (the one year without an update was a test to see if there was a rule like that-- and I think there is, I think we've been punished for going so long, but the slack has been taken up by growth in the total addressable market.)

With any business effort the question really isn't whether "apps" make "money", but how much leverage you get. What makes money is work and smarts, right? You can spend X amount of time and make Y amount of money a year building a SaaS Website, or building an App or working a job. Apps give your more leverage than SaaS Websites which give you more leverage than employers-- but that's just a generalization. It really depends in part on how well you understand the market, but also a great deal on how much effort you put into it.

I was pointing out here that we have an app we haven't put much effort into that has made rather good money given the level of effort.