Is developing apps for app stores a profitable business?

When Apple announced the launch of the app store, it was seen as a new business opportunity for dozens of small developers. This is because the iPhone is promoted among the top brands in recent times, there will be a lot of demand for iPhone in the coming years. Also, since smartphones are the technology of the future, this was seen as a profitable area where developers could play their part.

The last two years have been very fruitful and have led to the creation of an entire ecosystem that did not exist until now. Today, with millions of iPhones sold worldwide, they serve as a viable platform for selling utility iPhone apps. In one fell swoop, the iPhone app store has created a livelihood for various small-time programmers.

So how does the whole thing work? Mobile apps for iPhone in the Apple App Store are not always “sold”. Many of them are also available for free. So while some app developers play around with the volumes, by getting a lot of people to download, they can then make money through ads. Others play value by selling the app for a price, so as volumes drop, the company makes money on these sales. For every app sold, Apple charges a 30% commission on the value of the product. So a $0.99 app makes the developer about 70 cents and Apple makes $30 cents.

This is now big business. According to a new study, with close to 2 billion apps downloaded lately; 30% of them are paid apps, the total money Apple has made from the App Store is between $220 and $440 million annually. This automatically means that developers have earned between $560 million and $1 billion a year.