App Store Not As Profitable As You Might Think?

Lightspeed has published a report which suggests that the profitability of the App Store isn't as high as you might think.

Although it’s hard to come by the definitive ratio of free to paid apps, talking to industry participants I got estimates in the 1:15 to 1:40 range. So that suggests that between 25-60m paid apps have been sold.


O’Reilly recent did a survey of iphone apps and noted that the mean price for paid apps is $2.65. The weighted average price for paid apps is probably lower than this as the median is $1.99 and there is significant price elasticity for iphone apps, but let’s go with the $2.65.

Multiplying this by 25-50m paid apps, that suggests that the cumulative revenue from iphone apps is around $70-$160m. Apple gets 30% of this so Apple has probably made around $20-45m from the billion iPhone apps downloaded. (Note that if you use an assumption closer to $1.50 for weighted average app price, then this estimate drops to around $12-27m).

Read More [via MacNN]