A recent company study RevenueCat, specialized in subscription management for companies, has revealed that only 17% of applications that allow a paid subscription manages to generate enough income to cover its costs and thus become profitable apps. This study questions the effectiveness of this business model within mobile apps. Let's see What conclusions can we draw from this study?.
The potential of the app market is not being exploited
As Eric Crowley, partner at GP Bullhound, points out, the app market represents a unique sales opportunity. He specifically says that «Never before has there been a market as large and as accessible as what we have available on our mobile phones«. And it is true, it is precisely estimated that there are close to 8 billion mobile phones active in the world.
But, even though this is the largest market in history for sure, Mobile app sales seem to have stagnated in recent years.
This business model is not profitable
Although, on the other hand, it is true that many apps that fall within this parameter hardly take any time to develop and are very cheap to create (there are even those who directly copy other apps and launch them under another name). If we take this into account, There can be profitable apps starting from a very low profit threshold.
Si We read the study carried out by the company RevenueCat we see that the Most subscription-based apps don't generate enough revenue to cover the salaries of the developers and the entire team behind the apps. According to the study, only 17% of applications manage to earn more than $1.000 per month.
El RevenueCat study It is long and offers a lot of information about the performance of apps and their paid subscriptions. Despite its size, there are a few conclusions that you can draw from this study, I indicate them below.
Apps are not profitable until they are
Yes, I wrote something obvious, but it is true. The apps usually They are not profitable until they get the "spotlight" within the application catalog. That is to say, since there are so many apps on the market, when an app reaches a certain notoriety, it manages to multiply its sales.
There is a threshold where an app stops being unknown and explodes in sales. This is something important to keep in mind if you want to launch a solution to the mobile application market.
Health and Fitness at the top of subscriptions
Although most apps are not achieving the desired benefit, there are sectors where they are working better. According to the study, Health and fitness apps tend to perform better in terms of subscriptions. And on the other hand, travel and productivity apps are less successful in these terms.
Apps were cheaper before
The price of paid subscriptions for applications has risen quite a bit if we compare what a subscription cost 5 years ago. Furthermore, the market trend is upward and prices continue to rise. Even apps that start out offering a cheap service start to increase the price as they gain subscribers.
Users get tired of apps
Another worrying trend is the potential subscription fatigue that could be affecting these apps. The number of subscribers continuing to pay after a year has decreased by 14% compared to the previous year.
This may be indicative of possible fatigue on the part of the user, perhaps due to the great competition in this market. And, depending on the sector of the app in question, we can have updates on the market very frequently over time. This makes Users can switch from one app to another testing the functionalities offered by each one, reducing the payment subscription time by users.
Conclusions from the RevenueCat study
If we can take anything clear from the study, it is that Launching an app as a business can be complicated despite the fact that the app market is the market with the greatest visibility that exists (8 billion potential customers). In many cases the income generated is not enough to cover the costs of development, maintenance and distribution. This supposes a warning for anyone who wants to launch a mobile app and expect high income in return.
We can also understand that the market is stagnating and that in the near future we will see how many online services that we can acquire through the Play Store or the App Store will change their business model. This model change is probably due to hybrid subscription that combines the usual paid subscription with other sources of additional income such as advertising consumption.
If you have read the RevenueCat study, I ask you, Do you think the world of apps is stagnating?Do you spend less money on apps than before? I read you in comments.
