The general purpose of funding a mobile app is to create a return-on-investment. It is one of the most common and costly marketing configurations entrepreneurs who have a service or product they desire to make accessible to consumers can build. But an application is useful not just because a customer will pay anywhere from $0.99 – on up for it. More important than the initial cost itself is that it can be used to drive leads and receive in-app purchases (which the customer may find to be more convenient regardless). This is especially true if the app is free – which a good number of them are. While you may think it to be a superfluous investment to not immediately yield earnings, there are reasons they seem to cost so much.
Most commercial apps begin in the $150,000 dollar range. Meaning, if you sell 1,000 downloads at $0.99, you are only covering roughly 1.5% of the initial cost. While many private developers will charge much less (here at GrowIT, our starting fee is only $5,000 for the most basic design), it still takes an average of 18 weeks to build. That’s not including post-release updates or fixes in case something goes wrong outside of the developer’s control.
As for app store hosting costs, Google Play requests a one-time fee of $25. The App Store on iTunes costs $99 per year. However, both take around 30% of the profits made from downloads. This is why Apple and Android primarily function via the money usurped from purchased applications. However, the more apps that sell, the likelier these prices are to reduce. It is unclear how much the app stores make off of free apps (other than 30% of the initial subscription), but either way Apple at least seems to make enough off of costed apps.
While only an average of 5% of app users are willing to pay to unlock specific app features post-download, many claim that this is enough to turn over the cost of developing one. In-app advertisements can also drive these costs. An eCommerce feature is going to be more meticulous; however, statistics prove this is well worth it. In the 2015 State of Mobile Commerce report, 54% of mobile transactions now occur on an application, with a whopping 90% conversion rate from 2013-2015!
A mobile application is an incredible feature because it allows any individual to customize their mobile device. But in order to design, develop, host, and maintain, payment is filtered through many hands. If you believe an app is too costly for your company, perhaps reconsider the reasoning behind why you wish to fund one!