How to Fix Problems with the App Store to Make Money

Unfortunately the way the app store is setup encourages this. In my view, Apple has designed the app store very poorly. Only a tiny fraction of the apps that are out there are visible to customers. There are limited sorting options when searching, and the number of categories for apps is extremely limited. 

Two major weaknesses the app store has include:
  1. No drill down on generic categories.
  2. Removal by Apple of the new releases section for non-game apps, in the US store.
To illustrate the first problem, consider the education category. If you click on this you're going to see a ton of apps aimed at toddlers. Here and there you'll come across a religious app or an app aimed at college students, but the bulk are kiddie apps.

I've got nothing against apps designed to help kids learn, but having a simple generic education category is limiting the possibilities in the app store. Kiddie apps are crowding out other types of education apps. To see why this is a problem, jump on, and look at how their store is organized. Its much more user friendly and directed at helping the customer find what they want. There is almost an endless ability to drill down into cateogries on Amazon, allowing you to view categories for specific subjects that could fit within education (biology, math, political science, study guides). 
This helps customers and it also helps those selling books, since you can directly target your audience. The games category is structured differently on the app store, allowing you to target games to say casino, or word/trivia.

To its credit Apple did recently create a kids category, but they need to create sub categories with top selling lists in each one. Until they do, however, we're going to have to live with what the store offers.

The second weakness is the removal of the "new releases" section, which used to allow users to see all apps in a category and sort on release date. Now you're limited to seeing either a tiny set of maybe 20 apps that Apple picks out for you, or the top selling lists (note this is not true for the games category). Many developers claim you shouldn't rely on the new releases section anyway, but the downside is huge - you lose the opportunity to get your app out there directly in front of users for a few days giving it a chance to get some traction and get on a top selling list. In my view the design freaks at Apple believe the store should seem less cluttered, but they aren't looking at it from the customers point of view.

Dealing with the App Store As it is

Apple is unlikely to listen to my complaints so we have to deal with the app store as it is. Fo you this means:
  1. Creating well designed icons that stand out
  2. Making great looking screenshots
  3. Choosing keywords carefully
  4. Writing SEO copy for your app description
We'll discuss this in detail in Setting up Your App For the Store.

The Overall Business Model

Despite the weaknesses inherent in the app store, its possible to create apps that get on the charts. Here I want to discuss setting goals for the business. A real business is usually not driven off a single hit product. You can do that, but how likely is that? Especially given the way the app store is structured, betting that you're going to create a single app, and its going to rise into the top 10 of its category and make sustained money, that's unlikely.
Our goal is to create a real, sustainable business. Let's look at some existing large businesses. You could consider Walmart or Ford Motor Company for example, and I'll focus on Ford for illustration. Ford does in fact have a couple of flagship products. The F150 Truck is the best selling vehicle in the USA. Ford is also well known for the Mustang.

But if you go to a Ford dealership, its not a lot containing all F150 trucks, there is a wide variety of vehicles. There are many models - the Ford Explorer, Ford Focus, and so on. Ford isn't betting their entire existence on the F150, and they could weather a downturn in F150 sales because they have a large product line. Your app business model should mimic this approach.

In my view, a good approach for most app businesses is to create a wide variety of apps - possibly selling them in different Apple accounts. Let's illustrate this with an imaginary business. So a light bulb went off in your head and you've got what you think is a million dollar app idea. Should you run out and spend $5,000 hiring a developer to make it? Maybe not right away. I would opt for a more conservative approach. We'll set up a new app business that will target the following categories:
  • iPhone photo apps
  • Slot Machine apps
  • A couple of simple lifestyle apps
  • A couple of Mac productivity/business apps
  • Our one great idea
After doing some research on the photography and lifestyle categories to get ideas (see the chapter on Market Research), set out to see if you can get these ideas off the ground without investing too much into developer resources (see chapter 10 Must Have Resources for the App Business). The strategy here is to get your app business going without investing too much time or money so its bringing in a couple of thousand per month. You're not going to impress many friends with this but its going to generate the money you'll need for your one great idea.

A perennial winner in the app store (and in real life) is the slot machine. In the App Flipping chapter we tell you where to get one. Your initial investment is going to cost you between $700-$800 for a slot machine source code. You're also going to have to spend $500-$900 to "reskin" the app (change the theme and graphics). The good news is after your initial investment getting the source code, you can generate multiple slot machine apps by simply changing the graphics, so your costs drop after getting the first app out.

There are two approaches to use with slot machine apps. Most people opt for the fremium model that makes money both from ads and in-app purchases of "coins". My experience is this works pretty well, I've seen $400-$500 in ad revenue per month on an average slot machine game, and maybe another $300 a month for in-app purchases. If you have decent graphics in your reskin, chances are good you'll make back your initial investment in the first month.

Don't stop there. While everyone is obsessed with freemium, paid is not dead. People tend to look at the top grossing list for the app store - which is full of free games, and conclude they need to devote their lives to freemium. But like the real economy, the app store is not a zero sum game. Although free apps are making a greater share of overall app revenue, paid apps are still making money and overall app store revenue is growing. So although paid apps are taking a smaller share of the pie than they used to, the pie is larger.

I've found good success releasing paid slot machine apps as well. The paid category is less crowded, and you benefit by getting users to drop the initial $1.99 or so for the app. In your paid version of the slot machine you still sell "coins" via in-app purchase so will make some money from that as well. The justification for selling a paid slot machine is you remove ads from the app, so you're not bugging the user with ads. This might sound risky but its worked for me - I've made as much from paid slot machines as from free slot machines.

Another benefit is it allows you to leverage the same app source code and graphics. Instead of just releasing one app, you actually release two and double your return on investment.
Let's say to get started you release three slot machine games. Be sure to link them together - and let the user know they can remove ads from the app by paying $1.99. We will discuss approaches to doing this in the chapter Marketing without spending money.

Keep Moving with a Diversified Approach

The past few paragraphs make it seem like you're going to start a slot machines business, but that's not the goal. You should be simultaneously releasing other apps in different categories. The goal here is to get started slowly and not too big to generate some cash that can be used to get your great ideas developed, and hopefully make some money on the side.

So while you're making your slot machine apps, you're also going to be releasing a few apps:
  • One or two photo apps. Look on Chupa Mobile or Apptopia to find a pre-built photo app that isn't to expensive, and enhance it in some way to make it more useful to the customer.
  • Make a simple lifestyle app. This could be a wallpaper app.
  • Create a simple reference app. This can be an app that simply presents some information users are hungry for, like a "cheat" app for a popular game.
Your goals should be two-fold:
  • Help generate at least some of the money you need for the app or apps you hope will be big hits.
  • Create some base revenue to help you weather downturns.
  • Create a diversified portfolio.
In regard to the last point, its like stock investing. Many fools blindly put all their money in a single stock, while financial advisors are yelling "diversify". The same applies here. When your photo apps are sinking, if you're diversified, your slot machine apps or lifestyle apps will be making up for declines elsewhere to help keep you maintaining a steady income.