Quality over Quantity: How We Built iTeleport into a Profitable Business on the App Store
Our flagship app, iTeleport, is priced at $25 on the App Store, and our sales data shows that it's earned more than $1,000 a day. How did we get here?
The App Store has been out for almost two years now. There are almost 200k apps and over 38k developers (source). As the store has grown, one of the prevailing memes has been: you need to have a low price, high volume app to succeed in the App Store. As the number of apps has grown, visibility has become increasingly difficult, and so the logic is that developers need to get their apps in the Top 100 charts to get visibility, which will then drive volume. To get into the Top 100, however, you need to drop your prices, because your competitors on the store are willing to do that. This creates a vicious cycle that drops prices across the board, and makes it very difficult to create a sustainable, long-term business on the App Store without having a "hit" app. Some have argued that while there are some apps that are successful with a relatively high price, they are all big brands that have their own marketing machines, or get preferential treatment from Apple in getting on the Featured or What's Hot charts.
We'd like to debunk all of these myths. And we're going to do it with real data. Our app is called iTeleport (formerly Jaadu VNC). It's a VNC client for your iPhone/iPad that lets your control your computer from anywhere in the world, and supports Mac, Windows, Linux and many other platforms. It's been out since two weeks of the original App Store launch (July 08), and we just added iPad support last month. It's a profitable, sustainable business built entirely on revenue from the App Store that has not been driven by a high volume product. We're hiring. We have a long-term vision for the future. And here's the thing: the app costs $25, and it hasn't been in the Top 100 download charts since September, 2008.
Let's start with the data. The following chart shows iTeleport's App Store ranking in terms of number of downloads for six months (October '09 through March '10):
Yes, the chart is blank. As you can see, we never made it to the top thousand apps, let alone the top hundred. This doesn't look like a successful app at all.
Let's look at another chart. This one shows the App Store ranking of iTeleport in terms of revenue generated (from the top grossing list):
It looks completely different -- there are even a few days where the app broke into the top 100 grossing iPhone apps! Looks contradictory, but it isn't. You're probably wondering "this is all really nice, but how much money is this app making?". Great question!
This final chart shows the daily net revenue (after subtracting Apple's 30%) generated by the iPhone app over the same six months.
A maximum of almost $2,800, and it never drops below $1,000 a day. The data pretty clearly shows that we've been able to generate significant revenue without driving a high volume.
How did we get here? We believe it's a combination of creating a high quality product with great support in a well-defined market with significant demand. This doesn't sound too different from classic definitions of how to develop a successful software business, and it's not. We've done very little marketing. The app has been featured a couple of times over the past two years, but for short periods and not enough to explain the sustained level of revenues. Word-of-mouth is probably the best explanation of how revenues have sustained themselves. That, combined with offering something people really want, and are willing to pay a premium for if you give them distinctive, useful, hard-to-find features in return. Yes, there are cheaper, or even free, VNC clients. But they either suffer from poor connectivity, or poor support, or laggy performance, or less features or more crashes.
We're not trying to brag by publishing this data. We're really proud of what we've built, and we hope this data will inspire other independent developers to invest their time into building higher quality products. We believe this will be better for everyone: for developers, who get to focus on making incredible apps and earn a decent living from them; for consumers, who get awesome apps that are worth their price tag; and for Apple, because the quality of the apps makes the platform more attractive for everyone.
We also hope this demonstrates that you can build a business on the App Store. That doesn't mean it's easy, or that you'll automatically make more money if you raise your price, or that every app should be priced at $25. It's just another perspective, albeit one that we haven't heard in all the discussions of the iPhone developer ecosystem. This may be because we're the only ones, but we don't believe that's the case. And we'd like to encourage others to add their voices to the chorus, in the hope that we can change the perception of the App Store.
As independent developers, we have a choice. In our case, we decided to value quality over quantity, and it paid off for us. We hope that at the very least, this gives other developers something to think about. And we'd love to hear what you think -- please voice your own perspectives in the comments.
Stay tuned for more posts in the coming weeks. In an upcoming post, we'll be putting forward a case (with real sales data) for making Universal apps, instead of two separate iPhone/iPad apps. We'll also be presenting and analyzing sales data from April (not shown above) where our Universal app was ranked the top 100 grossing iPhone and iPad apps, and our iPad app also made it to the top 30 grossing iPad apps -- we'll be able to compare sales figures between the iPad and iPhone app stores and give a sense of the relative sizes of the two stores.
