It’s a fair bet that the majority of those of you reading these articles use apps – but don’t write them. There are no such things as “free” apps. Sure, there are apps that don’t cost you any money to download and install, but they’re not “free”.

Somebody had to put quite a bit of time and effort into the hardware and software required to code that app. That person had to obtain some sort of education to obtain the skills, knowledge, and expertise that it takes to code an application. Even if those were already sunk costs (the person already had the hardware and software, and already had the education needed) it still takes time to write an app, and it doesn’t stop there.

Apps are Expensive

That’s not where the expenses stop. After the app is written, bugs have to be found, fixed, tested, and updates released. Even after an app is “bug free” (which they never are), new devices are released and the operating system is updated with some amount of frequency – both which introduce unexpected situations that must be handled by the code.

From beginning to end, apps must be conceptualized, coded, compiled, artwork created, descriptions written, and code published to an app store (or two, or three, or more). Hundreds upon hundreds of hours might go into creating even the most basic app.

After that there’s marketing. You’ve got to advertise your app – whether that’s recruiting an army of people to tell their social circles about it, buying online ad space, or even buying more traditional advertisements.

Apps are very expensive.

How to Make Money

There are lots of ways to make money with an app, so let’s start with the easiest to understand: sell them.

Go to the app store and take a look at all the apps that cost money. That’s a one shot deal, but it’s not as much as you might think. For example, if you want to make US$1.00 for every copy of an app that you sell in the Google Play Store, you’ll have to charge your customers somewhere around US$1.43 per app – Google pockets the rest.  The story is similar regardless of where you publish your app: Amazon, Apple, Microsoft, or elsewhere.

Under this model, you survive on new sales of your app. As soon as your sales slow enough that they no longer cover your maintenance costs, your app is essentially “out of business”. In the desktop software model, you’d grandfather support for that app and release a new version, which you’d sell. That’s no longer the case in our app-centric world.

The next way to make money is to run ads. Instead of a one-shot payment, apps that are monetized with ads continue to pay the developer as they’re used. Ad partners usually require a lot of fairly invasive permissions to be granted that the app might otherwise not have needed. This discourages people from downloading the apps in the first place, but hey, developers have to eat, right?

Next are in-app purchases. Some apps let you buy “stuff” inside the app. This might be virtual goods like Sim City BuildIt and other “farming” apps feature, or maybe decorations for your virtual fish tank or frog habitat. The developer adds more game play and challenges, and entices users to purchase more “stuff” inside the app. This allows the developer to stay in business, support current users, and entice new users to install the app (and hopefully buy a whole bunch of virtual “stuff” as time goes on).

Subscriptions

Other types of apps are fed by content that is purchased elsewhere. This might be music that’s purchased somewhere and played through the app, movies and TV that you can watch if you have a monthly subscription to the service, and some apps are there to let you read books that you’ve already purchased.

Subscription-based apps are arguably the ones that have the most sustainable revenue streams. Whether that’s a subscription like Office 365, or one like Netflix.

Some developers have offered long-term subscriptions for a single-up-front sum – if you’re willing to pay. Most of these take the form of “lifetime” service and updates. Usually that’s not the primary sales pitch, and when it’s used it’s probably only promotional or used for a quick infusion of cash.

Whichever route is taken, support of the app still requires a revenue stream – one which isn’t coming in from those who got the “lifetime” licenses. If the revenue doesn’t come in, again, the app is essentially “out of business”.

Some developers who have found themselves in this situation have discontinued one app, only to create basically the same app under a different name in an attempt to get repeat buyers. This leaves a sour taste in the mouth of anyone who bought the first app, but really isn’t anything different than the software distribution model we’ve had on desktop PCs for decades.

Cerberus, an anti-theft app, recently was forced to “expire” its lifetime licences that were given away as promotions in the past.

We had to revoke free lifetime licenses that were given away during a few promotions we made years ago. We apologize for this and know it is a bad PR move, unfortunately it was not feasible anymore for us to provide a free service for life.

Free licenses will expire about 3 years after their beginning, and affected users will be notified via email before the license expires. We hope Cerberus helped those users recover a lost or stolen device, and that they will consider buying a license to continue to use our service. Paid licenses are not affected.

Some people are throwing Cerberus under the bus, and the company know’s it’s made a terrible public relations nightmare.

We’re not hopping on that bandwagon. Instead, we’re hoping that a little bit of background into how apps are made, how much they cost to make (and to maintain), and a peek inside how developers ultimately earn a living with them will help you to consider the developer when given the option to throw some support his or her way.

Making money writing apps isn’t as easy as you think, and supporting the developer might just help you and the rest of the users make sure your favorite app is updated and supported long into the future.