3% of app users bring in a fifth of all revenue
The highest-spending 3% of all app users account for nearly 20% of the total spend, while over 70% spends either nothing or very little.
According to research firm ABI Research, two-thirds of app users have spent money on an app at least once. For those who have bought apps, the average spend was around $14 per month.
Senior analyst Aapo Markkanen explains, "The median amount among the consumers who spend money on apps is much lower than the average, just $7.50 per month. This reflects the disproportionate role of big spenders as a revenue source. The highest-spending 3% of all app users account for nearly 20% of the total spend, while over 70% spends either nothing or very little."
There were also certain trends observed in different app categories. App releases that have traditionally made money are utility apps or iOS games that have in-app purchases. In either case however, it was observed that the revenue is generated from a seemingly small base of customers. This observation led to an investigation into how to convert free app users to premium users.
Markkanen has two recommendations. "First, don't get obsessed by mobile and apps, but remember also the web. Most of the successful app concepts either support, or are supported by, a web component. Second, see your product through a long-term lens, asking yourself what could convince your customers to still engage with the app in two years' time. Evernote, for example, has excelled at both. It has skillfully combined the web and the mobile, and at the same time it has also managed to become a habit for many of its users. It demonstrates that the longer its customers stick around with a free version of an app, the likelier they're going to convert to its premium version."