Now there’s an easy way to generate recurring revenue from apps.
Apple has just released the news that there will be a fundamental shift in the economics of the App Store.
Starting next week and continuing throughout the Autumn, Apple will begin rolling out new incentives for developers in its App Store.
These changes will include a new revenue-share model and subscription based pricing.
Since the App Store launched in 2008, Apple says that developers around the world have earned $40 billion, apparently with over a third of that revenue being generated last year. So there is no slow down in the app market.
The App Store business model has been based on either a one-off fee for purchase of an app, giving your app away, or adding in in-app purchases to their paid or free apps. The latter being a model that some games developers have thrived upon.
You will now be able to offer a monthly fee rather than a single price up front.
Subscription pricing models have been reserved for apps that served media content: audio, video, news, and so on. This has been a constant frustration of app developers, including us. Apple is now opening it to apps from any category, which will enable apps to generate a recurring revenue. This should also address the issues of free trials.
Developers will be able to choose one of over 200 subscription price points. They will also be able to create region specific pricing.
But there’s more…
Keep more of the subscription revenue.
Apple really wants developers to sell subscriptions, so much so that they are willing to reduce their revenue share. The 70/30 revenue split between developers and Apple remains in place, but apps that keep a user subscribed for more than a year will see that split fall to 85/15.
The other piece of good new is that App Store review times are now much shorter.
Finally, it looks like Google have reacted to this and put in place an instant change to just 15% from day 1.
So, what kind of apps suit a recurring revenue model?
Software as a Service (SaaS) has been around a long time, and it works well. Now Apple is providing the opportunity for this model to be extended out via its app store in all categories. We think there’s an amazing opportunity. Perhaps an unprecedented opportunity to generate that magic recurring revenue. Those who act fast will stand the best chance of benefitting. We have identified these apps:
- Education apps
- Training apps.
- Workflow apps.
- Business to business apps
- Premium information apps.
There’s a lot more, of course, and some are very some very specific. We are not going to detail those here because they represent an ideal opportunity for investment, which is a separate discussion.
All the information is available directly from Apple: https://developer.apple.com/app-store/subscriptions/whats-new/