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What does the mobile app development economy look like?

Ashwin Ramasamy
10th Mar 2015
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If you don't know this already, the guys who sold shovels during the great California Gold Rush made more money than the gold diggers. History repeats itself. In the mobile economy, contract app development (or outsourced app development, as we know it) brings the most revenue. VisionMobile's developer report below shows contract development grossing the highest revenue per month over every other avenue for monetisation, in the app economy.


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At ContractIQ, we work with several thousand app development studios every year and have access to hundreds of outsourced product development transactions. Every year, we ask the development studios how they price their services, what tools they use and what do they think of their customer segments and the larger market trends.

While nearly 60 per cent of development studios we interviewed, call themselves product engineering companies (as against mobile development shops), nearly 65 per cent of them confess that mobile brings them more than 50 per cent of their revenue. The phase of specialist mobile app development companies will soon be over. Every custom software development company will offer mobile development services. It's good, because you would have more choice going forward and it's bad because the noise will drown the signal.

Even as mobile development becomes a ubiquitous skill, industry specialisation still eludes most product engineering companies. Just over 16 per cent of the respondents, consider themselves industry-specific mobile solution providers.

The startup segment contributes to over 50 per cent of the demand for app development. Almost 75 per cent of the developers we interviewed felt that the demand from startups will be robust, through the rest of the year.


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The frustration involved in picking app developers can be noted in just one telling statistic - the difference between the highest and the lowest rates for iOS app development is about 30x (US at $ 250 per hour and Indonesia at $8 per hour). It becomes even more interesting when two comparable, high quality teams charge widely different rates on account of their geographical origins. The best teams in San Francisco are comparable to the best in Bangalore which are comparable to the best in Singapore. Yet, a customer's network and, hence, ability to pick the right teams is limited. As an aggregator and match-maker, ContractIQ tracks such elite studios from around the world and advises customers on the cost arbitrage opportunities for comparable value.


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On the monetisation front, only 25 per cent customers of the app development studios considered In-App Purchases and 40 per cent of the development studios confessed that nearly 75 per cent of their customers that build apps, fail to become sustainable businesses.

For a detailed look at the supply-demand dynamics, pricing and trends related to app development, download the full report here.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

 

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Authors
Ashwin Ramasamy
Ashwin Ramasamy runs ContractIQ, a marketplace that connects real enterprises and startups with app developers that build real products. They’ve helped build products worth 10s of millions of dollars though none of them have become unicorns yet.

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