Question: How is it possible to make a profit off of iPhone apps? I ran the math and I don't see how it's possible. What am I missing? What is a successful strategy?
Background: Yesterday I started to do some basic numbers for a possible iPhone app, and I realized that work in this field looks really difficult if you want to obtain profits. My numbers are as follows.
If we take into consideration that Apple takes 30% of each purchase, and with the asumption that 30% of the customers are going to demand money back because they are not happy with the product (you have to give back Apple's 30% comission from your profits), gives us that for each purchase, you get a margin of 40% (not counting other expenses, like servers, programmers salaries, etc).
So if you sell an app for 1$ per license (one app per user), you obtain a profit of 40 cents (0.40$ per user). It means that to achieve, for instance, 50.000$, you need a minimum of 125.000 happy customers. And we all agree that to build up a quality application, you will need a minimum of one designer, one IOs developer, one system engineer and one web app developer (at least for the back-end if you plan to build up some kind of social app), and is obvious that they have to have a decent salary that could give us an average of 35K$ year/developer (and we could only recruit decent developers with that numbers, not top ones).
If we multiply 4 developers x 35K$/year = 140K$ year (let's asume 150K$ if we include extra expenses like servers, etc).
So if we make a summary, we can deduce that we will need 375.000 happy customers purchasing our product per year just to pay bills (not profits).
Am I lossing something, or programming & selling iPhone apps is not that easy? I could even say that is impossible. Only super hits like WhatsUp for instance can obtain that amount of purchases, and we all agree that is almost impossible (or there are very low probabilities) that you could achieve that number of clients.
I hope somebody can give me a clue about selling products for iPhone (or mobility in general) and feasibility in real scenarios.