Small Percentage of Mobile Users Account For Large Share of Mobile App Buys

On Monday, a new report from ABI Research showed that nearly two-thirds of app users have spent money on an application at least once.

But among these paying app users, the mean spend was $14 per month. Behind the seemingly high average amount there are, however, some “striking findings,” ABI says.

“The median amount among the consumers who spend money on apps is much lower than the average, just $7.50 per month,” admits ABI senior analyst Aapo Markkanen. “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.”

The numbers also reflect certain trends in different app categories. Thus far, the releases that have best succeeded in making money have typically been utility apps often used for business purposes, or iOS games monetized through strings of in-app purchases. In both cases the money comes from a remarkably small base of customers.

So what – if anything – can developers do to help drive the conversion rate from free to premium?

“First,” Markkanen advises, “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,” he adds, “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.”

To learn more, check out ABI Research’s “Wave 3 US Survey Results – Mobile Applications” survey.