How Much Does Apple Actually Make from the App Store?
Apple has been pretty open with everyone on how many applications have been downloaded from the app store. Progressively, as each major figure is reached, announcements are made. Last week, Apple announced that a total of more than 15 billion applications had been downloaded from the app store – a large milestone for a retailer such as Apple or for an company at all, to say the least. What Apple isn’t too open about, is exactly how much profit they make from the total sales. Analyst Gene Munster of Piper Jaffray has taken Apple’s quietness as a cue and has estimated that amount.
According to Gene Munster, the average cost of an application on the app store is $1.44, of which 70% goes to developers, 1% goes towards application storage, 16% goes to credit card companies and only 13% goes to Apple. So basically, Apple only makes $0.18 on a $1.44 application while credit card companies and developers are making more.
Munster estimates that since the launch of the app store in 2008, the 15 billion application downloads have brought in a total profit of $292 million for Apple after other fees have been deducted ($538 million originally, $246 million deducted because of fees for storing and developing free applications). It’s not too shabby for Apple, but it’s wondrous that Apple is giving such a large cut of the sales to developers and that credit card companies are making an additional three percent on each app sale.
Apple yet has to release their actual profit figures, after expenses and all, but until then, Munster’s estimates seem to be pretty accurate. And, of course, a company as broad and important (21st largest retailer) could not survive on that kind of money – the app store not only brings in a portion of Apple’s total annual numbers, but also attracts the millions of iPhone, iPod Touch and iPad customers that keep Apple alive.