Mobile App Buyers Spend Big Bucks

When smartphone users spend money on applications, they spend money on applications. A new ABI Research survey of 235 US smartphone owners who purchased apps for their phone last year found that 16.5% of them spent somewhere between $100 and $499 on their mobile apps.

With many of the apps for the iPhone priced under $5, and most other mobile apps in the $7-$25 range, that’s a whole lot of application purchases.

While consumers might be thrilled with the cheap cost of a lot of their favorite iPhone applications, other app providers aren’t as happy. “Apple is seen by some as hurting the market with its iPhone App Store,” says senior analyst Jeff Orr, “It drives the price of content down to $1-$2, using a model similar to its successful iTunes music store. If you exclude Apple from the mix, applications for other platforms cost about $7-$25 each.”

According to ABI, developers with limited resources often have to choose a single smartphone platform for their applications. This leaves them with a “margin vs. volume” quandary: sell a lot of copies for the iPhone at a very low price and get 70% of the revenue, or sell fewer via one of the other application storefronts, but charge a higher price and earn more per transaction.