81% of Apps Sold On iTunes Are Free: Analyst

Here is some interesting analysis of the iTunes business model that Apple has built. The iTunes division has earned Apple $3.6 billion till date and based on the fact that Apple has paid out $1 billion to developers, its own revenue share comes close to $428 million (Apple splits revenue with developers in a ration of 70:30 favouring the developers). That brings the Apps contribution to 12% of iTunes revenue. Interestingly Apple sells over 16 million apps a day and around 8.9 million songs.

Analyst maths and some common sense reveals that as many as 81% of App Store sales are in free apps. The average sale price derived from the top 50 apps gives a mean of $1.49 and some more calculations and the gross profit that Apple makes on per app comes to roughly 44%. Its clear that the App Store isn’t bringing in killer profits for Apple but then the value it adds to the iPhone as a smartphone is certainly a USP worth millions (if not billions)!

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