Common Reasons Why US Apps Fail to Earn Money

Discover the common reasons why US apps fail to generate revenue. Explore market research, user engagement, monetization, UX, and marketing challenges.

Kelly-Anne Kantor
June 12, 2023
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While thousands of apps achieve profitability, the majority struggle to generate revenue. According to studies, over 60% of apps are unprofitable. App development teams invest significant resources in building apps, but many fail to monetize effectively. Here are the top reasons why US apps struggle to make money. 

Lack of Market Research

One common reason for app failure is a lack of thorough market research and understanding of the target audience. Without a clear understanding of user needs, preferences, and behaviors, app developers may end up creating products that fail to resonate with the intended audience. Successful apps invest time and effort in researching market trends, analyzing competitors, and conducting user surveys to identify gaps and opportunities. 

Poor user experience

An engaging user experience (UX) is critical to success. Apps must provide value to users, meet needs, and satisfy customers. Strong UX leads to higher engagement, retention, word-of-mouth promotion, and revenue. However, many fall short on UX for reasons like clunky navigation, frustrating functionality, cluttered layouts, a lack of personalization, slow loading times, and frequent crashes. Users quickly abandon apps that fail to deliver a compelling experience. Apps should invest in UX testing to ensure high quality and customer appeal. That includes intuitive design, seamless functionality, and performance optimization to provide a positive and hassle-free user experience.

Not optimizing for discoverability

Many apps struggle due to a lack of visibility and downloads in the app stores. Gaining traction requires more than a quality app. Marketing and user acquisition efforts like social sharing, SEO, public relations, and advertising help raise awareness and drive installs. App store optimization using ratings, reviews, screenshots, keywords, and descriptions also improves rankings and organic traffic. Apps that fail to optimize their store presence and invest in active marketing see limited uptake.

Lack of Monetization Strategy

Some apps launch without a clear revenue model, hoping to figure it out later. But by then, users had come to expect the app to be free. It's much harder to introduce subscriptions or in-app purchases after the fact. Relying solely on advertising revenue or implementing intrusive ads can alienate users. Subscription models may struggle if they don't offer sufficient value or exclusive features. In-app purchases can also fail if not well-integrated or if they disrupt the user experience. Developers should evaluate options like ads, freemium, subscriptions, and paid models upfront to integrate a smart monetization strategy into the initial app development process.  

Ignoring Key Metrics

Many apps fail to track essential metrics to optimize revenue, like cost per install (CPI), lifetime value (LTV), conversion rates, and churn. CPI determines how much it costs to acquire users. LTV measures potential revenue per user, conversion rates show how many users make purchases, and churn indicates how many stop using the app. Monitoring these metrics helps developers adjust marketing, features, and pricing to improve financial performance. Without metrics, apps struggle to diagnose problems and correct course.

Insufficient Marketing

Launching an app without a well-defined marketing and promotion strategy can lead to obscurity and limited user acquisition. App developers often underestimate the importance of app store optimization, social media marketing, influencer collaborations, and targeted advertising campaigns. Building a strong brand presence, generating positive reviews, and utilizing effective marketing channels are essential for app visibility and driving downloads. A lack of ongoing marketing efforts can result in the app's failure to gain traction and generate revenue.

Too Many Features or Too Little Features

Balance is very important in any field, and building apps is no exception. Adding the right amount of functionality to your app is paramount. You should have a lot of features that give your audience headaches but a few that make them want to know more. Apps should have useful features, and burdensome features should be removed. The feature count is determined after determining the usability of the app and examining the devices on which it runs. 

In summary, a combination of factors contributes to apps struggling to earn and scale revenue. Lacking a monetization strategy, ignoring metrics, poor UX, undiscoverability, and weak retention plans pose serious problems for an app's revenue potential. By following recommended practices around business models, data analysis, customer experience, marketing, and user loyalty, app development teams stand a better chance of overcoming these obstacles and building a profitable, sustainable app.

As seen on FOX, Digital journal, NCN, Market Watch, Bezinga and more

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