The App Store’s Brutal Truth: Why Startups Can’t Afford Average Apps

Why Mediocrity in App Development is Not an Option for Startups and Scale-Ups

The app industry rewards excellence and penalizes mediocrity. For startups and scale-ups, the stakes are even higher: success can mean exponential growth, while failure could result in lost time and resources. Competing in this crowded space requires a commitment to quality, performance, and user-centric design.

Market Dynamics: The Top-Performer Advantage

In the app marketplace, the top 10 apps in a category capture the majority of user engagement and revenue. For startups, this means aiming for excellence is not optional—it is the difference between standing out or getting lost. Whether you are building a subscription platform or a service tool, crafting a high-quality app gives you a competitive edge.

Revenue and Retention: The Key to Sustainable Growth

High-performing apps attract more users with lower acquisition costs, thanks to enhanced visibility in app store rankings. These apps also excel at retaining users through superior experiences, driving higher lifetime value. Startups and scale-ups must focus on creating intuitive, engaging apps that meet user needs to remain competitive.

The Case for Native Development

Native app development, using Swift for iOS or Kotlin for Android, offers unmatched performance, security, and user experience. These factors are crucial for startups seeking to impress investors, attract users, and scale efficiently. Native apps can also better leverage device-specific features, creating a seamless user experience.

Aiming for Excellence

To thrive in the app market, startups and scale-ups must aim high. Investing in superior development ensures better user retention, market visibility, and overall returns. While the initial costs may be significant, the potential rewards far outweigh the risks, especially in a market where being in the top tier defines success.

This polarization is driven by several factors, including user preferences, app visibility, and the quality of the user experience and, of course, some outliers, such as the social media platforms that generate an intensive amount of downloads. For a deeper understanding into the dynamics of the different market sectors keep reading.

You will find a thorough walkthrough of how different industries and markets have been impacted by the emergence of apps and how this can either give you an opportunity to win the market through aggressive tactics or how it will impose a forced investment for you, just to remain competitive.

The economics of top performers vs. mediocre app

Developing a mobile app can be a costly endeavour, often involving significant investment in terms of time, resources, and money. However, the return on this investment can vary greatly based on the app's market performance.

Revenue concentration: Why leading apps outperform the competition

The top apps in any category often enjoy exponential returns compared to their lower-ranked counterparts. For instance, top apps like Spotify or Instagram dominate their respective categories, capturing the majority of user engagement and revenue. Of course the extent to which this phenomenon is true, varies depending on the nature of the market, with some markets leaving a larger space for several competitors to thrive. This is most often true in the cases where the app is somewhat tied to a physical product or service. 

For example, think of ferry apps – in this case the app is tied to the ferry connection which in many cases is only operated by one shipping company, thus the app can act as a tool for upselling, loyalty, and ease of use. However, there is not a “winner takes all” scenario in play when it comes to ferry apps, as a lot of the revenue is tied to the physical offering which it is helping facilitate – the user is taking the ferry no matter what, it’s just a matter of convenience that drives them towards the app. The opposite is true for apps like Spotify and Instagram that have no connection to a physical service or product, so they rely on driving the engagement in the app in order to drive their business growth.

This means, as an app provider, unless you have a physical product, digital domination is essential for driving the intended value from the app.

Want an in-depth understanding of the key factors leading to app success? 

User Acquisition costs: How app store algorithms favor top performers

The cost of acquiring new users is typically lower for top-performing apps due to their higher visibility and organic reach. In contrast, mediocre apps may struggle to gain visibility, requiring more spending on marketing and promotion to attract users.

It is no secret that the app store algorithms significantly boosts apps that show high user engagement and satisfaction. A high-ranking app attracts more visibility, leading to increased downloads. These new downloads often translate into more reviews and ratings, which in turn further elevate the app's rank.

This cycle perpetuates itself, creating a positive spiral where visibility breeds more downloads, enhancing the app’s standing on the platform. The higher the app climbs in the rankings, the more it benefits from organic exposure, feeding back into the cycle and perpetuating its success. This all leads to a reduction in the User Acquisition Cost, as a lot of it is driven by the organic reach and popularity.