mobilesecurity.com [Mountain View, CA] Have you heard Silicon Valley’s version of Cinderella?  By day, a lowly developer toils away coding TPS report generators for a corporate behemoth (“Office Space” anyone?), but at night he tinkers with an Android app that ends up being the next big thing – setting him on his way to becoming the next Mark Zuckerberg.  He quits his day job and takes a leap of faith by investing in his own creativity for a living.

This is a heartwarming fairytale that fuels the fledgling careers of many a developer.  But the reality is that the people who “make it” by developing apps rely more on business acumen and perseverance than the sheer luck of coming up with the public’s latest obsession.

So how do you actually start making money by developing smartphone apps?  You think like a businessperson and start by asking yourself some key questions.

Which Market do I Tackle?

The most successful startup businesses fill a need in a market where there’s limited competition and a huge opportunity for growth.  But where do you go to obtain information on the Android app marketplace?  There are two useful sources at your disposal: a widget developed by the guys behind mobilesecurity.com that allows you to manipulate the data fields you track, and www.appbrain.com, a website that helps consumers find the best apps for their needs.  Both provide global and granular information on the Android marketplace that is otherwise hard to come by.

For any particular Android application, the “market” each developer needs to consider is the specific category within which their app will be available to consumers.  To give your app the greatest chance of success, you want to look at the categories that have the least number of existing apps (because these will be your competition), but also the categories that have the highest rate of download, because this is where public demand is highest.  The ideal category will be where the two fields intersect.

Once you’ve chosen your category, you can use the mobilesecurity.com widget to dig deeper into the data set for those apps.   

You Charge Them.  You Charge Them-Not.

Your next big decision is, “How am I going to make money?”  Thanks to innovations in technology, there now exist multiple revenue streams for developers and it’s up to you to decide how you want to structure your cash flow and user engagement.

Your choices are:

1)      Have users pay upfront when they download the app.

2)      Offer the application for free and then provide for in-app purchases.

3)      Offer the application for free and then sell in-app advertising.

4)      Any combination of the above.

If you decide to go with option #1, you will need to figure out how to price your app.  Mashable suggests you balance how much it will cost you to develop your product and how much customers are willing to pay for it.  To get an idea of the price the market will bear, you can use the Norton widget to see the historic average price of competitive apps and then ask yourself, “How much money do I want to make?”  Given your answer to that question, determine how many apps you will need users to download before you reach that number.  If your answer is above 5,000, a pay-upfront model may not be right for you.

According to App Brain, all of the most popular apps are free (very few paid versions of applications are ever downloaded more than 5,000 times).  Since people are more likely to download something if it costs nothing, developers have found the continual revenue stream of in-app advertising and purchases to be much more lucrative than asking customers to pay upfront.

Quality and Security Make a Difference

Google removes apps from the Android marketplace once a quarter if it considers them “low quality” and more frequently if the company believes they are infected with malware.  The low quality rating means the apps are deemed “not useful.” This means it would be prudent to develop a product people would actually use, since thousands are removed each quarter.  Quality counts.  Provide the public with an app they need or want, or else you won’t make any money, no matter how well it’s priced.