How to Choose a Profitable Niche « Trevor McKendrick

(This is the second of a 10 post series about my first year in the App Store. You can read the first post here. Thank you to the 1,800 of you who signed up to receive these via email!)

tl;dr We can estimate how profitable an app is using Gross and Paid Rankings. This helps us decide whether it’s a good niche to get into.

A Framework for Evaluating Potential Niches

When I was considering building my Spanish Bible app I wanted to be as sure as possible that people were going to be able to find it & buy it. With that in mind I came up with the idea of the ideal target niche.

The ideal niche:
1. Is profitable
2. Can be found through search
3. Has crappy competitors

Today I’m going to explain how to figure out #1.

Step 1. Find an app that ranks #25 Paid
I found two apps in the Business category that have a history of ranking around #25 Paid. You can see their historical Paid rankings below via AppFigures:
PDF Expert

Documents

Why #25 Paid? See step 2.

Step 2. Calculate the apps’ daily revenue using Distimo
Last year I asked the nice folks at Distimo to analyze how many downloads it takes an app to rank #25 Paid by category.

Gert Jan Spriensma, a Distimo analyst at the time, was nice enough to respond with this post which got picked up by TechCrunch.

You don’t even need to read the whole post, just this one chart:

This means our two example apps are being downloaded roughly 90 times a day. We can estimate their daily revenue by multiplying their prices by 90.

Step 3. Look up Gross Ranking
Easy with AppFigures:


Eyeballing the charts it looks like their average Gross Ranks are #13 and #50, respectively.

Step 4. Plot the Data
This is what we’ve collected:

Plotting it we get this:

This gives us an estimate on how much apps in the Business category make.

Conclusion
But estimating a niche’s profitability is only part 1 of the ideal niche. We want something that’s profitable and not swamped by competition.

In next Tuesday’s post I’ll write about how to pick a niche where users will find you via the best distribution channel of all – App Store search.

Next up…
If you’ve read this far I hope you’ll want to read the following 8 posts. Here’s some of the topics I plan to write about:

• App pricing strategies
• Finding “good enough” developers when you’re just starting
• Managing contractors (hint: treat them with respect)
• Getting good design work out of 99Designs
• How to build apps via Elance
• Mistakes to avoid when you’re not a developer yourself

You can follow me on Twitter here. If you’re like me and have stopped using Google Reader you can get email updates sent to you by signing up here: