How To Choose a Profitable Niche

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.

What’s the ideal niche?

The ideal niche:
1. Is profitable

2. Can be found via App Store search

3. Has crappy competitors

Let’s start with #1.

#1: Is the niche profitable?

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 ExpertDocuments

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 postwhich 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.

#2: Will Customers find you via Search?

You need to find something that can be found with a frequently searched keyword that doesn’t have a lot of competitors.

This is a tough one because Apple doesn’t release keyword data. While there do exist tools now that approximate keyword search frequency, I didn’t know about them when I picked my niche.

One in particular that I’ve started using lately is I’ve talked to the cofounder and he calls it the first “Google Keyword Tool” for App Stores. The interface isn’t very good yet, but the data he’s collecting is remarkable. It’ll tell you how often a term is searched and how many competitors also appear in the App Store Search Results (ASSRs).

Do it Yourself
But I’d also recommend doing your own tried and true research. I did the following before most any App Store optimzation tools went mainstream:

For each niche I brainstormed a bunch of keywords/phrases. I plugged those words into the Google Keyword Tool and clicked the “mobile only” option.

From there I selected the top 30 or so keywords. And I plugged those into the search bar of the App Store.

Then I go through the ASSRs.

For the top 5 or 10 results for each keyword I consider a few metrics:

  • Does the app have a lot of reviews? How recent are the reviews?
  • When did the developer last update the app?
  • Are there any apps that make good money and only rank high in the ASSRs for a few KW’s?

In an ideal world you’d find an app that has lots of reviews and that ranks well in the ASSRs for one keyword phrase, and of course is making money. That means the phrase is likely to be something users are searching for.

If a profitable app ranks well for a few keywords look at the other apps in the ASSRs. Do they appear to be making money, too? Generally, the more money the top results are making, the more likely the keyword is searched by users.

You do have to be careful here though: some apps will rank well for many KWs and it requires much more detective work to figure out which KWs are the ones users are actually searching.

Is the keyword competitive?
Simply look at the # of apps in the ASSRs for the KW phrases research above.

E.g. below are the # of results for different KW’s with the word “calculator”:

“calculator” = 10,930
“tip calculator” = 777
“scientific calculator” = 336
“graphing calculator” = 81

I consider anything less than 100 to be great. Anything over 500 is probably too much.

Again, the App Stores are great because they give public reviews. You already know what user do and don’t like about your competitors. If you decide to get into that niche, you know where the improvements need to be made.

Also subjectively look at competitors: does it appear the developer is putting time/care/love into the product? Maybe she’s become apathetic because she has so little competition and users can’t find anything else. That’s exactly how the landscape looked with Spanish Bibles (It’s worth noting that since then the competition has picked up significantly.)

If it looks like the competition isn’t trying very hard but they’re still making money, it’s likely you’ve found a niche worth investing some more time in.

Talk to me more on Twitter.

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