Android developers can improve their revenue from apps by 900 percent above average if they focus on developing for less competitive but more price-intensive categories, according to analyst firm research2guidance.

Apps in Android Market’s Games category have “rather mediocre” monetisation potential due to the intense competition for downloads, according to research2guidance’s Android Market Insights report. Apps in categories where users prefer free alternatives or don’t feel sufficiently motivated to pay for apps also suffer low average revenue.

It's the more niche categories with little competition that yield the biggest revenues: the Weather category in Android Market – the smallest category – has the highest average revenue per app.

But despite the revenue potential of Weather apps, research2guidance says they have a very specific use case meaning it will be difficult to make another app that could have a significant impact.

Instead, the analyst firm advises developers to build apps for the Android Market Business category as it has relatively few apps (7,000) with only 13 percent being paid apps. research2guidance argues that businesses are prepared to pay for good tools, meaning there is plenty of scope to secure good revenues from apps designed for the category.

The Android Market Insights report found the average Android app has generated almost US$2,500 since launching, with average cumulated revenue from paid downloads ranging between US$300 and US$21,000 per category.