android apps for profit nov 2014
TRANSCRIPT
Apps for Profit
Nathan Mellor CritterMap Software LLC
Followup at http://eepurl.com/d9tZj Low
Objectives
• Think about app ideas
• Find your top ten
• Evaluate their profit potential.
To get started
• Make a copy of this spreadsheet (Google Drive)
• http://bit.ly/1cwrX7E : L then One
• Register at AppAnnie.com
My Former Office (2009)
My new office
• One of the Top grossing Apps in “Travel and Local”
Since 2011
Book
• http://www.amazon.com/dp/B00GJHIGY0
• Join Mailing List to find out when it is free http://eepurl.com/d9tZj
Is this you?(Dilbert.com)
Success=Profit
• Profit(app) = Revenue(app)-Cost(app)
Revenue
Profit
Cost
Optimize Marketing
FunnelLabor Complexity
Leve
rage
Proc
ess/
Plan
Tool
s
Effe
ctiv
e H
irin
g
Marketing FunnelHow it applies to mobile apps
Target Audience (potentially interested)
Prospect (aware product exists)
The App Marketing Funnel
Lead (has tried product)
Customer (monetized)
Loyal Customer (repeat sales)
Advocate (recommends product)
Target Audience = Outdoor Navigation users 1% of 1.3 million activations per day = 13,000 per day
Prospect = see my app listing ????? - figures not available
App Market Funnel + Numbers
Lead = installs demo product 500 per day
Customer- bought paid app 20% =>100 per day
Loyal Customer= bought an addon 22 per day
Advocate= 5 star 2 per day
Target Audience (potentially interested)
Prospect (aware product exists)
Target Audience
Lead (has tried product)
Focusing your App Idea
The Secret Idea
• Email from stranger:
• Hey, I have a great an idea for an app that will make lots of money. I will let you develop it for a split of the profits.
“Good ideas are common - what's uncommon are people who'll work hard enough to bring them about”
Ashleigh Brilliant
But not all good ideas are equally valuable . . .• Top Grossing Apps: 500
• Ranked in a category: about 34,000
• >1 million apps
• 64% have <10 ratings
• 89% have <100 ratings
Should your idea be your passion ...
• Yes.
• Doesn’t change the market.
• But it does change you
• Find passion or choose to be passionate.
• Avoid something you don’t care about
Your Skills or Background
• What you (or your organization) are good at
• Or choose to be good at
• Not just programming
• Understanding the market
Should your idea be a hobby or interest?
• Not if you are the only one with the hobby.
• Yes if it has mass market appeal
• Long tail products may not pay off in apps - yet.
Ex: Garmin’s outdoor/fitness division had sales of $400 million last year
What do they buy now?
How unique should your idea be?
Book Amazon Sales Rank
All New Square Foot Gardening, 2nd Edition
#4,629 in Books
Greenhouse Gardeners Companion #23,593 in Books
The Pack Goat #678,394 in Books
Practical GoatPacking #3,054,219 in Books
Should your idea be innovative?
• Innovation is great!
• Innovation involves both risk and reward.
• Innovation is not always rewarded in the marketplace.
• Can you build on something that is already popular?
Profit Potential
• Try to find exact dollar value of future app.
• Come up with your ten best ideas.
• Find out their revenue potential
• Look at the cost to produce them
• Pick the best of them in terms of profit potential.
Calculating Revenue Potential
Market Research: Crushing your Dreams.
What if there are seven apps like yours? Good thing or bad?
• Themes
• UI Standards
• Features
• Best or worst practices
• Revenue potential
What can you learn from an existing app?
Best way to estimate revenue potential
• How are similar apps doing on the Market?
How much money are those other apps
making?
How Do Apps Make Money?
• Paid App
• In App Purchase (Freemium)
• Advertising
• To choose your model:
• Use knowledge of target market
• See what successful apps in the category are doing
• Guess
Paid Apps• Post Gold Rush
(Android never had one)
• Only get paid once
• Don’t have to implement your own checkout code
• Best for low maintenance
• Estimate by: Top Paid Charts
!
In App Purchases• Must implement
purchase code • Can buy multiple times
• Can be recurring
• Appropriate for some categories
• Estimate by: Top Grossing Charts
!
In App Purchases
Unmanaged (consumable)
Managed Subscription
Virtual Currency
Gems/Coins
Credits
Content Feature Content Service
Advertising• Can grow over time if
installs stick
• Proportional to usage (offset server resources)
• Estimate: Top Free Charts plus tricks
• Not available offline
• Bad where there is not an opportunity for impressions.
To make money with advertising
• 1000 impressions/week
• * $1 eCPM (cost per thousand impressions)
• =$1 per week
Spreadsheet
Comparable apps for each idea
Free or Paid Total Installs
Rankings
Top Paid/Free
• Based on downloads
• From the last several days - not a lifetime achievement award
• A LOT less downloads are needed to get in top paid than top free.
Rankings Hierarchy
App Annie Rank History
Top Grossing
• Also hierarchical
• Also from the last few days
• Based on revenue including iap
• Best way to gauge successful freemium products
App Annie Chart
But what about advertising revenue?
Adwords Display Planner
possible CPM?
Spreadsheet
Cost to provide?
Cost to provide?
• Revenue(App) != k*Cost(App)
• There is no law that states that Revenue from an app is proportional to cost
• Unless it is a work for hire with an hourly contract.
Can you have a million in revenue and still worry?
hundreds
thousands
tens of thousands
hundreds of thousands
0 25000 50000 75000 100000
Cost
What is cost effective?
Revenue
Profit
Cost
Optimize Marketing
FunnelLabor Complexity
Leve
rage
Proc
ess/
Plan
Tool
s
Effe
ctiv
e H
irin
g
Two Ways to Increase Cost
1. Complexity
FaucetEverything but the kitchen sink app
Engineering effortYou wrote it in a
weekendSeveral engineering
years
Lines of code 300 70,000
Number of features 1 100
Number of features requested by users
0 300+
What to do when done Work on another app Never done
Bragging rights “My 400th big hit”“Still working on the same app I told you
about last year”
2. Labor
• Won’t be a problem, because you are doing everything yourself, right?
Four Ways to Decrease Cost
1. Leverage and Reuse
• Can you take advantage of existing code?
• Yours or some you can license.
• Leverage - needs more work
• Reuse - intact
• Reuse is cheaper than leverage
1. Leverage and Reuse
• Library
• presumably closed source
• Framework
• Cross platform
• Open Source
• Apache 2.0 vs LGPL vs GPL
• Complete Source Code
ReSkinning
• License complete source code
• Change all graphics, themes, names
• Release as new game/app
• Rinse and repeat if desired. . .
But reskinning is never done by big companies?
Or is it?
2. Process and Planning
• As opposed to making it up as you go along.
3. Tools
• Are great to have in the cloud for a dispersed team
• Not just software development
• Communication: Skype
• Project Management: basecamphq.com
• Tech support: Zendesk
• Design and mockups: LucidChart.com
4. Effective Hiring
• You can hire someone to do:
• Programming
• Design/graphics
• Writing/Content creation
• Internet marketing tasks
• Tech Support
4. Effective Hiring
• You can hire someone:
• For a fixed price job according to a quote
• As a part time, hourly freelancer
• As a full time worker.
• Which is ideal?
So... do you need an office building and
some venture capital?
Where to hire
• A number of online site
• ODesk
• Hourly, fixed price
• eLance
• Hourly, fixed price
• onlinejobs.ph
• full or part time, philippines
reskinning:
hire one guy for a month:
hire a team for a few months:
work on full time for a year
0 25000 50000 75000 100000
Cost
What is cost effective?
Conclusions:
• Find your top ten ideas
• Research the revenue potential
• Research the potential cost
• Go out and make some money
• Followup at http://eepurl.com/d9tZj