What happens when you plan on building the next Angry Birds but your results don’t quite live up to your vision?
Face it, not every mobile app is a million-seller corner case like Angry Birds or Instagram. For those of you out there who have spent months building your app, forgoing food, water, sleep and your family – only to have it launch, peak and plummet – there is hope for your app yet.
We are seeing a growing trend for second-market offerings: eBay, of course, brought the concept of auctions to the digital masses. Companies like TagSellIt and others are bringing second-hand goods to the mobile space. Today, a growing number of startups are emerging offering services to help developers earn an exit from their efforts in mobile app development.
There are over 1 million apps in the various app stores across all mobile platforms and, as is well-documented by recent acquisitions, discovery is a challenge for developers looking to get their apps on as many devices as possible. Eventually there comes a time when the results of the efforts are not paying off or when the developer would like to move on and fund another project. As with everything in the technology world, an exit is an exit and companies like Apptopia are trying to facilitate that marriage between need and product.
Another key trend we are seeing are companies looking at bolstering their mobile offerings through acquisition. Having a single app in the ecosystem is not effective for discovery so many companies are looking for complementary apps to their one in-house developed app. This is a huge opportunity for developers looking to fill a niche that an incumbent may look to in the future.
Who knows what sticks in this app world. Sometimes what seems like a ridiculous idea takes off and one that makes absolute sense dies a slow and painful death. Maybe your idea is one of the lottery winners but for the rest of us it is good to know there are options for all the hard word that went into developing it.
What is your app worth?
This is a loaded question and, depending on who you ask, you will get different answers. To the developer, the app is worth the combined value of the effort that went into the development. To someone looking at purchasing it from an app store it is the value of impact or joy they will receive from time spent. To a company looking to purchase ownership it is the value of the internal time required to develop it over the impact of diverting resources to build it.
Sometimes the challenge is seeing the end game for apps in general. What started out as a cottage or basement industry has grown up to become one of the most fiercely competitive and whim-based business environments we’ve ever seen. The amount of effort and cost that now needs to go into building a globally competitive app is steadily rising while the rules of monetization are changing rapidly as the traditional model races to zero.
There comes a point when a developer must look at the lifetime value of their app and balance it against an opportunity to sell the rights and walk away. For example, RIM is offering a guarantee on their new platform that each developer will generate $10,000 in revenue in 12 months or they will write a cheque for the difference. If you could accelerate that by selling the app today to collect on that revenue immediately, would you?
Building apps and turning them into revenue is without a doubt a challenge. However, as the mobile industry and ecosystems evolve we are starting to see many alternative opportunities to make the money that is needed to build sustainable, growing companies. Add the idea of finding niches, building apps and selling them before they see the light of day to that monetization list.
The idea of selling an app outright – handing it off and walking away – is a hard concept to grasp for some. All the hard work, the late nights and the promise of what it could be sometimes get in the way of the right decision. So why should you sell your app and what kind of apps sell better in an open and competitive marketplace?
First off, the fact that there are so many over lapping apps – similar or straight up clones – makes it difficult to stand out. So what makes an app appealing to buyers? There are some patterns here. While some apps in the various app stores might target whim buys and provide an experience that users will quickly get bored of, the apps that are more appealing are the ones that provide a consistent need that never ends. Card games, puzzle games, To Do lists – these are perfect examples of perpetually used apps. These are also examples of apps that end up selling for more.
Another aspect of selling your app is staging. If you’ve ever watched any of the house selling reality shows on television you know what this means. Home sellers fill the house with perfectly placed furniture, beautifully laid sod and top it off with freshly baked cookies. It sets the tone. It shows the possibilities. It sells houses.
The same thing must be done with an app if you want to maximize the opportunity – augmenting the user interface, enhancing the user experience, ensuring high code quality and documentation and making sure there are strong analytics are the same as outfitting the dining room, the TV room and the bedrooms with the right furniture to share the vision of what could be.
As you can see, selling an app is no different than selling your home. Some get their asking price, others settle for what is offered.