”Hey, I have this GREAT idea for an app. Now I only have to find someone who can build it.”
Ever heard it before? Or something like it? In the forums where I hang out, it comes up now and then. However, ideas are cheap – getting them implemented is not. Even though I have never myself built an app, I have gotten input from people who have, and I’ve been involved in software development for long enough to be able to bring up some things that should be considered before you start. Starting with the big one:
How will the app make money?
Just one software developer might cost somewhere in the ballpark between $25 to $400 per hour depending on where you are located, who you hire, in which format, etc. While $25 per hour might sound tempting, remember that you also most likely get what you pay for, and a developer with a lower hour price might result in more hours required for development before you get to something you can start charging for. Also remember that an app is a never ending development project in a way (I’ll get more to that later). If they work about 40 h per week and a month is about 4 weeks long, that means that only to cover the development per month, your app needs to make 40 x 4 x 25 = $4000 just to pay that one person. Plus 15-30% or so as that is what Google and Apple charge for distributing your app. Plus whatever taxes the country you’re in requires for money made online (again, more on that later). And that is counting low.
So let’s do some math. Say that your app costs the user $1 in a onetime fee. That means you need to attract 4000 new users each month to cover the cost of one full-time developer. How do you plan to do that?
What about advertisement revenue in apps? Ad revenue is not directly proportional to downloads, but to actual use of the app (or rather exposure to the ads in the app). The revenue for video apps are somewhere between $1 to $20 per 1000 exposures. If we again go with the low number, your users will need to see ads 4000 x 1000 = 4 000 000 times each month to pay for one cheap developer. Unless you want your app to only be a constant source of video ad content, the exposure per user per usage time should be kept relatively low. Otherwise your users will tire of the app quickly and leave. Finding that balance can be tricky.
Subscription then? What can your app offer that people might want to pay for monthly? A subscription is an investment where the investor expects constant return – not only in terms of current functionality but also improvements over time. After all – if you only keep functionality that was there from the start, why would I as a customer keep paying month after month for the same thing? This means you’ll probably have to spend even more on development compared to the other two options as there will not only be maintenance after the initial build but also constant implementation of new things that, in turn, need maintenance. Or you need to pay for a content provider that keeps the content in the app fresh. What you then need to figure out is how much your customers are willing to pay to keep using your app over time? How much value do they perceive it delivers, and what is it worth to them?
Is it something anyone actually wants or needs?
Just because you think it’s a good idea doesn’t necessarily mean your intended users do. Before you reallystart spending money on development, try to verify in one way or another that what you plan to build actually has an audience.
The creator of the app Storyspot, who has been through this journey herself, gave the advice not to be afraid to talk to people about your idea. That way you will not only get a sanity-check but also valuable input and other angles than you would have been able to come up with yourself. You might realize that your original idea won’t work, but that a tweaked version would. It is much cheaper to pivot in the idea stage than when you have started building something.
There are other ways of testing your idea. If you google ” validate your product idea” you will find multiple ways of doing this. However, it might be a good idea to pair up with a market researcher to first figure out if the idea will fly. Then a good user experience (UX) designer could help you with finding out how to design it (like in how it should work and not only what it will look like) for your users to like it. Getting inspired by the lean startup methodology is a good idea. Keep in mind that good UX or market research people rarely come for free, so you will need some money to invest here as well.
Do you want to make a native or non-native app?
Ok, let me explain: The two major remaining operative systems on mobile devices today are Android (for Android phones) and iOS (for iPhones). Apps made for these are written in different programming languages and environments. Apps made for either Android or iOS are called native apps. There are also apps that are written for both in the same language, but those are best described as mobile websites running in a browser where you, as a user, don’t see the browser. These are called non-native apps. Native apps have access to everything the operating system can use and often inherits the graphical look and feel of standard components such as buttons and other interactive elements. Non-native apps, on the other hand, might look the same on both platforms, but it can depend on what is available to browsers on the specific device you have. They will also only be able to use a standard subset of functions and features on your phone, as they were made to work on the smallest common subset of things of the two platforms.
There are also hybrids available, but to keep it short and relatively simple, we’ll stick to native and non-native apps for now. Here is a link to a blog post that really dives into what native and non-native means.
Who (and what) do you need to make the app?
Depending on what your app will do, this will vary a lot. If it is something simple that will require nothing outside of the phone, you most likely will need very much less than if the app, e.g., requires log in that needs to verify against something on the internet or data stored on somewhere else than on the phone itself.
If the app only needs what you have on your phone in terms of content, information and hardware, you will most likely need at least one app developer, a designer of some sort for not only designing the look and feel but also how it should work in terms of flows and features, and a quality assurance (QA) person who make sure it actually works. This can be the same person, but often it is hard to find just one person who is good in all areas. Also keep in mind that you might need more than one developer simply because developing for an android phone and an iPhone is not done in the same language unless you run a non-native app and most app developers are not very good at working on both.
If your app requires access to something outside the phone and you will supply whatever that is, e.g. content, you will need internet connected servers to store it on and software developed to run on the servers. The software running on the server is often called back-end services, which requires Back End developers to write it. While the developers write the software, you might need someone to set up the server and the things running on it. And the pipeline used to deploy things on it. And watches over it to see that it doesn’t go down. In short, you need a few different people on top of the QAs and developers, e.g., people with titles like DevOps Engineers.
Speaking of someone who sets up pipelines: Unless you plan to develop something, release it, and never look at it again, modern software development, which is what we’re essentially talking about here, will require the setting up of a release process involving testing the software for bugs, regression, stability and load, as well as releasing or deploying it in some way. It can be automated, but if you are only just starting out, most of these steps will most likely be very very very manual. It’s a lot of work that someone has to do.
Do you want to have employees or hire an app development agency?
Once you’ve figured out what kind of app you want and what it should do, you need to figure out how to build and maintain it. In an earlier section, I discussed who (and what) you need to develop an app. For how to get these, you have the options of hiring people yourself as employees or write a contract with a company that will do this as a service. The latter comes with the benefit of getting the entire know-how and package at once with the drawback of you then depending on an external party probably for the lifetime of your app. It most likely will not be a onetime cost due to the need of maintenance etc. (More about maintenance later.)
If the app is just an app, i.e., something that you build, release and then leave to live its life on its own only to be there to provide an income for you, using a contractor or agency to build it for you makes perfect sense. However, if the app is the central part of a new business where you also plan to improve and expand on its offering, you most likely want your own development team. This as your development on it will most likely be continuous. Working with an agency will require more in terms of specifications, requirements, and agreements on what to deliver. Hence, changing your priorities and what to make quickly will be more complicated if you’ve already signed off something with an agency compared to just talking it through with your internal development team.
If you decide to build your own team, there are a few challenges ahead. Some of these are:
- Do you know what it means legally to hire someone? What does it mean in terms of commitment and risk?
- How do you know you get the right person and competences?
- What kind of incentives will you pay them with?
Keep in mind that when you’re first starting out, the future of their employment will feel quite unsafe. You might provide the idea, but they provide hard earned experience and might have left a secure source of income and benefits to help you realize your dream.
What about DIY app creators?
Using a DIY tool to create a prototype to test with potential customers and users to see if your idea works will probably be much cheaper and faster than making the app by writing the code from scratch. Being fast has its merits, but there are also some other considerations you have to do before you choose to go fully down the app creator route.
Most of the services that let you build your app are subscription services. This means that if you stop the subscription, your app either won’t be working anymore or you won’t be able to update it, which means it will stop working when iOS and Android have been updated enough times. So if you use such a service, you will have to continue paying the fee for as long as you intend your app to continue working for your users.
Can’t you just learn how to code?
Regarding learning to code yourself: Let’s make an analogy here. How much time and effort would you feel you’d have to spend on learning how to cook if you were to open a restaurant with yourself as the head chef? Or the only chef really? If it was for a food truck or a hot dog stand, watching cooking tutorials on YouTube for a few nights might suffice, but if you wanted to provide your customers with a Micheline level experience, I bet you wouldn’t even consider not hiring a professional. The same goes for this. What experience do you want to give your users? And security in terms of keeping their data safe? It’s one thing to program (or cook) something for yourself as a hobby, quite another if you charge strangers for the result.
Do you have enough money to get started?
In a previous section, we discussed costs for one developer per hour in relation to incomes. However, before you earn anything you need to have a product or service to sell. Hence, you need some money up front to pay for initial development. How much that is depends on all the things previously mentioned, e.g. who will develop your app, will it be native or non-native, maturity of the release process, investment in market/user research and design, etc. It also depends on the amount of features and polish you want to put into your product before you launch. Just to get an idea of the cost, you can use cost calculators provided by app development agencies out there such as this one. Even if you use such a calculator, the actual cost could turn out to be much higher. Experienced project leaders in other fields often calculate a cost by taking the initial estimate and multiply it by 3. The same goes for the time needed.
Where the money should come from is another thing to consider. If you cannot answer the questions in this post, you will most likely be the only financier. However, if you can, you might be able to attract investors. Investors can provide a good starting plate, but comes with the expectation of a return of investment within quite a short time. An optimization for quick profit might come with the risk of not being able to do investments in things that might pan out in the long run. They will also most likely have opinions about how the company should be run. Many who now work as investors in new companies have a background in running such themselves and can provide good input and advice. However, you will most likely sacrifice some of your freedom to act (and ownership of your company) for the money invested.
Is your app ready for launch?
Apple and Android have quite extensive processes for approving apps in their stores. They look at everything from design, to usefulness, to stability. It is wise to read through and make sure your app adheres to their requirements in good time before submitting it for approval.
However, while the review process will verify that your app is conforming to a set of guidelines and is not obviously worthless, it will tell you nothing about if it actually is ready for launch. This is something you have to verify with actual potential users if you want to avoid those one star ratings. As mentioned in the section about if the idea is something anyone wants, being user centered is key to success unless you’re making an app people are forced to use.
How will people find your app?
There are currently around 2,56 million apps in Google Play and 1,85 million apps in the Apple App store (September 2020). When searching for apps, they are usually ranked by relevance or rating. Somehow your app has to stand out so people can find it. Do you have any ideas of how to make that happen?
How do you handle the money coming in?
If you are making money from apps, you need to pay taxes in most countries. How that works differ between countries and you can find information about how it works for Android here and how it works for iOS here. To do that, you often need to have formed a company. You most likely will have had to do that anyway to pay for all other things needed to make an app, but at the very least, you need a company to handle incomes. And you need to figure out how tax rules and accounting works in the location where the company resides. Apple and Google will handle some tax things during purchase, but there will still be taxes that have to be paid and accounting done by you. Once the taxes on the money earned are paid, you also need to adhere to local rules regarding how you will get some of it as the founder. Either having excellent knowledge yourself about accounting or knowing someone who does is essential. The tax agency is not something you want to argue with or ignore. Learn from Al Capone.
What about maintenance?
Android and iOS are constantly updating both in terms of software, but also actual terms of usage. When new privacy rules and regulations, e.g., are introduced, they will require you to follow them or having your app removed from the store. In addition, hardly any software is written without bugs. This means that even if the app you have had built was considered ”done”, it will need regular updates to still work on modern phones and comply with current rules and regulations. This might not need a full-time developer, but it will require some plan and budget for regular maintenance work. If you have made native apps, this also means twice the cost, as you need to keep both apps up to date.
Are you really sure it is an app you want to make?
As mentioned in the previous section, there are already a lot of apps out there. The average user has somewhere between 60-90 apps installed on their devices, but spends most of the time using only about 10 of these. That’s a tiny number of apps out of a lot available. Your app really has to provide something unique or necessary to become one of those 10 (or even 90). Do you really believe in your idea enough to spend what is needed in terms of time, effort and money to get into the app markets?
Conclusion
There is a quite famous South Park episode with gnomes collecting underpants based on the profit plan of ”Step 1: Collect underpants, Step 2: ?, Step 3: Profit”. When it comes to mobile apps, the plan often seems similar, i.e., Step 1: Come up with a great app idea, Step 2: ?, Step 3: Profit. This post is about the middle part, Step 2. It is not covering everything by far, but should give an idea of the actual complexity of making a profitable app. If you confidently can answer all the questions, you might actually be able to launch a successful app. Or at least have a good start when trying to do so. And get more respect from whoever you contact to help make your idea into something real and working.
Special thanks to the following for their input and contributions:
Ashley, InterVarsity
Linda Evertsson Norrevik, Storyspot
Angelica Wistbo Nibell, Wistbo driftportal
Carina Mclane
Sara Bergman
Helena Johansson
Helena Storvall