How to make the business plan of an app

At first glance, it might seem that this market is very fragmented – in which anyone with minimal development knowledge can create an app – and that business opportunities are scarce, since there is a lot of competition. But we are at the beginning of what is going to be a great market. In the not too distant future, everyone will have a smartphone with access to apps. It will be a phenomenon greater than that of the web.

When someone, with that minimal knowledge of development, decides to face the task of creating an application and finds himself in this environment – ​​a large number of different apps, different business models, various operating systems, etc. – what does he do to launch it, how do you sell it, where, to whom, at what value…

Returning to the starting point, any business –whether online or offline– requires a  prior study and feasibility analysis , because they are all governed by a market in which there are competitors, barriers to entry, customers, financial needs… Think about it. The opposite would be to condemn the project to failure even before starting it.

To develop an application and launch it on the market, it is obviously also necessary –mandatory– to make a  business plan  and even more so when we are talking about a global market with exponential growth.

Where to start?

The market? As we said before, it is an open sector, which is in its first stage of development, which offers many business opportunities… But  where to start? The first step is to reflect on what need the app we want to develop covers. One way of looking at it is that apps are tools and you have to focus on detecting what new needs the app you have in mind would cover. Once we are clear that there is a real need for that idea, we look for which apps on the market cover that need and how they do it, to find out if we can really add value. Many times we find that they do not exist, that is, we look for ideas that are not yet on the market. And when they appear, because it is a very lively and fast market, we try to generate value with new functionalities and interactions.

From there,  the second key emerges : think of the app as the origin of the idea. We do not adapt an idea from another medium and turn it into an app. We are thinking that a certain application will be on Android (Google’s Android Market) or on iOS (Apple Store) and that, depending on the device, we will develop some functionalities (mobility, offering context opportunities for different uses, etc.), that is to say , that we already thought about these opportunities from the beginning, so the app is always the origin of our thinking; not that we have seen a website or a book and then think that it can be turned into an app.

In addition to these aspects, you have to  decide if you want to develop your own apps or for third parties . If it is the second option, you have to create custom developments for clients.

Entry barriers

Compared to those that existed six or seven years ago when the first major developments began, the barriers to entry have changed. Basically, before it was the novelty of the channel. The biggest problem was going to tell about the opportunity to carry the Internet in your pocket when people were used to the Internet that the operators’ portals then offered, with very limited navigation or with devices that allowed access to content, but in a very remote.

Another barrier was the lack of knowledge about the apps themselves. People associated mobile content with downloading wallpapers and nobody could assimilate that you could have so much power in your pocket with apps.

Now, despite so little time having passed, it is easier because there is much more information, it is a consolidated channel, which has proven to be profitable and because, in addition, there are many examples to look at.

Paradoxically, the current barriers have more to do with that opening in the market that empowers anyone with minimal technical knowledge to develop an app, that is, the competition is greater. Something similar happens with what happens in the web development market. How to overcome that  barrier? To differentiate yourself, you have to use experience. More and more customers prefer developer companies to freelancers, not because the latter lack knowledge, but because customers want the apps but also the added services (maintenance, support…). The client usually asks you for a specific development for a platform (mainly for iPhone and Android) and then that we do the same for lesser known platforms. We have response capacity and resources.

The target audience

We must also  assess what our target audience is , because iPhone users are not the same as Android users. For example, Android are mobiles from various manufacturers, economically more accessible and with a lower purchasing power than those with iPhone. Do not make the mistake of making an application and putting it on all platforms, because it will not always work the same.

Another element is what is known as the conceptualization stage of the app, a phase in which you have to analyze what functionalities you will include, how it will interact, what usability it will have and a graphic design in accordance with all this.

Maintenance is also important  so that it does not become obsolete . It is useless to hang it, not update it and not listen to the criticisms made by the users of your app. If so, it will be a matter of weeks for it to be forgotten.

How to sell an application?

Choose how you launch it to the market: paid or free? For one or several platforms? Identify what your target is, where it is and how to reach it. And then, make a campaign in networks, specialized media and even in other applications. There are six ways to make money with an app:

1.- Payment model . You upload the app to a store and put a price on it. It is not highly recommended, because you are one more in the universe of global apps and not all of them earn money.

2.- Freemium . Users download it for free, and there are extra features that are paid for.

3.- In app . It is free and is enriched with paid content.

4.- In-house . They are custom developments for business environments. For example, a CRM. They will not have many users, but it will be used by the clients of that company.

5.- Subscription . It is free and a temporary subscription is paid for services. They are recurring income.

6.- For advertising . It is earned by advertising integrated into the apps themselves.

Some experts consider that the ideal is to make them free and then think about what payment services to develop around them. Or have a free app to get a brand image. You don’t monetize it, but it’s an important intangible.

Store or stores?

In addition,  you must assess on which platform or platforms you will upload it . The main developments are made for iOS (Apple’s Apple Store) and Android (Google’s Android Market), but there are other platforms. The Apple Store  has a very restrictive policy, because it says who can post and who can’t based on the content and the app. However, the Apple Store model, although it carries a significant commission, is valid because payment is centralized and access for users is very easy.

When you publish on iOS or Android, you decide in which countries you register them. If your market is going to be global and your app will be available all over the world, communication must be global.

Experts highlight two avenues of promotion. The first, meritocracy: the most downloaded are at the top of the rankings. And another is that Apple decides to promote you based on interest, how well made it is, etc. The stores renew the content every two or three days to give the feeling that there is new content. These stores reward applications with many downloads in a very short time and also penalize those that go down a lot in that time. They try to generate that there are always new ones so that customers enter continuously. This is good for the user, but bad for the developers, because you can go up a lot in a short time or go down very fast.

development costs

Depending on the type of app, the investments can take between one and two months of development, with a cost of between 10,000 and 20,000 euros, and developments of a minimum of six months, with a cost of between 100,000 and 200,000 euros. And that has to do with the depth of the app, the complexity, the integration it has with external services, etc.

No less important are marketing costs. Once developed, what do you do so that they download it among thousands of other applications? Use app positioning and promotion services, speak in the main blogs in the sector or advertise your app in other apps, and all of this costs money. Develop apps whose functionalities share things on social networks, because it makes them go viral.

Agencies specialized in positioning apps have been born, because if, thanks to this positioning, you manage to capture only 1% of the 100 million downloads per month of paid apps (we are talking about one million downloads per month at one dollar), you will have generated one million dollars.

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