So, you have an app idea. Some app ideas are brilliant, some are kind of clever and some are just not worth pursuing. How do you determine whether or not your idea holds water?
1. Do you really, really believe in your idea?
The first question to ask yourself is how much are you willing to put on the line for this app? An app is not a cheap thing to buy, and with so many apps in the world, it takes a good bit of marketing and advertising effort to get anyone to notice you. You need a hefty budget to put into this incredibly risky venture. By 2018, researchers estimate that less than 1 percent of apps will be profitable on their own. So you should really be asking yourself, “Do I believe in this enough to risk tens or hundreds of thousands of dollars on it?”
2. How will you pay for your app?
Once you know you believe in your idea, you also need to know how you plan to pay for your app. Again, custom app development is expensive. Quality developers command at least $150 per hour for their work, and apps don’t get made in a day. They generally take months, which is why even the simplest of custom apps will cost about $20,000. If you or your existing business can’t foot the bill on your own and you intend to seek investors, a solid pitch and a plan are essential. Investors want to see traction and a talented team. No investor will cut a deal with you over something that hasn’t been tested in the market yet (see point 4). If you have no clue how to get tens or hundreds of thousands of dollars to pay for your app and its subsequent promotion, you aren’t ready to move forward.
3. Is your app for consumers or businesses?
Another important factor is who will be using your app. Apps made for consumers are far more likely to fail than those made for businesses. The general public is very fickle when it comes to the apps they use. They don’t like to pay for apps, and they expect high quality apps even at the free price point. If you cut any corners on a consumer app, your users will notice and likely abandon your app. Business apps that are designed to increase productivity, profitability or effectiveness of an existing business have a much larger chance of success. An app for $100 that can save $1000 worth of work is a good investment for a business, even though a consumer would likely never pay that price. Businesses are also more likely to be understanding of a first-run limited feature set with the knowledge it will expand later. You’re taking a much bigger risk with a consumer app than a business app.
4. Would someone pay you to do what your app will do?
Proving there is a need for your app prior to developing it is crucial. Get traction on your idea prior to investing in an app. Could you sell this product or service in a simpler, cheaper format? For example, collecting and distributing reviews of restaurants through a template-based website could prove market interest in Yelp. A phone number to call for a car to pick you up from your location within 5 minutes of your call can prove traction for Uber. Putting together a simple website and manually recruiting beach condo owners to list their units for rental can prove AirBnB’s model. If you can’t sell the idea in person, it’s not going to sell as an app.
5. How is your app going to make money?
Finally, you have to have a great way that your app will make money. Monetizing apps has gotten increasingly more creative and difficult as users prove that they don’t like to pay for apps. An upfront, one-time cost that’s low enough for users to be willing pay would have to have millions of paying customers to end up profitable. Users also get irritated by ads quickly, so relying on an advertising-only revenue stream won’t make you popular with your users. The apps that bring in the most revenue are the ones that complement another business structure. For example, Netflix has an app, but users don’t pay for the app. They pay for access to the service through the Netflix website, and the app is simply a viewer. AirBnB is a free app, but there are fees that go to the company from both the property owner and the renter each time a property is rented. Think creatively about your app idea and make sure you have an innovative way to make money.
What it all comes down to is that an idea is only an idea. A much better predictor of success is whether or not the innovator with the idea is willing to put in the money, time and effort.
Are you ready to talk about your app idea? We’re ready to hear about it. Contact us to set up a consultation.