Have An App Idea? What To Do About It.

You’ve just had a revelation and came up with this amazing app idea. Now what do you do with it. Well, first things first, hold your horses. What do you want to achieve with creating an app?

  • ◊ Become the next Zuckerberg?
  • ◊ Reduce costs and increase employee productivity for your company?
  • ◊ Create new revenue opportunities for your business?
  • ◊ Disrupt the marketplace?
  • ◊ Brand yourself?
  • ◊ Have a fun, cool idea attached to your name?

These are all worthwhile pursuits. Granted each of them will come with a different price to pay from your wallet and your time, but I’m not here to judge, I’m here to help steer you in the right direction.

“I have this killer app idea. No one else has thought about this idea before.” Are you sure? Did you do market research? Let me repeat myself, did you do market research, not just Google your app name? I’ve heard so many “great app” ideas and then when I ask the person who their competitors are or even if they did any research I get a response along the lines of “Well, I’ve never heard of anything like it and my girlfriend thinks its a great idea.” Two things here, A. Girlfriend’s aren’t the best resource for knowledge about the app world. B. If you can’t even motivate yourself to do some basic market research to see what sort of competition is out there, then you aren’t serious about your app. Not a big deal, just challenging you enough to ensure you are motivated to actually go through the process of bringing your app idea to fruition.

News flash, not all apps that are created rake in $1 Million. Turns out, that almost 60% of all apps don’t break even on development costs and that 70% of developers earned less than $5K from their most successful app.1 Now you’re probably wondering why that is? Because the idea wasn’t cool enough? Because they weren’t good at marketing campaigns? Because the app had hideous design or an inferior product? Nope. Well, maybe… but that’s not the point here. From what most research points out, is that the app did not solve a problem.2 The app was not something users could live without. Today, users can only spend so much time on their devices. It’s a crowded space, so why would anyone use their precious time to be in your app instead of some other app they are already using or just want to check out for the first time?

Yo, just get to the point. How much is it gonna cost me to make an app? Excellent question, so here are some stats for you to digest.

Per a credible source, the team over at Kinvey conducted a survey and the results show that average cost per app is $270,000.3 I’m sure everyone has heard these once in a lifetime success stories about apps meteoric rises, IPO’s, and acquisitions – Facebook acquires Instagram for $1B, Groupon has biggest IPO since Google, Yahoo Acquires Summly and makes a 17 year old punk kid a millionaire overnight, Angry Birds Becomes the #1 Paid App of All Time.4 Now you’re probably sitting there fuming in your 4’ by 4’ cubicle wondering why these people got so lucky. You probably have an app idea but now what do you do?

Turns out it takes both time and money to create a successful app. Here are some basic examples in today’s dollars how much it would cost and duration to create some of the biggest apps out there:5

  • ◊ Facebook: $500K, 9 months
  • ◊ Instagram: $100K – $300K, 3-6 months
  • ◊ Uber: $1M – $1.5M
  • ◊ What’sApp: $250K, 9 months
  • ◊ Angry Birds: $2.2M, 12 months

Here are some more stats from the Kinvey Survey:

Another credible team over at Clutch conducted a survey and they found that the median cost per app is right around $171,4506. It’s interesting to note that the largest cost driver according to the Clutch survey is not the features of the app but the infrastructure, which includes:

  • ◊ Basic controls
  • ◊ Data storage
  • ◊ 3rd party integration
  • ◊ Access to enterprise data
  • ◊ Data encryption
  • ◊ Scaleability

To be clear, just coming up with the app idea, doing some code and getting it to the app store is not the end of the line for costs associated with the app. Here are are a few other ongoing costs to be fully aware of when deciding to take the plunge into running an app company.

A Forrester Survey once found that the average amount spent on a typical mobile app ($50,000 to $150,000) turns out to be just 35% of the true two-year cost. This means when looking at a yearly budget after launch, your team should multiply the development cost by a factor of 3.7 This implies that your team should be budgeting thousands of dollars per month for running the app, whether it be promotions, marketing, upkeep, costs of goods sold, storage of information within the app, etc. Another credible source – Commentum – found in 2015 that the estimated the maintenance cost for a medium-sized enterprise application project to be in the range of $5,000 to $11,000 per month. Even the lowest estimate for a small project is not insubstantial at $3,000 per month — and a larger project ranges as high as $25,000 per month.8

No matter what technology is used for your app or what industry your app falls into, please, please, please, I beg of your for your own success, plan for several updates per year. According to an AnyPresence survey of enterprise mobile application development professionals, found that over 80% reported updating their apps at least twice a year and nearly a third were updating at least once a month. Frequent updating can be a major ongoing cost driver. 9

Don’t pull your hair out trying to ask your rich uncle for all this money just to run your app for a few years. Take a deep breath, cool your jets and listen. All apps either currently, or in their future plans, have revenue models. Now the question is, what sort of revenue model do you want to implement:

  • ◊ Ads
  • ◊ Subscription Service
  • ◊ Selling actual products or services
  • ◊ Pay to download the app
  • ◊ Freemium – in app purchases for upgrades, new features, etc

Ad’s are by far the most popular, but what you need to know is that for advertisements you need to get users first. No one is going to pay you truck loads of money hand over fist if you don’t have any eyeballs to show the advertisements too. In the end, revenue is generated through creating a quality product that users want to utilize. Don’t mistake this with “if we build it, they will come.” No, uh uh. In my opinion, this is where people lose focus. They spend all this time trying to generate the greatest idea instead of letting the users and market define their own wants / needs. This generally entails the use of a pivot. A pivot is when an app changes direction from what one idea or functionality is, and focuses in a new direction to meet the needs of its end users. Some of the most famous pivots include: Yelp, YouTube, Instagram, Twitter10 and I’m sure everyone is familiar with the fact that Facebook was originally named Facemash to compare whether students or “hot” or “not.”

Now you’re probably wondering, how much would it cost to make my hot new app that is going to leave Facebook in the dust? Well, if you’re looking to figure out how much your app would cost per the general census, there are a handful of calculators out there:

Here the thing though. Those calculators just take broad ideas and put them into an formula to pump out some high number for expected costs. If you are serious about creating an app I can point you in the right direction with 2 possible options:

  1. ◊ Think Latitude: Do you have an application or idea and need consulting?  Do you need help with understanding how to incorporate or file a patent?  Are you looking to get an investment for your company?  Let us walk you through these steps.  Our team thrives in helping startups succeed with over 20 years of experience. Startups are our passion, and we love to work with them in any stage, whether you are just getting started or hit a roadblock and need consulting, just reach out and we can guide you today. 

Please remember, if you took nothing else away from this work of art, have a strategy in place for getting your app idea together, developed, and post market. Get customers before building the product. Create design before code. Still, a product is nothing without scalability. “You can’t just build a product today, you need to build a venture. And that involves processes, structures, feedback loops, analytics and a community.”

  • 1. http://arstechnica.com/apple/2012/05/ios-app-success-is-a-lottery-and-60-of-developers-dont-break-even/
  • 2. https://www.biznessapps.com/blog/startups-should-solve-problems-not-develop-ideas/
  • 3. http://resources.kinvey.com/docs/State+of+Enterprise+Mobility+Survey+2014+-+Kinvey.pdf
  • 4. http://mashable.com/2013/04/11/epic-startup-moments/#SWGcUJHFG5qA
  • 5. http://thenextweb.com/dd/2013/12/02/much-cost-build-worlds-hottest-startups/#gref
  • 6. https://clutch.co/app-developers/resources/cost-build-mobile-app-survey
  • 7. http://www.computerworld.com/s/article/9224230/Chief_mobile_officer_A_job_title_now_timely_
  • 8. http://www.comentum.com/mobile-app-development-cost.html
  • 9. http://www.anypresence.com/blog/2013/07/11/state-enterprise-mobile-readiness-2013/
  • 10. http://mashable.com/2011/07/08/startups-change-direction/#b0CUcqg9Gsq9