This document discusses how to evaluate the profit potential of app ideas. It recommends making a list of the top ten ideas and researching the revenue and cost for each using tools like a spreadsheet. Revenue potential can be estimated by looking at comparable apps' installs, rankings and earnings from sources like ads or in-app purchases. Costs can be decreased by leveraging existing code, planning processes efficiently, using online tools, and hiring freelancers when needed. The goal is to identify which ideas have the highest potential profit by subtracting estimated costs from estimated revenues.

1. Apps for Profit
Nathan Mellor
CritterMap Software LLC
Followup at http://eepurl.com/d9tZj
Low

2. Objectives
• Think about app idea
• Find your top ten
• Evaluate their profit potential.

3. To get started
• Make a copy of this
spreadsheet (Google Drive)
• http://bit.ly/1cwrX7E
Register at AppAnnie.com
•

4. Book Signing
•
http://www.amazon.com/
dp/B00GJHIGY0

5. About me - 2009
•
Worked for a major printer
manufacturer for 12 years
•
Feb 2009: “routine” meeting with
boss
•
•
•
•
•
Downsizing announced
New house, new mortgage.
March 27: Last day at work
March 28th: Third child born
April 2009: “Outplacement”
counseling

6. Nathan in 2010
•
•
•
Reeducation through the Trade ACT
•
Enrolled in University of San Francisco’s Internet
Marketing program
Developing an app on a new operating system called
Android
•
•
First launched to the market June 2010.
Started at about 5 sales a day; I was aiming for ~56.
Paid zero taxes AND got a refund.

7. Since 2011
• Top grossing App in
“Travel and Local”

8. I have a corner office
with a view

9. Is this you?
(Dilbert.com)

10. Marketing Funnel
How it applies to mobile apps

11. The Internet Marketing Funnel
Target Audience
Target Audience
(potentially interested)
(potentially interested)
Prospect
Prospect
(aware product exists)
(aware product exists)
Lead
Lead
(has tried product)
(has tried product)
Customer
Customer
(paid for something)
(paid for something)
Loyal Customer
Loyal Customer
(repeat sales)
(repeat sales)
Advocate
Advocate
(recommends product)
(recommends product)

12. App Market Funnel + Numbers
Target Audience = Outdoor Navigation users
Target Audience = Outdoor Navigation users
1% of 1.3 million activations per day = 13,000 per day
1% of 1.3 million activations per day = 13,000 per day
Prospect = see my app listing
Prospect = see my app listing
????? -- figures not available
????? figures not available
Lead = installs demo product
Lead = installs demo product
500 per day
500 per day
Customer- bought paid app
Customer- bought paid app
20% =>100 per day
20% =>100 per day
Loyal Customer= bought an addon
Loyal Customer= bought an addon
22 per day
22 per day
Advocate= 5 star
Advocate= 5 star
2 per day
2 per day

13. Target Audience
Focusing your App Idea
Target Audience
Target Audience
(potentially interested)
(potentially interested)
Prospect
Prospect
(aware product exists)
(aware product exists)
Lead
Lead
(has tried product)
(has tried product)

14. The Secret Idea
• Email from stranger:
• Hey, I have a great an idea for an app that will
make lots of money. I will let you develop it for
a split of the profits.

15. “Good ideas are common - what's
uncommon are people who'll work
hard enough to bring them about”
Ashleigh Brilliant

16. But not all good ideas
are equally valuable . . .
•
•
Top Grossing Apps: 500
•
>1 million apps
Ranked in a category:
about 34,000
•
•
64% have <10 ratings
89% have <100
ratings

17. Should your idea be
your passion ...
your passion ...
• Yes.
• Doesn’t change the market.
• But it does change you
• Find passion or choose to be passionate.
• Avoid something you don’t care about

18. Should your idea be a
hobby or interest?
• Not if you are the only one with the hobby.
• Yes if it has mass market appeal
• Long tail products may not pay off in apps yet.

19. What do they buy
now?
Ex: Garmin’s outdoor/fitness division
had sales of $400 million last year

20. How unique should
your idea be?
Book
All New Square Foot
Gardening, 2nd Edition
Greenhouse Gardeners
Companion
Amazon Sales Rank
#4,629 in Books
#23,593 in Books
The Pack Goat
#678,394 in Books
Practical GoatPacking
#3,054,219 in Books

21. Should your idea be
innovative?
• Innovation is great!
• Innovation involves both risk and reward.
• Innovation is not always rewarded in the
marketplace.
• Can you build on something that is already
popular?

22. Success=Profit
• Profit(app) = Revenue(app)-Cost(app)

23. Profit Potential
• Try to find exact dollar value of future app.
• Come up with your ten best ideas.
• Find out their revenue potential
• Look at the cost to produce them
• Pick the best of them in terms of profit potential.

24. Calculating Revenue
Potential

25. Market Research:
Crushing your Dreams.
What if there are seven apps like yours?
Good thing or bad?

26. an existing app?
• Themes
• UI Standards
• Features
• Best or worst practices
• Revenue potential

27. How much money are
those other apps
making?

28. spreadsheet on Google
Drive
http://bit.ly/1cwrX7E

29. Spreadsheet

30. Comparable apps for
each idea

31. Free or Paid
Total Installs
Total Installs

32. Rankings

33. Top Paid/Free
• Based on downloads
• From the last several days - not a lifetime
achievement award
• A LOT less downloads are needed to get in
top paid than top free.

34. Rankings Hierarchy

35. App Annie Rank
History

36. Top Grossing
• Also hierarchical
• Also from the last few days
• Based on revenue including iap
• Best way to gauge successful freemium
products

37. App Annie Chart

38. But what about
advertising revenue?

39. Adwords Display
Planner

40. possible CPM?

41. Spreadsheet

42. Cost to provide?

43. Can you have a million in
revenue and still worry?

44. What is cost effective?

45. Two Ways to Increase
Cost

46. 1. Complexity
Faucet App
Everything but the
kitchen sink app
Engineering effort
You wrote it in a
weekend
Several engineering
years
Lines of code
300
70,000
Number of features
1
100
Number of features
requested by users
0
300+
What to do when done Work on another app
Bragging rights
“My 400th big hit”
Never done
“Still working on the
same app I told you
about last year”

47. 2. Labor
• Won’t be a problem, because you are doing
everything yourself, right?
• Wrong!
• Doing everything yourself is the most
expensive thing you can do.

48. Four Ways to Decrease
Cost

49. 1. Leverage and Reuse
• Can you take advantage of existing code?
• Yours or some you can license.
• Leverage - needs more work
• Reuse - intact
• Reuse is cheaper than leverage

50. 1. Leverage and Reuse
• Library
• presumably closed source
• Framework
• Cross platform
• Open Source
• Apache 2.0 vs LGPL vs GPL
• Complete Source Code

51. ReSkinning
• License complete source code
• Change all graphics, themes, names
• Release as new game/app
• Rinse and repeat if desired. . .

52. But reskinning is never
done by big companies?
Or is it?

53. 2. Process and Planning
• As opposed to making it up as you go
along.

54. 3. Tools
•
Are great to have in the cloud for a dispersed
team
•
•
•
•
•
Not just software development
Communication: Skype
Project Management: basecamphq.com
Tech support: Zendesk
Design and mockups: LucidChart.com

55. 4. Effective Hiring
• You can hire someone to do:
• Programming
• Design/graphics
• Writing/Content creation
• Internet marketing tasks
• Tech Support

56. 4. Effective Hiring
• You can hire someone:
• For a fixed price job according to a quote
• As a part time, hourly freelance
• As a full time worker.
• Which is best?

57. So... do you need an
office building and
some venture capital?

58. Where to hire
•
• ODesk
• Hourly, fixed price
• eLance
• Hourly, fixed price
• onlinejobs.ph
• full or part time, philippines
A number of online site

59. What is cost effective?

60. Conclusions:
• Find your top ten ideas
• Research the revenue potential
• Research the potential cost
• Go out and make some money!