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HUNDREDS OF MILLIONS OF BUYERS ARE LOOKING FOR YOUR GREAT APP

A great idea for an Apple iOS, Android or Windows Mobile software app can appeal to millions of ready buyers via app stores

Have a hot idea for mobile device app software? The number of ready buyers is rapidly growing. They use popular smart phones, tablets and products like:

  • Apple iOS-based iPhones, iPads and iPods,
  • Google Android- the underlying app software of many devices made by HTC, Motorola, LG, Samsung, Sony Ericson, Amazon and others,
  • Nokia and Microsoft Windows Phone,
  • Blackberry’s RIM, and
  • other on-the-go technologies.

Devices such as these have quickly found a massive, ever-expanding market for good (and not-so-good) app offerings. Carving out even a fraction of that market can yield enormous profit.

Current Mobile App Market Revenues & Future App Sales Projections

So how big is the mobile app market? Definitive answers are elusive. According to an early 2011 study by IHS Screen Digest which analyzed the actual sales realized from the big 4 players alone, 2009 app revenues were $828 million. 2010 revenues leaped to $2.1 BILLION. Analyst projections vary widely and seem to have healthy doses of optimism and pessimism depending on the analyst. Research firm IDC has projected total annual app revenues by the end of 2014 to top $35 BILLION. Gartner claims there was $18 BILLION in 2012 revenue and projected $26 BILLION for 2013. Juniper has projected $52 BILLION for 2016 and ABI has projected a high of $92 BILLION for 2018.

Several other respected firms have their own revenue views but all tend to be quite optimistic about rapid growth over the next few years. Columns 1 & 2 in the below table use collective, "expert" projections along with our own best estimates of growth to project total mobile app revenues between 2014 and 2018.

That's good information but what you really want to know is how much YOUR own app(s) can make in the next few years. Columns 3-6 illustrate various revenues an app entrepreneur could realize from those estimates if he or she could carve out relatively small shares of those revenues for themselves...

Year
Big Four
App Revenue (billions)
Your cut at
0.5% share (thousands)
Your cut at
0.01% share (thousands)
Your cut at
0.005% share
(thousands)
Your cut at
0.001% share
(thousands)
2009
$0.8
$4,140.0
$82.8
$41.4
$8.3
2010
$2.1
$10,500.0
$210.0
$105.0
$21.0
2011
$7.1
$35,500.0
$710.0
$355.0
$71.0
2012
$14.7
$73,300.0
$1,466.0
$733.0
$146.6
2013
$21.1
$105,250.0
$2,105.0
$1,052.5
$210.5
2014
$29.5
$147,350.0
$2,947.0
$1,473.5
$294.7
2015
$38.3
$191,555.0
$3,831.1
$1,915.6
$383.1
2016
$49.8
$249,021.5
$4,980.4
$2,490.2
$498.0
2017
$59.8
$298,825.8
$5,976.5
$2,998.3
$597.7
2018
$71.7
$358,591.0
$7,171.8
$3,585.9
$717.2
YOUR OWN APP(s) ESTIMATED
TOTAL SALES 2015-18
$1.1
Billion
$22
Million
$11
Million
$2.2
Million

If the annual app revenue projections (column 2) pan out as shown, total app revenues should surpass approx. $70 BILLION in 2018 (some predict revenues will get there a bit sooner). Who wouldn’t want a small slice of all those revenues? For example (as illustrated in column 4 above) If you could create an app(s) that wins 1/100th of 1% of those 2018 projected revenues, you make more than $7 million in that year alone! If you build that app(s) to launch in 2015 and make 1/100th of 1% of the above projected revenues through 2018, your tally for 2015-2018 revenues could add up to nearly $22 million (as shown in the bottom row).

Not sure you can develop one or more apps to capture 1/100th share of total app revenues? How about cutting the goal in half by aiming for a smaller 0.005% share as illustrated in column 5? Using the revenue projections for 2018, a 0.005% share of the projected total would yield $3.5 million in 2018 revenues or an accumulated $11 million between 2015 and 2018.

Still not sure you can develop one or more apps that can capture 0.005% of total revenues? Column 6 illustrates aiming for a tiny slice at only 0.001% share (that's 1/1000th of 1%) of the estimated revenues. Even with such a low target, 2018 could be a $700K year for your business and 2015 to 2018 could deliver accumulated sales of $2.2 million. That would be like making better than a $500K-per-year salary while capturing only 0.001% of the total app revenues projected through 2018. Only 1/1000th of 1%!

Don't take the "your cut" columns to mean you can't go for better than the share estimates shown in the table. While column 3 at 1/2 of 1% (or 0.5%) share illustrates how to become an app entrepreneur billionaire (yes, that's billionaire with a "B"), some app development companies are aiming even higher with share targets of 1%-5% or more. We don't even show those much bigger numbers in the table but larger shares would yield much greater revenues than what we do show. For example, 1% would simply double the numbers illustrated in column 3... 2% would quadruple them.

Given the amount of money involved, you should aim as high as possible too... even monetize your app idea(s) within your own business. We can help you build a great company from scratch or evolve an existing business toward (also) capitalizing on the app market gold rush. If you strive for 2% but end up with only 1% you'll just have to try to get by best you can on those billions. As a frame of reference, in 2011 Forbes estimated HDNet, 2929 Entertainment & Dallas Mavericks owner Mark Cuban's worth at $2.5 billion and he seems to be doing OK. Want to buy your own national sports team, media company and/or television network?

"I've Got a Great Idea for a Mobile App(s)... Now What?"

If you are an innovator with a good app idea(s), you’ve already accomplished what many consider the most important part of the process. To monetize your app concept, you will need to take it further than just an idea (there is not much of a market for app ideas on their own). You need to work on turning the idea into a finished product and taking it to market most effectively. The very best way to proceed beyond your innovation brainstorm can be summarized in 3 key needs:

  1. flesh out the details of your idea as thoroughly as possible in a written app specification document (fully imagine it in good detail- including the nitty-gritty- and write it all down),
  2. engage a quality programming team to turn that detailed app architecture description into impressive software ready to be sold in the app store(s), and,
  3. get an app marketing model in motion, starting well before you go to market and continuing beyond your launch.

BI can help you do all 3 of these best-in-class. We leverage deep, award-winning resources to help you flow from your good concept to profitable launch & ongoing growth. Let's put some detail to each of those key needs...

1. Architecting a Mobile App Specification: A Complete App Vision Before Coding Begins

One of the first things to fully appreciate is that you don’t have to become a programmer to create an app. Not believing this fact derails so many innovators from taking even one next step beyond hatching the idea. Think about it:

  • When you build a home, do you personally have to become a carpenter, plumber, electrician, etc?
  • When your car needs repairs, do you have to become an auto mechanic?
  • When you have some health need, do you have to become a Doctor?

Of course not! Those are all experts at their crafts- professionals that you temporarily hire to lend their talents to your wants or needs. Exceptional app programming talent can be contracted just like an electrician, mechanic or Doctor. In most cases, it is your shrewdest move to tap into specialists already skilled at a task like app programming as opposed trying to do it yourself... even if you have some ability. They’ll likely get it done much quicker and at a much higher level of quality than you’ll be able to achieve on your own. Besides, while you’re busy trying to figure out how to code your app in Objective C, Java, and/or HTML5 + Javascript, etc, someone else may beat you to market. There are many ROI advantages in agility. BI has very capable programming teams in our cream-of-the-crop network. We can match your concept to the talent most suitable for turning your idea into a quality, usable app... FAST!

Before you engage programmers, there’s a very smart thing you should do first... something almost all app innovators fail to do. By far the best way to minimize the overall cost of monetizing your app idea is by minimizing the time programmers need to understand exactly what you want the app to do, exactly how you want it to work, exactly how you want it to look, etc. To revisit our home-building analogy, if you want to build a new home, do you just call in the carpenters, plumbers, electricians, etc, and tell them to have at it? No, the first step is to develop detailed plans for the home you want them to build. An architect helps you fully conceptualize your new home in nitty-gritty detail before the first brick is laid... before you have to start paying the skilled labor to do the actual building work. BI software app architects can help you completely map out your software application before the first line of code is written. This is a very important pre-programming step that most people foolishly skip. Don't be one of them.

Big Innovations experts can help you architect your app for maximum appeal... and maximum revenuesWhy is this "spec first" step so important? A thoroughly planned app can save you lots of money (programming time is very expensive time- especially when programming without a plan requires reviews, changes, more reviews, more changes, etc). You pay for every bit of that coding (including the code you want changed or thrown out). If you fly by the seat of your pants in developing your app, you are reviewing progress and then having them delete code to fix things you don't like... over and over again. You wouldn't want to have the carpenters, bricklayers, plumbers doing and undoing their work as you review and then recognize that you want that house to be different than how they best-guessed for you. It would be very expensive to have them putting up walls, taking down walls, moving walls around, rerouting plumbing then rerouting it again, etc. Building an app without a plan is exactly like that. You have relatively expensive specialists happy to bill you much more money than necessary as you keep reviewing progress and making changes on the fly. Architecting it all out first is like using detailed house plans to get it all exactly as you want it before the first brick is laid.

The second major reason to "spec first" is that a fully imagined app plan can incorporate all of the value and revenue-building elements important to maximizing your upside. If you want to make money with your app(s), you want to think through all of the revenue-generation options before the app is coded. If you want millions or tens of millions of people to want to buy your app, you want to weave all of the perceived value-building elements right into the software architecture plan. This way, when the app is ready to go to market, it will be loaded with attractive benefits and clever monetization hooks to woo prospects in great volume. Trying to glom on the money-making pieces late in the process or after an app is largely coded tends to be a far less effective way to go (likely to result in more programming expense to force such new elements into the app). In corporate speak, this would be the "bandaid approach" or sometimes "putting bandaids on bandaids." Using a "spec first" approach mitigates the bandaids. You can map it all out in advance to get it as right as possible.

Our software app architects can work with you to turn your ideas about the app into very tangible plans, documenting the details so that when the programmers are contracted, they’ll have an exceptionally clear picture of exactly what you want them to code. Exactly what does the app do? Exactly how do users use the app? What are the navigation elements and how do they look? What do the various screens look like on phone and tablet-sized devices? Exactly what are the various ways the app will make money? Exactly what about the app will keep users coming back? What will get them to turn their friends onto the app? Etc. We will collaboratively share many options to flesh out your idea and you can pick & choose those you like: options to yield a more appealing app and options to yield a more profitable revenue stream(s) for you.

Unfortunately, the alternative approach is the more common, fly-by-the-seat-of-the-pants app development model. That model skips the architecture step typically by the person with the app idea calling app programmers to develop it (again, the analogy is wanting to build a house but skipping the architecture step). It involves a ton of expensive question & answer as the programmers try to draw out of you what you want them to do, often followed by them doing some coding on best guesses then seeking your review and change requests. This will repeat over and over as they guess differently than you desire it and you have to ask them- and pay them more- to adjust the functionality to what you actually want. You pay for the code you keep and you pay for the code that gets thrown out. It's a very inefficient approach even if you have lots of money to burn. Whether you seek our help or not, don't build your app that way.

Besides saving (relatively expensive) programmer time, a great written specification document also helps you think it all through, fleshing out the loosely-defined app concept in your head into a detailed app description. Most importantly, a complete specification facilitates the opportunity to solicit fixed project bids for the coding work. In other words, instead of falling into the (almost always more expensive) trap of an open-ended hourly project, a fixed bid gets you FLAT FEE bid(s) to develop the app in full.

Beware the hourly gigs. Engaging programmers on an hourly basis creates a tangible, financial incentive for the project to take as many hours as they think they can bill. It’s not about how quickly they get your development project done, it’s how long they can stretch it out. Each added hour of billings is more money for them. And remember, the biggest lure of programming by the hour conceals a hidden hook: once you get into a coding project, you somewhat get married to the developer. If it doesn’t go well and you want to fire them, their replacement often wants to throw out “all that bad code that (former) team created and start over.” For these kinds of reasons, we subscribe to the idea that fixed project cost for app programming is the ONLY way to go.

In our approach, we help you fully spec out your app so that programmers are actually willing to offer fixed project bids. From their perspective, a richly-detailed project specification gives them something they rarely see from app entrepreneurs: a specific development target ready to be locked down. This is key to their ability to estimate exactly how many hours they'll need to turn the description into a functional, polished app. With assurances from you/us that the project won't become a much more common moving target (so prevalent in the fly-by-the-seat-of-the-pants model where the details of the app are being made up and/or changed on the fly), they can confidently commit to a fixed project fee bid. You can offer those assurances because we helped you flesh out your app idea in full.

If some of the bidders have questions, we work with you and/or them to clarify any areas within the spec from which those questions arose and then share the added detail with the other bidders too. The end goal is to end up with a selection of bids from quality developers that reflect the right balance of sufficient compensation to fully accomplish your objective. Then, you (or we) can choose the right team from the various bids and put those programmers to work. We can also manage their work as part of a BI engagement. As a fixed bid project, they are naturally motivated to get the work done as efficiently as possible, which means you can go to market sooner than later. You'll never get that same pace to market from programmers paid by the hour.

Along with helping you map out the look & feel and functionality of your app, we also leverage our expertise in marketing, recurring revenue models, business, etc, to help you think about the future of your app with special emphasis on the many ways it can help you make money beyond the initial sale. This is vitally important for maximizing what is known as lifetime value. While such concepts can be added later, most of the business-related ones are best to weave in right up front (app customers hate updates that seem focused on nickel & diming them; put the money-making hooks in up front and you'll avoid that kind of backlash).

2. Contracting the Right App Programmers For Your Job

With a complete specification describing the nitty-gritty details of the app, we should be able to get a good number of fixed project fee bids for the coding part of your project. Here’s some of what goes into helping you select the best programming team for your job:

  • Invest the time to find the right developers from a sea of wrong developers. Look at examples of their work. Talk to references about the experience of working with them. If they’ve developed apps for others, be sure to take notice of app reviews in which the developer’s own contributions to the app- often the programming, but sometimes the design work too- are poorly received.
  • Ask those that become finalists for your project about their current project load. They’ll always claim they have capacity but you want to insure that they really do. Remember what we shared earlier about the importance of agility.
  • Ask them for a realistic timeline to completely finish your app as architected in the spec document. Insure they are held to this quote. Consider linking a small bonus to that schedule AFTER they offer it.
  • Ask when they can start your project. Don't assume the answer is always immediately.
  • Get their coding warranty and/or method of fixing bugs in their programming after your app is live. There's always some bugs to squash; you'll need some rapid turnaround programming support to minimize bug-driven complaints in customer reviews. Sales momentum gets hurt by long lags in resolving bugs. Again, you need agility.
  • 2 universal truths: 1) all programmers are not created equal and 2) the programmers who offer the cheapest quote are not automatically the best quote. It’s not solely about lowest price, it’s about completely getting what you want out of the job. The low-ball programmers are quoting low for a reason, which is unlikely to be remarkable generosity on their part. When we gather multiple contractor quotes for clients, we usually dismiss the outliers- the crazy low and crazy high quotes- then make our recommendations from those that remain. The cluster of quotes in the middle are much more likely to deliver the app as described in your specification. Low-ballers will quit on you, deliver substandard work and/or come back seeking additional money after you are somewhat locked in with them.
Big Innovations programming teams quickly and cost-efiiciently turn great softare application architecture into quality apps ready to go to market

There are various pros & cons in the debate of domestic programmers vs. offshore programmers. We have found that the latter sometimes comes with some communication and other hurdles that can offset the perceived savings. For example, if you have to spend double or triple the time communicating what you want with an offshore team, their total billings can end up higher than going with a native team. Again, see that final bullet in the above list. Choose wisely (or get our expert recommendation).

After the engagement is underway, it’s important to be patient. Rushing programmers yields stress on both ends and/or shoddy shortcuts. We always collaboratively build specific development milestones with the programmers as part of their engagement. Attaching project development fee payments to milestone accomplishments is an excellent way to keep your project on schedule. Never prepay for the whole project.

Lastly, money talks in this space. Everybody wants non-sales talent like programmers to work for only a share of future revenue but talent- if it is good- has plenty of other employers demanding their services too. Some will be willing to pay for that talent with cash now. Popular concepts like joint ventures, alliances, partnering, etc, all sound great to the risk-averse entrepreneur who wants lots of work done for them solely for "future potential" but all such concepts usually involve asking very skilled professionals to work for free today in hopes of some big payout tomorrow. When this kind of talent looks at their compensation options of future potential vs. hard cash today, the latter tends to heavily dominate their priorities.

Of course you would like to get your app developed with zero out-of-pocket risk. Who wouldn't? The problem is that there is a ton of competing entrepreneurs who have the exact same wish. They too have the greatest app concept ever conceived and once it's launched it will probably make them into the next Electronic Arts or Facebook on its own (too). You can try to win programmer commitment that way but you'll do much better by realizing that entrepreneurs who grow great successes out of ideas usually do so because they take tangible risks. If you want your project prioritized, showing the programmers the money wins their focus over the countless other would-be app entrepreneurs in search of some form of sweat equity. It's very smart to step to the front of the line.

And don’t take a lack of enthusiasm or interest in your offers of some form of commission, stock or stock options as an expert vote against the potential ROI in your app. You just have to put yourself in their shoes. How often do YOU choose to put in a lot of professional work for free in hopes of getting paid in some unknown amount of compensation at some ambiguous future point in time? Good programming talent doesn’t need to take on 100% of the risk for only some small share of future reward. They’ve got 10 more app entrepreneurs calling them every day with "this is the next Angry Birds" programming projects. Some of those callers believe in their concept enough to spend some cash on realizing their dreams. If you have a good idea, you should too.




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