5 Steps to Building a Million-Dollar App
The mobile app boom has made success stories out of individuals who turned a great idea for a mobile application into a monthly revenue stream. However, for every success story, there are hundreds whose apps went bust. What are the common trends between successes and failures in mobile app development? What is the overall business plan? How can I become a so-called 'Appreneur'? The book App Empire documents answers to these questions in an effort to empower anyone to become a successful Appreneur. After reading the book and newsletters, and interviewing author Chad Mureta, I've distilled down a few key takeaways.
1. Market Research is Key
Mureta claims to spend over 80 percent of his time on market research of top trending applications. This market research sets the stage for not only the app idea, but also sales and marketing plans. Follow the top trending apps in your target app categories and use them on a regular basis. Becoming a frequent mobile app user is core to deep market research. Understanding what the customer wants and the traits of top trending apps will provide design direction and strategic marketing insights.
2. Iterative Improvements Are Better Than Breakthrough Innovations
Throughout the book, Mureta stresses "Don't Hate, Emulate." Emulating successful ideas isn't a foreign concept since even the most 'breakthrough' innovations were, in reality, an improvement on an existing concept. It may also be worthwhile to also consider applying "spare parts" innovation by exploring combinations of existing apps for a new and more useful product. For example, social tagging + retro photo trend = Instagram.
3. There Are Many Ways to Monetize a Mobile App
All types of monetization of mobile apps are made from three basic flavors: Premium, Freemium and Ad Networks.
Premium Model - There's an upfront download fee. This is the most straightforward and obvious way to monetize your mobile app. However, the cost barrier to entry results in premium apps representing only 14 percent of the total app downloads on the Apple App Store (Xyologic, Aug 2012).
Freemium Model - The app is a free download and contains content for purchase inside the app (aka in-app purchases) or an upgrade option to a premium version. This is a very attractive model since it lowers the barrier to entry for cost-conscious smartphone users.
Ad Networks - The app and all its content can be completely free and still generate revenue through advertising. This model provides a low barrier to entry since it's always free, but it also comes with the weakness of lower profit margins from using a cost per click or affiliate basis. However, there are many different ways of optimizing how you choose your advertising partners and where you display the ads that can raise ad network revenues.
4. Being an Appreneur Can Be Automated
The last part of App Empire discusses how to automate your mobile app development business. What could be more attractive to any entrepreneur? Mureta walks the reader through the following:
- How to set up roles for your team such as programmer, graphic designer and even an accountant
- How to manage remotely using applications like Skype and Basecamp
- How to outsource your life using a personal assistant
These instructions can have an Appreneur running the entire business via smartphone!
5. You Don't Need to Be a Programmer or a Millionaire to Develop an App
Chad Mureta didn't know a line of code or have any seed investment when he developed his first mobile application. In fact, Mureta developed his first app for only $1,800! App Empire walks through the common pitfalls and strategies to working with an outside development team. If you are not a developer, it may be worthwhile to brush up on your project management skills since this is going to be your primary operational duty.
Mureta's story is interesting and inspiring. If you are considering developing a mobile