Ask HN: What are app developers buisness models?

#1

Post by NeilRShah » Thu, Jul 26, 2012, 12:52 PM UTC

Hello everyone!

I am not an app developer, and I have no plans of becoming one anytime soon. This question is just for my personal curiosity. I was just downloading yet another series of apps (read: addiction) from the App store and I was wondering - can someone who runs an iPhone app company give me a snapshot of their business?

How many downloads do you get for your apps each month, and how many paid developers do you have on your team? Do you outsource most of your work or design in-house? Are the margins on apps enough to allow you to run a business?

And, I guess most of all: do you enjoy your work?

Re: Ask HN: What are app developers buisness models?

#2

Post by andreasklinger » Thu, Jul 26, 2012, 1:35 PM UTC

I am pretty sure you have seen these two links, they are currently on HN frontpage - if not they might be helpful:

- http://daveaddey.com/?p=893 - http://www.streamingcolour.com/blog/2011/09/28/results-ios-g...

Re: Ask HN: What are app developers buisness models?

#3

Post by boralben » Thu, Jul 26, 2012, 1:45 PM UTC

I am a one man indie shop. My freelance work supports the time and design expense that I use for my side-projects which make peanuts.

Re: Ask HN: What are app developers buisness models?

#4

Post by salman89 » Thu, Jul 26, 2012, 1:52 PM UTC

I'm not going to comment on directly for profit (read: paid) apps, but there are a large number of apps that exist for benefits outside of just direct revenue generation. These benefits can include greater exposure for said company, value add to existing chain, etc.

Re: Ask HN: What are app developers buisness models?

#5

Post by frankphilips » Thu, Jul 26, 2012, 1:57 PM UTC

The app development business is an extremely tough market to break into right now. There are two ways of approaching it.

A) Build a services company.

This can be lucrative if you need short-term cash. However be prepared to sell your ass off. Obtaining clients is NOT easy, with the amount of offshore competition.

B) Build products

Let me tell you right now that if your product sucks, this isn't worth the effort at all. Your app will drown in the sea of other apps. Do your research, focus on big markets, and figure out ways to make successful apps even better. If you put in quality time in building kick-ass products, this is the way to go.

Most importantly, try to figure out how to get the social component baked into the app. Take Draw Something for example..in order to play, you NEED to invite friends. This is genius, because it builds a viral component into the app. Oh by the way, give the app away for free and power it with in-app purchases. Only charge for an app if you've built up enough traction with a free app.

Overall, mobile app development is a hard business, and the smart move would be to spend as little as possible, and try to break even first, then reinvest.

Re: Ask HN: What are app developers buisness models?

#6

Post by thijser » Thu, Jul 26, 2012, 2:00 PM UTC

Is there a reason you're only interested in iOS?

We do Android apps only and have completely been focusing on free apps in the Google Play market with in-app ads. Our own systems evolved into an SDK that anyone can use now and we just announced standard format banner-ads that tie in nicely with Admob mediation today: http://news.ycombinator.com/item?id=4295631

We're 4 people at the moment working only on our own projects and we're in the process of hiring more engineers.

Re: Ask HN: What are app developers buisness models?

#7

Post by madmax108 » Thu, Jul 26, 2012, 2:01 PM UTC

I am NOT a formal app developer myself, though I do help out a friend who owns an app dev firm (mainly with testing n design critiquing). This is how he gets work done:

He has a 3 person team who actually work fulltime with the company. 2 of them are coders and one of them is on for business development/handling the management aspects.

The coding is done inhouse, while the design is generally outsourced. (I'm from India, and getting decent design work done without blowing a hole in your pocket isn't really a big issue). The designer is paid on a per-project basis i.e as per the work.

He currently has a few apps on the app store, and he's just about reached break even on his initial investment (They started barely 6-7 months ago, so it's still early ).

... and yes, the whole team is super happy! Mostly coz they left their day jobs working with .NET (yeah, for real! :P) to work on what they love!:)

Re: Ask HN: What are app developers buisness models?

#8

Post by auser678 » Thu, Jul 26, 2012, 2:25 PM UTC

Wow, this is a great question. I run newgenapps.com We have been developing apps since July 2008, since the iPhone SDK went public.

We have seen the whole app economy grow from zero to what it is today, and we have seen some really interesting business models emerge.

1. The iPhone and iPad have opened numerous possibilities to develop some really amazing apps. Angry Birds was a game waiting for iPhone to happen. So if you are able to find a space that fits your idea, you can make some real money.Education, Music, Productivity are some really cool categories where a lot of innovation is happening.

2. A me too app seldom works

3. In app purchases is a brilliant way to monetize. This model lets an app go viral while also making revenue through good segmentation

4. If you have a successful app, the Return on Investment can be quite huge. Hence it makes a lot of sense to have a 'Portfolio of Apps' and reinvest.

5. Localization is an under appreciated feature. Many apps can double or triple revenue after being localized.

6. Apps have become an integral point of presence for any business

7. Apps also augment a number of products or services. They may not generate revenue themselves, but can help sales of the product or service

8. A successful app, designed well in a manner to provide recurring revenue stream can easily do USD 10 to 20k in revenue every month supported and maintained by a single developer.

And yes, developing apps is a highly enjoyable and satisfying job!

Re: Ask HN: What are app developers buisness models?

#9

Post by dashN9ne » Thu, Jul 26, 2012, 2:41 PM UTC

I've got a dev team of ten, working mostly on iOS and android game apps for hire. We've done 8 iOS/android games in the last couple years, some of them AAA, some not.

Paid ($1) games of a decent quality typically generate sales between 40 and 100 thousand; and can do much better if 'everything goes right'. Development costs are roughly the same. For apps, seems around 75% of cost is on the engineering side. Design is all from third parties here but included in the above figures.

Work is enjoyable.

Re: Ask HN: What are app developers buisness models?

#10

Post by tstegart » Thu, Jul 26, 2012, 2:50 PM UTC

We're an iPad travel magazine and are up to about 350 downloads a month. No paid developers, or any developers actually, we rely on a pretty cool open source tool called Baker and I've self-taught myself bits of code here and there to make it work. No profit yet, the ad selling starts next month, so we'll find out then if it will be a success. :)