The NY Times has an interesting article about the iEconomy and how most app developers aren’t making any money selling iPhone apps.
This is true today. The competition for apps on Apple’s app store is intense.
There used to be a time when all you had to do to make money in apps was to create a good app and post it in the app store. People would find you there, and you could make money from day one with little to no marketing.
Those days are gone.
Now, in addition to creating a good app, you need to get it noticed, so it stands out. This includes doing the following:
Creating an icon for it that helps it stands out from the crowd.
Creating a strategy to make it easier for it go viral.
So is it still worth it to build mobile apps on the app store?
Well the good news is that, even though it requires more work now to create a hit app than it did before on either Apple’s app store or Google’s Play market place, the user base of potential customers keeps increasing as Apple and Google sell more smart phones.
So yes, the risk is much higher, but the potential reward payout has also increased in the process.
The other benefit from all this is that most app developers won’t go through the trouble of doing all those steps, which makes it easier for the few that do to stand out.
If you still think it’s too much work, then you can consider creating an app for other mobile platforms like Blackberry 10 or Windows Phone 8. Although they have less users, you would also have a lot less competition from other app developers.
These past couple of weeks, I had the opportunity to submit a new app to the appstore for my new startup. While I’ve submitted several apps in the past, this was the first time I had an app that I needed to submit for a deadline, so speed was of the essence. For PR purposes, you may have a date in time that you want to start promoting your app. It is in your interest to get as many downloads as you can over a short period of time (ideally the same day) if you want to rank in the charts, so having your app ready for download on your advertised day is crucial.
Here are some of the tricks I learned in the process:
Check the current speed of app store review submissions. Here’s a good site that shows the approximate review times of apps currently being submitted. Be careful with this one since it refers to events in the past and not present. So for example, at the time of this blog post it shows this 11 days for apps. App store review times may have improved or gotten worse since then, but it still gives you a rough idea of how long it’s taking other apps to get approved at the moment. This way you can schedule enough time for your submission.
Set the launch date with Apple. When submitting your app, you can choose to have the app automatically released when it is approved, or have it released on a specific day. So for example, if you wanted to launch your product in 3 weeks, you could submit your app now, but tell them not to release your app until the launch date in 3 weeks. Obviously this would only work if the launch date is AFTER they have approved your app. If the approval goes past your release date, then there’s not much you can do. This of course doesn’t make the approval any faster, but is useful for advertising your grand launch date.
Ask for an expedited review. Not many people know this (I didn’t). Apple has a form you can fill out to ask for an expedited review of your app. They take a couple of days to review your request before deciding if your circumstance warrants an expedited review or not. They may also choose to ignore you if you regularly make such requests. If your circumstance is genuine though, you can do so.
Create a test account. If your app requires a user to login before they can do anything in the app, then create a test account for the Apple review team to use. Otherwise you risk them not seeing parts of the app that require a user to be logged in. Include the test account details in the review notes (see next point).
Fill in the review notes. Whenever you’re submitting an app, it doesn’t hurt to fill in details in the review notes. Even stating things that may be obvious won’t hurt (better safe than sorry). For example in my case, I had to state that my app was only for release in Taiwan, and so would not show any content in the US (where the reviewers were located).
Include a video. If there are parts of the app that the review team won’t be able to see (eg. future levels of a game or location specific features) then include a demo video that showcases the other parts.
The bottom line is that the easier you make it for the app review team to understand your app, then the faster they will take to approve it. So any steps you can take during the submission process to help them will end up helping you.
Steve Jobs’ recent resignation from Apple had a lot of people reminiscing about his contributions to the tech world and beyond. This got me thinking about all the things that I’ve learned about business from Apple and Steve Jobs, especially in the past decade.
1. It is ok to fail.
It’s how you pick yourself up, and what you learn from your experiences that matter. While we have all heard of Apple’s many iSuccesses, there were many failures early on for both Jobs and Apple. Some of Apple’s early products, like the Apple III and the Apple Lisa had to be canceled after not meeting sales expectations. That didn’t stop them from continuing on however.
Of course Steve Jobs’ biggest failure was being forced to resign in 1985, from the company he founded. How would you react to such a situation?
Jobs reacted by starting a new computer company – NeXT, that he would later sell back to Apple for a huge sum. He also purchased a small company named Pixar, that isn’t so small anymore. Not bad for a failure!
2. Surround yourself with really good people.
While Steve Jobs deserves a lot of the credit for founding Apple, and building its resurgence, he deserves equal credit for finding and associating himself with the right people. Starting with Steve Wozniak who cofounded Apple with Steve Jobs, to Jonathan Ive, who has led Apple’s strong design, and new CEO Tim Cook, who has been instrumental in Apple’s logistics. You are only as good as the team around you.
3. Get inspiration from outside your circles.
A famous Steve Jobs anecdote recalls how he attended a calligraphy class in college, which later inspired the fonts that made up the Mac OS. A lot of inspiration in the tech world comes from taking events from daily life and finding ways to incorporate them online. Gamification is another concept that takes daily, mundane tasks and makes them more interesting by adding game life elements to them.
What inspiration have you drawn from life, that you have adapted into your business?
4. Think Different.
Apple’s famous Think Different commercial from the late 90s wasn’t just a marketing ploy. It represents a philosophy that the whole company believes in. In 1997, Steve Jobs ended a speech by saying:
You always had to be a little different to buy an Apple computer. When we shipped the Apple II, you had to think differently about computers. Computers were these things you saw in movies, they occupied giant rooms. They weren’t these things you had on your desktop. You had to think differently because there wasn’t any software at the beginning… I think you had to think differently when you bought a Mac. It was a totally different computer, worked in a totally different way and used a totally different part of your brain… I think you still have to think differently to buy an Apple computer. And I think the people who do buy them do think differently. They are the creative spirits in the world. They are the people who are not just out to get a job done, they are out to change the world and they are out to change the world using whatever great tools they can get. And we make tools for those kinds of people.
While Microsoft and Google have preferred to license their OS to others in order to gain market share, Apple has preferred a closed system, where they control both the hardware and the software.
While Android phones market themselves to power users who demand a lot of features, Apple focuses on its simplicity in doing a few things right.
When PC manufacturers raced to release low end netbooks, Apple chose a different route.
This level of detail isn’t just limited to the products, but to its stores as well.
The end result is a consistent brand message that consumers are willing to pay for.
6. Learn to say no.
When Steve Jobs returned to Apple in 1996, one of his first acts of business was to reduce the number of products Apple sold from 350 to a mere 10. Android phones are known for having more features and options than the iPhone. Yet Apple prefers to keep things simple. According to Steve Jobs,
People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying ‘no’ to 1,000 things.
Newer versions of Apple products have been famous for what they don’t have in addition to what they do have. The iMac was famous for not having a floppy drive. Apple’s Macbook Air laptops don’t have optical drives or ethernet ports. And of course iPhones don’t have keyboards.
(Incidentally, this blog post was initially titled “13 Things I learned About Business from Steve Jobs”, however I found a way to say no to 3 points!)
7. Competition doesn’t have to be a zero sum game.
Through the early 90s, Apple and Microsoft were bitter enemies, engaged in high profile lawsuits. Yet in 1997, Steve Jobs negotiated a significant investment in Apple from Microsoft. In response to critics of the deal, Jobs said:
We have to let go of the notion that for Apple to win, Microsoft needs to lose.
Since then, although Microsoft and Apple continue to compete with each on several fronts including desktop and mobile operating systems, as well as browsing software, they have teamed up as allies on occasion, where it benefits them.
8. Emotion is a powerful tool.
Apple knows how to bottle up emotion and sell it. Instead of touting features and specifications, Apple ads prefer to focus on the emotion of users.
How much would Apple competitors be willing to pay to get this type of publicity for their own product launches?
10. Trust your intuition.
In separate commencement speeches, both former Apple CEO Steve Jobs, and current Apple CEO Tim Cook talk about trusting your intuition. Jobs famously made the decision to drop out of college. At the time, he wondered if he was doing the right thing, but he followed his gut, and we know how that turned out.
In Tim Cook’s speech, he talked about his decision to leave Compaq when it was the world’s top PC maker, and join Apple, who was losing money at the time. All the advice he was given suggested that staying at Compaq would be a better decision, yet he too trusted his intuition and took the job at Apple. In retrospect, that too was a pretty good move for him.
My Own Apple Experience
My first experience with Apple products began in 2006 when I purchased my first iPod. I was enamored by all the podcasts that were available on iTunes for free. I was especially interested in the ones teaching languages. That prompted me to start my first business later that year – Chinese Learn Online. Over 80% of the initial traffic to the site came from iTunes.
A couple of years later, I purchased my first iPhone. That introduced me to the app store and how mobile apps could be a part of my business. Later that year, I released my first app. Since then, I’ve released several additional apps that form a significant part of my revenue. I’m now working on my first iPad app.
Needless to say, I’ve been a big fan of Apple ever since. They make great products that people love, while allowing individuals like me to build our businesses around. Thanks Steve!
You have done your market research and found the demand. You have now created a product to solve this demand. So what should you price it at?
With traditional products, you figured out your costs to make the product, then added a sufficient markup to come up with a price.
You could also factor in supply and demand. If your supplies were lower than the demand, you could charge more for your product, and vice versa.
With digital products, such as an ebook, access to a website or a software download, cost isn’t an issue. Neither is supply. So what other factors can you consider?
Competition:
You could take a look at what the competition is offering, and at what price they are selling it for. If your product has less features, then sell it for less. If your product has more features, then sell it for more.
Obviously there is more to it than that. The competition’s price may have brand recognition included in the price. So competing products without the same recognition have to price themselves lower, with the same features in order to compete.
There is a tablet war going on right now, with several companies selling their own tablets to compete with Apple’s iPad. The initial batch of competing tablets had more features, and so were priced higher than the iPad. Sales were disappointing, and they have since had to lower their prices to undercut the iPad, just to compete.
Customer Type:
Another angle to consider is what type of person you are trying to attract as your customer. If you are competitive on price, then what types of customers will that attract? I have experimented with pricing with my apps on the app store and have noticed that different prices attract different types of customers.
Free: The majority of customers on any of the mobile platforms have never purchased an app. There is a huge selection of apps in the free category, so there is no need for this group to ever need to purchase an app with a price tag. If you’re targeting this group, then you should have a good freemium strategy, or find other ways to benefit from them.
$0.99: This group loves bargains. They look for apps that are on sale, and rarely purchase apps at full price.
$0.99-$4.99: This group will purchase apps that solve their need for the right price.
$5+: This group will purchase apps that solve their need, regardless of price.
Would you prefer to have 100 customers purchase your product at $1 each, or would you prefer 20 customers purchase your product at $5? 20 customers may require less support and maintenance than the 100 customers. Then again those 100 customers might recommend your product to more people. Which is more important to you? Price accordingly.
Value:
At the end of the day, your product is worth what customers are willing to pay for it. So your goal should be to show the value in it. Things you could do to show value include:
Free trial. Get your customer using your product, so that when the trial ends, they can’t live without it. This strategy works especially well with products where a user has accumulated data, that they don’t want to lose when the trial ends. Customers will pay more for products they are familiar with and have satisfactorily used before.
Feature Chart: Summarize the features your product has, versus competing products. More checkmarks on your side should suggest more value for your product.
Segmented Products: If you’re targeting different customer types, then you can have separate products for each of them. For example you could have a cheaper product for individuals, a more expensive one for small businesses and the most expensive one for large businesses that can afford it.
Choice Products: Another approach is to create a very expensive product, whose main purpose is to create value for the main product you want to promote. This works with the segmented approach above. Very few customers may purchase your most expensive product, but having it there creates additional value for the cheaper ones.
Bulk Price: People shop at Costco to get bulk pricing. How can this apply to your business? If you’re selling subscriptions, you can offer long term subscriptions for a cheaper per month cost.
Add-ons: You can also break down the price of a product into components that can be purchased separately. This way customers can purchase the exact features they want. I use this strategy in my Contact Manager app. Add-ons are also easier sells since the customer is already sold on your product at that point.
Whatever pricing strategy you end up using, keep it simple for your customer. Your customer already has to make a decision on whether to purchase your product or not. Don’t also give them a decision of what product to buy as well.
Be a contrarian. Sometimes, the best advice is to not be like everyone else, or do what everyone else is doing. A great line I heard once is that during a gold rush, you should be the one selling shovels, rather than digging dirt with the rest of them.
Take a look at the world’s biggest tech company – Apple. Other companies like to cram as many features as they can into their products. Apple prefers to keep their products simple. Other companies compete on price point. Apple focuses on quality, maintaining a higher price point. The list goes on. Apple prefers to march to the beat of their own drum, and last I checked, it hasn’t hurt them one bit.
When I built my STL Contacts app, I took a different approach to apps than other companies. Instead of building an app that did one simple thing really well, I attempted to combine features from several apps into one. Is this the best approach? Time will tell. But it’s one way to stand out.
You’re right. I’m not like those other guys. And here’s why that’s a good thing.
Is there anything in your industry that you can do differently from everyone else? A different solution to a problem that people have?
The NY Times has an interesting article about the iEconomy and how most app developers aren’t making any money selling iPhone apps.
You have done your market research and found the demand. You have now created a product to solve this demand. So what should you price it at?