As soon as the SDK came out, I naturally thought of what cool app I could come up with. Im not a coder, so I thought about others ways to get into the business, and I came up with the idea of selling apps in a bundle. Which basically led to this post. At first it was just another silly idea to make money, I come up with them all the time in my head (and I mean all the time, I cant stop). It seemed like it would be a great way to go, so I started thinking about it some more. But I decided that while I come up with tons of ways to make money, but Ive never actually started a business with any of them. And I probably wasnt going to start this one.
So why not get it out there and see what other people can do with the idea. Someone would have done this by the time the store debuts anyway, but I think it would be great to see some entrepreneurs (maybe even someone from these forums) figure out what to do with it, and hopefully make it big.
As many of you know, Im a kind of quiet guy on the forums, but my thinking just got right out of hand, one thing led to another, and I ended up starting a blog to put all my thoughts down. Im hoping to cover the basics of the iPhone app business and where it might be going. Its mostly directed towards entrepreneurs, since I think this is one of the best opportunities that start-ups have ever has in a very long time. Anyways, enough jabbing, you can find the blog at www.iphoneappentrepreneur.com. Lets get down to the roadmap.
First, some definitions:
A bundle is a collection of small apps sold as a package. For lack of a better word, the person who collects, packages and sell these apps is a bundler.
Should you even bother?
Apple hasnt said it will allow apps to be sold in a bundle, but Im predicting they will, if not initially, then soon, and heres why:
First, the infrastructure is there. A bundle is comparable to an album. You can sell five applications separately or together just as easy as you sell music.
Second, its cheaper for Apple. Have you ever wondering why you dont get billed for buying a song each day? Apple waits (or tries to hold out long enough) until youve bought a few songs, to lower the costs associated with credit card transactions.
Third, it helps the consumer. If youre trying to find solutions to your problems, wouldnt it be nicer to find that bundle of apps than having to search through thousands of single apps researching each one?
Why would you want to sell you apps in a bundle?
As a developer, why would you want to sell your app in a bundle and (presumably) give some money to a middleman and share revenue?
The most obvious answer, I believe, is visibility. If your app is done by June, this isnt really a problem, go it alone, you have a good chance. But what about next year? Say you make a small game. How many competitors do you think youll have next year? What if you could combine your game with 4 others and sell as a package? Or better yet, 10 others? I think a package of 10 games is much more visible and easier to market than 10 separate games.
What will you sell?
Figure out what kind of company you want to be, and how you will market it. Take the form you think will work the best in building your business. Will you be a developer who looks to others to sell your app? Or do you want to get apps from developers, and put them together to make money. Maybe you want to be a developer cooperative, eliminating the middle man.
Take a different form:
Most people think of bundles as a lose collection of software all having the same theme, sometimes from different companies. But really, a bundle can take many forms (and provide opportunities to entrepreneurs to make money with those forms). Its a new world out there, so throw out the old conventions and start new ones. Lets use the game example again. What is a game company, really? A game company is someone who hires developers and makes and markets a game. Well, start your own. Instead of hiring developers, find them and get a hold of their great new games. Put them in a package with your brand on it, and voila! Youre the newest game developer on the block. You do the marketing and the promotion. Build up your brand with a collection of game bundles, and you can be competing with the big boys.
I think this is where the opportunity for entrepreneurs really comes about. What kind of company could you start? What industry could be served better by some small but separate tools rather than one large application? How could you put all those tools together and create value?
For example, maybe you notice that a lot of people sell things on eBay. What kind of tools could help them out immensely? More specifically, what would they want to do on their phone? You could develop a set of tools that lets someone take an emailed picture of an object, add a title, description and price, and upload it to an eBay Store. The bundle could include a series of apps, like a basic photo editor that automatically matches the dimension you use in your store, an auction starting app that allows you to enter the information and start selling, and an auction tracking app, that tracks your store stats, your competitors and selling trends. People will use the different apps at different times, so one big app might not be the best thing. And, they finally get out of their house! What could be better.
Bundles of good:
The idea of a bundle doesnt have to be purely commercial. The idea can work well for non-profits and general fundraising. Just like MacRumors sometimes sells a bundle of software, they could sell a bundle of iPhone apps as well. Non-profits could sell bundles to raise money.
Marketing (finding your niche):
How do you differentiate yourself from the rest? The more people who write the same software, the harder itll be. So if you sell productivity software, maybe you concentrate on a certain segment, like salespeople, or lawyers. Maybe you cater to a specific audience, like lovers of trivia games. Or maybe you fill a small gap and have no competitors. Be the best at a small thing instead of mediocre at a big thing. Find something that you can do that will get you noticed.
Leverage your strengths:
If youre going to sell a bundle, use the built-in strengths in your marketing. A bundle solves multiple software problems at once. A bundle provides more value than a single application. A bundle might be cheaper than buying your competitions applications one by one. A bundle provides the press an opportunity to recommend more things at once to their readers. A bundles software works well together, while apps from separate competitors might not. A bundle lets you build a brand, which can build trust and reputation. So when version 2.0 comes out, people will know that buying your stuff is likely going to provide them with value. It prevents them from having to seek out other alternatives and waste time.
Dont forget the obvious
In all the excitement, dont let yourself get caught up in the numbers and forget the basics. Your apps still have to be good. They still have to work well and provide a great user experience. They still have to be a good value compared to the free apps out there. Marketing, in my view, can never make a bad product good. Start with a great product first.
Put in some numbers:
As an end note, just in case you were lacking some motivation, Ive done some simple calculations on what the market might be worth. Ive broken it out better on the blog, but heres one example.
Lets say you wanted to start a game company business, lets call it myiPhone Game Co. Youre likely to have stiff competition, so you narrow your focus (niche marketing) to trivia games. Specifically, music trivia games. Now, they take many forms, so you decide to find 3 good developers, and get them to make three different music trivia games. They turn out great, and youre ready to go. You decide to sell your three games for $4.99. The basic breakdown will look like this:
Price Apples cut Total made on each sale
$4.99 $1.49 $3.50
Now lets assume the structure of the deal looks liked this:
Each developer gets 25% for their contribution. You get the last 25% for your marketing and promotional work and for putting up the upfront costs (the $99 developer fee).
Therefore, each person gets roughly $.87 for each copy sold. 87 cents? Sound like much? Well see.
Lets see what some mildly successful (or unsuccessful) sales numbers will equal.
100 copies sold = $350.00 in revenue (after Apples cut) = $87.5 per person
Youve practically made back your developers fee.
200 copies = $700.00 in revenue = $175.00 per person
500 copies = $1,750.00 in revenue = $437.50 per person
1000 copies = $3,500.00 in revenue = $875.00 per person
5,000 copies = $17,500.00 in revenue = $4,375.00 per person
10,000 copies = $35,000.00 in revenue = $8,750.00 per person
50,000 copies = $175,000.00 in revenue = $43,750.00 per person
100,000 copies = $350,000.00 in revenue = $87,500.00 per person
So, for 3 developers and a promoter, 100,000 copies at $4.99 looks like the sweet spot to provide everyone with a nice yearly salary. But theres more. What if:
You put out a pack of games each 6 months. Can you double your income?
You successfully build a brand around your games, becoming known as the best brand of successful music trivia games. How would your future packs do?
You sold updates to your old games every 6 months.
Lets look at the updates more carefully. People eventually get tired of a trivia game because they know the answers. What if you put out an update with new questions and answers. Lets say you sold an update for all three games for $1.49. On each update, after Apples cut, you will receive $1.04 (rounded). Say you got 10% of people to buy an update. So, from the chart above:
If you sold 100 original copies, you sell 10 updates (10%) = $10.40 in update revenue (after Apples cut) = $2.60 per person
200 original copies, 20 updates = $20.80 in update revenue = $5.20 per person
500 original copies, 50 updates = $52.00 in update revenue = $13.00 per person
1000 original copies, 100 = $104.00 in update revenue = $26.00 per person
5,000 original copies, 500 = $520.00 in update revenue = $130.00 per person
10,000 original copies, 1,000 = $1,040.00 in update revenue = $260.00 per person
50,000 original copies, 5,000 = $5,200.00 in update revenue = $1,300.00 per person
100,000 original copies, 10,000 = $10,400.00 in update revenue = $2,600.00 per person
Doesnt sound like much, does it? Thats just 10 percent. What if you could get it up to 20, or 50? (at the 100,000 copy level, selling an update to 50% of your customers will net each person an extra $13,000.00). Furthermore, what if youve successfully developed 5 other game packages. Each game builds on the last, and releasing 5 updates over the course of the year multiples that income.
Updates gives you other opportunities besides making money. It gives you something to yell about (read: sending out more press releases, getting yourself more attention). It keeps people coming back to your brand, instead of getting bored and finding something else new. Plus, if you incorporated the new answers into the original game, you might see a bump in sales of the original, since people who may have been on the fence will be getting both sets of answers. That bump will enlarge your customer base for the next update, and so on. Essentially, your games never die.
So how big is the market?
Well, time for some fuzzy math.There have been 4 million iPhones sold that we know of, and an undetermined number of iPod Touches. Apple want to sell an estimated 10 million iPhones by the end of 2008.
Lets go conservatively. By June, 2008 lets pretend there will be 5 Million iPhones and iPod Touches sold combined.
10% of 5 million = 500,000
5% of 5 million = 250,000
2% of 5 million = 100,000
1% of 5 million = 50,000
So basically, your target number is 2%, if you want to earn $87K a year. How will you reach those customers? Start planning now
Basic Roadmap
So why not get it out there and see what other people can do with the idea. Someone would have done this by the time the store debuts anyway, but I think it would be great to see some entrepreneurs (maybe even someone from these forums) figure out what to do with it, and hopefully make it big.
As many of you know, Im a kind of quiet guy on the forums, but my thinking just got right out of hand, one thing led to another, and I ended up starting a blog to put all my thoughts down. Im hoping to cover the basics of the iPhone app business and where it might be going. Its mostly directed towards entrepreneurs, since I think this is one of the best opportunities that start-ups have ever has in a very long time. Anyways, enough jabbing, you can find the blog at www.iphoneappentrepreneur.com. Lets get down to the roadmap.
First, some definitions:
A bundle is a collection of small apps sold as a package. For lack of a better word, the person who collects, packages and sell these apps is a bundler.
Should you even bother?
Apple hasnt said it will allow apps to be sold in a bundle, but Im predicting they will, if not initially, then soon, and heres why:
First, the infrastructure is there. A bundle is comparable to an album. You can sell five applications separately or together just as easy as you sell music.
Second, its cheaper for Apple. Have you ever wondering why you dont get billed for buying a song each day? Apple waits (or tries to hold out long enough) until youve bought a few songs, to lower the costs associated with credit card transactions.
Third, it helps the consumer. If youre trying to find solutions to your problems, wouldnt it be nicer to find that bundle of apps than having to search through thousands of single apps researching each one?
Why would you want to sell you apps in a bundle?
As a developer, why would you want to sell your app in a bundle and (presumably) give some money to a middleman and share revenue?
The most obvious answer, I believe, is visibility. If your app is done by June, this isnt really a problem, go it alone, you have a good chance. But what about next year? Say you make a small game. How many competitors do you think youll have next year? What if you could combine your game with 4 others and sell as a package? Or better yet, 10 others? I think a package of 10 games is much more visible and easier to market than 10 separate games.
What will you sell?
Figure out what kind of company you want to be, and how you will market it. Take the form you think will work the best in building your business. Will you be a developer who looks to others to sell your app? Or do you want to get apps from developers, and put them together to make money. Maybe you want to be a developer cooperative, eliminating the middle man.
Take a different form:
Most people think of bundles as a lose collection of software all having the same theme, sometimes from different companies. But really, a bundle can take many forms (and provide opportunities to entrepreneurs to make money with those forms). Its a new world out there, so throw out the old conventions and start new ones. Lets use the game example again. What is a game company, really? A game company is someone who hires developers and makes and markets a game. Well, start your own. Instead of hiring developers, find them and get a hold of their great new games. Put them in a package with your brand on it, and voila! Youre the newest game developer on the block. You do the marketing and the promotion. Build up your brand with a collection of game bundles, and you can be competing with the big boys.
I think this is where the opportunity for entrepreneurs really comes about. What kind of company could you start? What industry could be served better by some small but separate tools rather than one large application? How could you put all those tools together and create value?
For example, maybe you notice that a lot of people sell things on eBay. What kind of tools could help them out immensely? More specifically, what would they want to do on their phone? You could develop a set of tools that lets someone take an emailed picture of an object, add a title, description and price, and upload it to an eBay Store. The bundle could include a series of apps, like a basic photo editor that automatically matches the dimension you use in your store, an auction starting app that allows you to enter the information and start selling, and an auction tracking app, that tracks your store stats, your competitors and selling trends. People will use the different apps at different times, so one big app might not be the best thing. And, they finally get out of their house! What could be better.
Bundles of good:
The idea of a bundle doesnt have to be purely commercial. The idea can work well for non-profits and general fundraising. Just like MacRumors sometimes sells a bundle of software, they could sell a bundle of iPhone apps as well. Non-profits could sell bundles to raise money.
Marketing (finding your niche):
How do you differentiate yourself from the rest? The more people who write the same software, the harder itll be. So if you sell productivity software, maybe you concentrate on a certain segment, like salespeople, or lawyers. Maybe you cater to a specific audience, like lovers of trivia games. Or maybe you fill a small gap and have no competitors. Be the best at a small thing instead of mediocre at a big thing. Find something that you can do that will get you noticed.
Leverage your strengths:
If youre going to sell a bundle, use the built-in strengths in your marketing. A bundle solves multiple software problems at once. A bundle provides more value than a single application. A bundle might be cheaper than buying your competitions applications one by one. A bundle provides the press an opportunity to recommend more things at once to their readers. A bundles software works well together, while apps from separate competitors might not. A bundle lets you build a brand, which can build trust and reputation. So when version 2.0 comes out, people will know that buying your stuff is likely going to provide them with value. It prevents them from having to seek out other alternatives and waste time.
Dont forget the obvious
In all the excitement, dont let yourself get caught up in the numbers and forget the basics. Your apps still have to be good. They still have to work well and provide a great user experience. They still have to be a good value compared to the free apps out there. Marketing, in my view, can never make a bad product good. Start with a great product first.
Put in some numbers:
As an end note, just in case you were lacking some motivation, Ive done some simple calculations on what the market might be worth. Ive broken it out better on the blog, but heres one example.
Lets say you wanted to start a game company business, lets call it myiPhone Game Co. Youre likely to have stiff competition, so you narrow your focus (niche marketing) to trivia games. Specifically, music trivia games. Now, they take many forms, so you decide to find 3 good developers, and get them to make three different music trivia games. They turn out great, and youre ready to go. You decide to sell your three games for $4.99. The basic breakdown will look like this:
Price Apples cut Total made on each sale
$4.99 $1.49 $3.50
Now lets assume the structure of the deal looks liked this:
Each developer gets 25% for their contribution. You get the last 25% for your marketing and promotional work and for putting up the upfront costs (the $99 developer fee).
Therefore, each person gets roughly $.87 for each copy sold. 87 cents? Sound like much? Well see.
Lets see what some mildly successful (or unsuccessful) sales numbers will equal.
100 copies sold = $350.00 in revenue (after Apples cut) = $87.5 per person
Youve practically made back your developers fee.
200 copies = $700.00 in revenue = $175.00 per person
500 copies = $1,750.00 in revenue = $437.50 per person
1000 copies = $3,500.00 in revenue = $875.00 per person
5,000 copies = $17,500.00 in revenue = $4,375.00 per person
10,000 copies = $35,000.00 in revenue = $8,750.00 per person
50,000 copies = $175,000.00 in revenue = $43,750.00 per person
100,000 copies = $350,000.00 in revenue = $87,500.00 per person
So, for 3 developers and a promoter, 100,000 copies at $4.99 looks like the sweet spot to provide everyone with a nice yearly salary. But theres more. What if:
You put out a pack of games each 6 months. Can you double your income?
You successfully build a brand around your games, becoming known as the best brand of successful music trivia games. How would your future packs do?
You sold updates to your old games every 6 months.
Lets look at the updates more carefully. People eventually get tired of a trivia game because they know the answers. What if you put out an update with new questions and answers. Lets say you sold an update for all three games for $1.49. On each update, after Apples cut, you will receive $1.04 (rounded). Say you got 10% of people to buy an update. So, from the chart above:
If you sold 100 original copies, you sell 10 updates (10%) = $10.40 in update revenue (after Apples cut) = $2.60 per person
200 original copies, 20 updates = $20.80 in update revenue = $5.20 per person
500 original copies, 50 updates = $52.00 in update revenue = $13.00 per person
1000 original copies, 100 = $104.00 in update revenue = $26.00 per person
5,000 original copies, 500 = $520.00 in update revenue = $130.00 per person
10,000 original copies, 1,000 = $1,040.00 in update revenue = $260.00 per person
50,000 original copies, 5,000 = $5,200.00 in update revenue = $1,300.00 per person
100,000 original copies, 10,000 = $10,400.00 in update revenue = $2,600.00 per person
Doesnt sound like much, does it? Thats just 10 percent. What if you could get it up to 20, or 50? (at the 100,000 copy level, selling an update to 50% of your customers will net each person an extra $13,000.00). Furthermore, what if youve successfully developed 5 other game packages. Each game builds on the last, and releasing 5 updates over the course of the year multiples that income.
Updates gives you other opportunities besides making money. It gives you something to yell about (read: sending out more press releases, getting yourself more attention). It keeps people coming back to your brand, instead of getting bored and finding something else new. Plus, if you incorporated the new answers into the original game, you might see a bump in sales of the original, since people who may have been on the fence will be getting both sets of answers. That bump will enlarge your customer base for the next update, and so on. Essentially, your games never die.
So how big is the market?
Well, time for some fuzzy math.There have been 4 million iPhones sold that we know of, and an undetermined number of iPod Touches. Apple want to sell an estimated 10 million iPhones by the end of 2008.
Lets go conservatively. By June, 2008 lets pretend there will be 5 Million iPhones and iPod Touches sold combined.
10% of 5 million = 500,000
5% of 5 million = 250,000
2% of 5 million = 100,000
1% of 5 million = 50,000
So basically, your target number is 2%, if you want to earn $87K a year. How will you reach those customers? Start planning now
Basic Roadmap
- Decide what you want to sell
- Figure out how you will get your content. Will you develop it yourself, buy it from developers, or share revenue with developers?
- Decide who you will sell it to (your niche).
- Make a good product
- Promote your product: to websites, the press, bloggers, anyone who covers your niche.
- Provide good service to your customers.
- Use updates or new versions to keep people coming back.
- Stay ahead of your competition.
