The app development industry has boomed over the past five years; our smartphones have changed the way we socialise, play games, get information and generally manage our lives. Some one billion smartphones were sold in 2015, with the average consumer spending up to two hours a day on apps. In fact, the market has exploded since the introduction of apps in 2008 – it surpassed £60 billion in 2016 and is expected to exceed £80 billion by 2020.
The market is growing, but so is the competition. This increased competition has greater demands from consumers, who now expect their apps to be free – and seemingly each day a new app springs up that can do more for less.
Building a successful business out of an app is a significant challenge; not only do you have to build a product that can be marketed as an attractive proposition to the end-user, but you also have to obtain their loyalty so that they remain engaged with it – this is how you build yourself an active user base.
The biggest challenge is having the time – or rather the money to buy the time – to trial and error a path towards a successful business model and effective monetisation. The key to this is to set up your Minimum Viable Product. During brainstorming sessions you may come up with ideas that will take years to develop. Resist the temptation; create a simple but sustainable business model first and then grow from there. So-called ‘scope creep’ – a continual growth in the scope of a project – is a killer to an app start-up business; instead, develop one feature at a time, and make each one right.
As a start-up, you’ll also need buy-in from your app development team so that they understand the impact of their work on the success of the product. It is essential that your technology lead understands the big picture – this will ensure that any technology-related decisions align with the requirements of the business as a whole.
Launching the product to the market is just the beginning. The next challenge is to ensure that people are interacting with your app for a significant period of time. You also have to keep pace with the rate of change in the market that has your competition releasing new products at breakneck speed.
Once you have a stream of returning users, there will be plenty of ways to make money out of your product. Identifying the most effective monetisation strategy is a matter of trial and error; but, if you have the retention, you have the time – that’s why the most financially successful apps are games.
In-app advertising and in-app purchasing are effective monetisation strategies, however whether this is appropriate depends on the nature of your app and the sector you’re operating in. We decided to operate a ‘freemium’ business model with Bodireel. This means that the app is free, but users can decide to upgrade their accounts to receive support in achieving their goals by connecting with health and fitness professionals.
We’re still growing, and the challenges keep presenting themselves. Building a successful business out of an app is as competitive as any other business venture. Time is your most limited resource; use it wisely.