As a creative individual, ideas come and go through your mind all the time. You have had your morning coffee, you are sitting with a pen and paper, or your fingers ready to attack the keyboard. Your brain has all sorts of thoughts and ideas, and you come up with a groundbreaking, revolutionary app idea (or so you think). Your first step should be to assess the viability and profitability of your app idea in the market. While you can sell an app idea, you had in your shower for millions of dollars, it is not very likely to happen.
For a successful app idea, you need to check your idea for a certain list of things:
- Does it address a specific problem?
- Does your app idea provide a feasible and efficient solution for that problem?
- Is there any competitor that has a solution ready for this problem?
- Does your app idea have any unique selling points to be a better alternative?
Once you have an overview of all these parameters, you can claim to have a unique app idea. We will discuss this in greater detail later in this blog. Good examples of apps that managed to provide new solutions to existing problems and became successful are:
It was built to address the cash shortage problem to pay a friend/family/colleague or any individual. Venmo came in as a solution that allows you to pay cash to your friend when nobody has cash.
It was built to make keeping track of classwork that was otherwise a complicated task. Their solution was to build an app that helps students stay on top of work and communications from their school.
The biggest problem with body transformation or exercising is keeping track of routines and diet. MyFtinessPal realized this problem and came up with features like diet diary and workout plans to provide fitness related information and tools in one place.
Now that you have a unique app idea in hand, your focus should be on how to make money from this idea.
Can You Sell an App Idea?
Technically, yes. You cannot come up with an app idea and go to Google or Apple and ask them to pay you for your groundbreaking idea. You won’t get any remuneration for your idea because app ideas are comparatively a very small part of the entire app development process. Hence they don’t hold a true monetary value. BUT, if you work on an app idea and develop it to an extent, you can sell an app idea for millions of dollars. You need a proof of concept for big players to be interested in what you have to offer. The theory doesn’t sell.
As per Statista, by the third quarter of 2020, Android users had an option to choose from over 2.87 million apps, and Apple users had access to 1.96 million available apps on their app store. Hence it is clear that there is a considerable market and demand for unique and efficient apps.
How to Sell your App Idea to a Company?
So now we understand what doesn’t sell when approaching big companies. Now we can look at what does. Tech giants like Facebook, Apple, Google do purchase apps. Yes, if you try submitting them a proposal with your app idea or documents, they will not pay you a dime for it. Since they mention that they don’t entertain proposal submissions, and if a user does still send it to them, they consider it to be their assets. So your approach needs to change to reach these giants.
As I was saying, these big companies do purchase apps that catch their attention. For this, you need to build your app or get an MVP framework ready and market it so that the big players can’t avoid it. If you do this thoroughly, you will be approached by these companies to purchase your application. If we talk about Facebook, an ex-employee had revealed that they bought Instagram in 2012 for competing against Twitter and Google+ back in 2012. This was a $1 billion deal for a photo-sharing app. Now you know that you need to work on perfecting your app idea to increase its value, here are some tips and steps to getting that million-dollar revenue for selling your mobile app idea:
1. Put the app idea to paper:
Having an app idea is not only about deciding your niche or thinking of one user-case scenario. It requires a lot of brainstorming and thinking. But all that brainstorming and thinking will be of no use till you put it down to paper. Write down all that you can think about. What is the primary purpose of the app? What are the features it will have? How will it bring value to the users? You can also note down the design ideas, marketing, monetizing strategies, and app name options you have thought of. Remember, this is the first draft, so you need not elaborate on each point in detail right away. This mind-map will be the roadmap to building your app’s architecture and shaping its concept.
Also Check: Top App Ideas for Business Start-Up in 2021
2. Do your market research and look for patterns:
Remember, making an app is very similar to starting a business. You have to approach it in the same manner. And the first thing you need to do when entering a market or a business is – learn more about your target audience and competitors.
Getting app ideas from competitors
For this, you need to conduct a competitive analysis. Competitive analysis is nothing but a nerdy word coined to identify and evaluate your current and potential competition for their weaknesses and strengths. There is no definite way of conducting competitive analysis since it is not an exact science. Every developer has their metrics to compare their apps with the apps available on the market. But the fundamentals can be simple:
- Identify the competitors
- Understand what they’re doing good (take pointers)
- Understand where they’re slacking (definitely take pointers)
- Draft a plan to create your mobile app
It’s good to have high-quality competition; it helps drive research forward at a faster pace.” — Shuji Nakamura, engineer, and inventor
Getting app ideas from the target audience
You need to visualize your users as individuals who can get some benefit from using your app. You should spend time understanding what distinctive characteristics they can have
- Who are they?
- What information do you need about them – their age, gender, occupation, location.
- How and where do they find out about new products and services?
3. Create a convincing business plan for your mobile app idea:
“A goal without a plan is just a wish.” Antoine de Saint-Exupéry
It is important to put your goals and ideas in a properly structured plan; otherwise, they would end up being far-fetched wishes and nothing else. You already have come this far, and you have all the data needed to create the best app that can sell for millions. Why stop now? Making a mobile app business plan will help you:
- Attract investments for your app idea
- Have a holistic and objective view of all factors
- Reducing risks
Create a perfect business plan for your mobile app by following these steps:
1. Executive Summary
You should create a short detailed overview of your mobile app business plan. This is a crucial step that you should focus especially on. Your executive summary is the first thing your potential investors will encounter. To get this section perfect, try to follow the idea of – conveying more through lesser words. You don’t have to talk about the product’s working; instead, sell more on your information of the market scenario, targeted users, problems your app address, proposed solutions, how it has a unique value proposition, and the end objectives of your app.
2. Company Introduction
The next step for making a convincing and detailed business plan for selling your app idea is to prepare your company information. The future is never predictable; for these reasons, things you promised in the first step might still not have the investors at the edge of their seat to give you their money. Many investors believe in investing in the business and the people that run the company instead of products. Things to include at this stage are:
1 . An overview
You need to mention some details for any investor to understand your organization and feel comfortable about trusting it.
- Entity type – Privately owned/LLC
- Location – Where is your home office? What other branches (if any) do you have?
- Duration – When did you establish your company?
- Size – How many employees do you have?
- Scalability– Is your company working off-shore too?
- Goal – What is your long term goal for the company?
- Vision – What is your vision for the app/company?
- Problem – What is the biggest problem you’re facing for which you need the funding.
2. Advisory Panel
Most mobile app development companies have a team of experts that support them by being their advisors. These industry experts generally have years of experience in their niche, and more times than less, they also have a few successful apps under their belt. Having such advisors on-board improves your brand credibility and trustworthiness immensely. So if you have an advisory panel, do mention them in your business plan when selling your app idea.
3. Management Team
Your team members are the human resources that get the work going. Hence you need to mention all their names with their rightful designations and other professional information while mentioning the organizational hierarchy so that the investors can have a better understanding of the talent and skills your company has.
3. Industry Knowledge:
No matter what app you end up making, it will belong to at least one primary industry. Since you are entering this industry as an entrepreneur, it is natural that you would know every crucial trend, information, to challenges of your chosen industry. This is exactly what you need to prove to your investors. In your business plan for your app idea, talk about
1. Market size
One of the primary things you should know and talk about in your business plan is the market size. First, talk about the total available market based on the market demand and other factors. Then talk about the serviceable available market that you can target in the next 3-5 years. And finally, show your plans to work towards the obtainable market made up of your initial users ranging from 6-12 months.
If you want to have a good perspective on explaining your market sizes, I would advise you to watch Shark Tank on the CW network. Having to see real entrepreneurs market their idea to sharks (investors) and explain their market vision will help you understand what works and what doesn’t.
2. Market projections
Market projections are basically how well you can conduct future predictions by studying the market’s past and present conditions for gaining that insight. For this, you should compare and analyze the market’s size in the last five years, see if there were new entrants and how much funding was injected into the market.
3. SWOT analysis
You probably learned this in school or your college. This is one concept that you should be thankful for your academics to include as it comes in very handy in real-life applications. Especially for building a stellar business plan for your app idea. SWOT stands for:
Outlining all these parameters for your company helps give a structured description of your current situation that helps investors get a little closer to your brand through effective planning for app development.
4. Marketing Strategy:
So far, you have convinced your investors that you know the market. You have given them a detailed insight into who you are and what you are trying to do with your app. But you still are to tell them – how? Your mobile app marketing strategy has the most power to convince investors that you are ready to take on the challenges and have a plan towards success. Your marketing strategy should be so effective that it should act as a deal-sealer between you and the investors.
An efficient marketing strategy should include:
1. Description of the user-persona.
User-persona is essentially what character building for story-books or novels is. You build an imaginative or a virtual enactment of how your target customer would be like. This would include relevant metrics like age, gender, location, occupation, income group, and marital status. If you have more than one user persona for your app, mention all of them in your app development business plan.
2. Key metrics
The growth and popularity of your mobile app can be measured based on various metrics. You should be careful about picking the apt metrics that are the most suitable for your business model. For instance, if you are making a fitness app, your metric should be the number of signups instead of the number of downloads.
3. Customer acquisition strategy
After defining your user-persona, you can focus on your customer acquisition strategy. To make your investors believe in you, one thing you should confidently know about is your customer acquisition cost. After you’re done establishing a channel and the campaigns that make up your marketing strategy, you would better figure out your customer acquisition.
These are some channels and methods you can try for achieving better results:
- App store optimization
- Content marketing
- Email marketing
- Event marketing
- Incentivized user downloads
- Mobile app wall ads
- Mobile site redirection
- Organic installs
- Push and in-app notifications
- Retargeting campaigns
- Referral incentives
- Search engine marketing
- Social media (Facebook/Twitter/Instagram) ads
4. Create a landing page
A landing page can help your app reach out to many more customers. The landing page can work as a space where your active users and new users can browse through for keeping up with the latest innovations and updates of your app. Make sure your landing page includes
- Name of your app
- Promotional videos/images
5. Operational strategy
Your daily operations are a big part of who you are as a company, and responsible and aware. Allowing your investors to see how you strategize your operational expenses and functions will help them see you as prepared and motivated. You should map out your plans of handling customer service, quality assurance and how you’re planning the app development process, and more.
6. Financial plan
Last but indeed not the least important aspect of a perfect business plan. Here we talk numbers. Try answering questions that investors are likely to have to want to invest in your company. Questions like what money will you make? What is your estimated cost of running this business? How much funds do you need, and how will you allocate them? Here you should include your app monetization strategy, startup costs, and details about the funding required and how it will help you and provide a benefit back to the investor for their efforts and financial help.
Choosing the right App Development process for testing Product-Market Fit:
Product-market fit is the measure of the extent to which a product satisfies strong market demand. It is often seen as the first step for building a successful app that will sell. Now, as a developer, there are different approaches you can take to test out your product for product-market fit. The most popular ones are
- POC – Proof of Concept
- MVP – Minimal Viable Product
Before you choose either of these methods to check your app viability, you should clear your mind with these two questions –
- What are you trying to validate?
- Who is your target audience?
All three methods have their approach and perspective on checking app viability. You have to decide which one fits your app objectives better and is the best test to see that your app is sustainable and profitable in the real market.
Also Check: Top App Ideas for Business Start-Up in 2021
1. POC – Proof of Concept
POC – Proof of Concept is an approach used by businesses to validate their concept’s feasibility. This process comes into the picture way before you start with your app development process. If you are unsure of your app idea and want to test it out on a smaller scale before committing to a full app, you can start a small project for verifying the concept for practicality, business model ground, and technical capability. Mobile app POC is usually not for the customers but mainly for internal checking to see if the app is worthy of continuing operations.
- It is cost-effective and time-effective.
- It gives you a clear answer at the very beginning of the project.
- It helps you take notice of errors and risks at the early stages.
- It gives an insight into the feasibility and confirms the ideal potential of your app idea.
Choose POC when
- When you need seed-stage funding
- When you want to check if the ideas work technically
- For sharing information internally.
- For accessing if the project is viable or not
Mobile app prototyping displays how an app will flow from one screen to another and visually look to the end-users. Doing so helps you understand how the app will flow, usability, and what features should be added to make your application better.
- It helps get early feedback.
- Helps in identifying mistakes in the design and development phase
- Users can validate application flow.
- Helpful in getting seed funding
Choose Prototype when
- You want to visualize how your app will work.
- Limited on a budget but wish to show the app to the stakeholders
- You have limited technical availability.
3. MVP – Minimal Viable Product
MVP is making a functional app but without the extra features. It is an app that runs on the primary elements that represent the application. It can be sent to users for testing and noting their experience and providing feedback or can be shown to investors to showcase the app’s potential and capabilities at half the cost of building a fully functional app and going to them.
- Closest to having a real-time application
- Attracts high retention from low investments
- It helps avoid time and money wastage.
- It helps collect useful feedback.
Choose MVP when
- You need to show a customer how the app works.
- You need to make money out of the application.
- When you are limited on a budget to make a fully functional app
- When you want to pitch to investors for taking an interest in your app idea
Pitching your app idea to the right investors:
Now you have a business plan ready and an app prototype/proof of concept or a functional MVP. You have all the tools needed to sell your app idea. Now you need to focus on finding the right investors who want to invest or purchase your app idea. In the business plan, we realized the importance of knowing your target audience. If you don’t know your target audience, you will most likely fail to sell your product or even develop one that reaches the selling stage. Similarly, when finding an app investors and pitching to them, you will not get funds unless you target an investor interested in your app. There are different kinds of investors with other interests. You need to find out the right investors to pitch to and build your pitch in a way that appeals to them.
Before pitching to investors, you should also know about the ways to protect your app from third-party businesses. You can save your app by
- Getting an NDA – Non-Disclosure Agreement
- Starting coding as soon as you finalize your app idea
- If you hire a freelancer, ask them to sign over all the copyrights to you.
- Register a trademark for your app name and logo
- Pursue any developer who infringes your work
- Consider putting a patent application.
These are the different types of investors you should know about:
A venture capitalist is a private equity investor that gives capital to startups and small businesses that show high growth potential in exchange for an equity stake in their business. For venture capitalists, they are willing to risk their money on such enterprises as they see a massive return on their investment if these companies turn successful. VCs generally target or look for firms that already have a business or app made and are looking for help to commercialize their app.
How to Pitch to a Venture Capitalist
- Preparing for the pitch
- Keep your Metrics ready.
- Proof of Concept
- Scaling process
- Product/Market fit
- Profitability Metrics
- Customer Acquisition Strategy
- Identify what you need.
- For valuation
- Narrowing down firms
- Research your VC
- How well do they know the industry?
- Do you need to educate them with detailed examples?
- What successful startups have they backed in the past and why?
- How big is their fund?
- The Pitch
- Prepare your greeting
- Prepare the introduction
- Highlight your app’s USP
- Sell the Product Story
- Give the Value Demonstration
- Prove the Profitability Demonstration
- Talk about your Team
- Close the pitch
- Prepare for answering questions
Start-up accelerators focus more on providing startups with mentorship, resources, and advice to help them initiate their operations or to help them reach their goals with more ease. Such organizations also keep a demo day attracting startup investors on the various startups by hosting a series of investment pitches. Since they don’t provide much monetary value or assets, they are useful for any company that is still unsure of their products or don’t feel confident handling everything themselves. If your purpose is to sell the app idea, then accelerator investors won’t help. If you need their service to initiate your efforts, you can pitch them using the following guideline.
How to Pitch to an Accelerator Organization
- Be confident and focus on facts.
- Put forth your solution to the identified problem.
- Keep their interest by weaving a story.
- Close in with some kind of oral call-to-action
MicroVC is a Micro Venture Capital invested to fund early-stage emerging companies with financial help that is generally lesser than traditional venture capital. Since these companies are at an earlier development process in their app journey, they need to convince prospective investors to invest based on limited data points and projections the company has to offer. In your pitch deck for MicroVC, there are a couple of things you should pay attention to.
How to Pitch to a MicroVC
- Highlight why your company will win a majority of competitive opportunities
- Why is your team uniquely positioned to get the edge in the market?
- Include a competitive analysis slide
- Show the investors exactly how they fit into your app idea plan.
- Include all records – profits and losses both
4. Angel Investors:
Angel Investors have many different names, such as – seed investors, angel funder, or private investors. They are high net-worth individuals who give financial support to entrepreneurs and small startups. Angel investors invest their own money behind businesses they find worth investing in, while venture capitalists manage others’ pooled money and invest using this pool.
How to Pitch to an Angel Investor
- Market yourself
- Help them realize the business opportunity for your app idea.
- Let the numbers do the talking.
- Focus on your delivery and not just your study
- Focus on the human element
You will not be rewarded for having a basic app idea. For selling an app, you need to work on the app and treat it like a business. Doing so would help you reach out to many big players in the app industry. These big players aren’t just Apple, Android, Facebook, and other tech giants but also several other investors and companies that are willing to help you at all stages of your app development journey. If you don’t take shortcuts and be patient with your app idea, you can honestly earn a fortune from the efforts, time, and money you invest in this process.