What’s My App Worth?

| Blog | May 25, 2012

Price matters. Whether you are just selling a copy of your app or if you want to sell your app business. Coming up with the right price for your app could be the difference between success and failure.

Youneedtoknowthe market and have keen sense of what is fair and reasonable and how much prospective investors are willing to pay for your app or business.

Start by mapping out how much it cost you to develop your app. This should include all of the fixed and variable costs needed to produce the final app. Expenses like rent, salaries, property taxes and anything else that doesn’t change are considered fixed costs. Variable costs, like hourly wages and sales commissions, can change depending on the number of apps you produce or sell. You have to consider everything, including all overhead costs. Once you know exactly how much it’s costing you to provide your product, divide it by the number of copies you expect to sell. That’s how much you need to sell each app for in order to break even. Example: If it costs you $10,000 to develop your app, and you expect to sell 5,000 of them, then they will each need to cost at least $2. The markup is where things get a little tricky, but here are some key considerations to keep in mind.

  1. Consider your user base.
    If your goal is to attract anyone and everyone, then you’re on the wrong track. You need to figure out if your app is best suited to be sold as an niche product, a standard product or a discount/free product.
  2. Understand the market, and know what your competitors are doing.
    Find out how much customers are paying for your competitors’ products. Jot down the price range, from cheapest to most expensive, and try not to stray from within those numbers. Anything above or below will come as a shock to most customers.
  3. Focus on value.
    Figure out what the real value of your app is. Does it help your users in some way that other apps can’t? Is the design more appealing, and does it make the product easier to use? Don’t sell yourself short here. Many companies try to undersell the competition. They simply offer the lowest price and assume that that’s what all users are looking for, but if the value of your app really does exceed that of your competitors, then don’t be afraid to charge a little more. Customers are willing to shell out the extra money, so long as the value of the app meets their expectations.
  4. Be honest with yourself about your product.
    This one can be tough. People become really attached to their applications and believe that they soar above and beyond anything else like them, but rarely is that the case. That doesn’t mean that you don’t have a unique or better application. Take a long, honest look at other apps. Consider features, design, durability, etc. How does your app compare? Is it really that different or that much better?
  5. Don’t try to price your way into profitability.
    When the market is down or sales are stagnant or falling, don’t automatically jack up your prices to make up for lost revenue. Why? First of all, users will not be pleased with the sudden change. Second of all, if the market is down and people are pinching pennies all over the place, increasing the price of your product will only exacerbate the problem. Instead, keep close tabs on your costs and your cash flow. By cutting costs to make ends meet instead of increasing prices, you’ll still be able to get by and your customers will be appreciative of your efforts through the hard times and again once business improves

In the end if you can be honest with yourself and the market and put a fair price on your app you will get many more opportunities to sell your app to interested buyers

About SellMyApplication:

Sellmyapplication.com (SMA) was founded in 2010 by a small group of app developers based out of Boston, MA USA. We were first to market with the idea of creating a mobile app marketplace for mobile app businesses. Our site is focused on connecting developers interested in buying, selling, trading, or licensing apps they’ve written. SMA has quickly become the leading marketplace with thousands of registered developers and millions of visitors every year.

With SellMyApplication.com you’ll be able to reach a highly targeted audience of app developers, entrepreneurs, and users interested in purchasing code to improve existing projects or expand their reach across to new customers. Read our FAQ to get started.

Want to sell your app business?
There’s a place for that!

No Tags

  

Leave a Reply