How to Start an App Business

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Published May 01, 2012

| FOXBusiness

At a rate of 30 million a day, downloading apps is a popular hobby among consumers.

So, too, is developing ideas for great new ones.

The trouble often lies in taking an app from conception to high-tech reality — but experts agree anyone can develop a successful, and potentially lucrative, mobile app with the right approach and effort.

"You can make a lot of money off of this if you do things the right way," said Chad Mureta, who had no experience in the field before founding three mobile application businesses, including Empire Apps.

While having the idea is paramount, Mikka Olsson, co-founder of the app development firm Ebbex, said a lot of other work, from design to marketing, is necessary for it to be a productive venture.

"Having a great idea is just 5 percent of the process," Olsson said. " It's a huge opportunity, but you have to gear up and really want it."

Olsson's co-founder at Ebbex, Nicolas Acuña, advises those looking to launch their own app to first share their idea with friends and family.

"Find out of if they would use it or find it intriguing," Acuña said. "It is hard for (the one with the idea) to have a true verdict on it, because they are already in love with it."

Researching the competition is another crucial step, and can determine what other apps in the space are doing right and wrong, app developer Mike Rundle said. He encourages those wanting to launch their own app to spend time writing down the specific features they feel they want it to have.

"Having a one-paragraph description of an app is not enough," Rundle said. "It should be a few pages of bullet points going over what the app offers, why it's different than others and what it will do to delight users and stand out from the crowd."

Once the idea is flushed out, the app can be built. Unlike websites, which can be created even by those with little technical experience, mobile apps take both coding knowledge and software development proficiency. Since few have that expertise at hand, most app creators turn to an outside developer, which could be either a large firm or an individual freelancer.

The cost could run from $1,000 to $1 million, according to Mureta, noting it all depends on what the app's creator is trying to accomplish.

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He believes a lack of technical experience is an advantage for creators.

"It is actually better if you aren't a coder," Mureta said. "You aren't stuck coding all of the time and you are more focused on creating the app."

Mureta is proof that someone can launch an app with no experience and come out ahead. The California developer came up with the idea for his first app, Fingerprint Security Pro, while in the hospital recovering from a devastating car accident. He spent less than $2,000 making it, then raked in close to $700,000 in profits.

The first step in having it make money is to start selling it to consumers. For Apple devices, all apps are sold through iTunes, while Android apps can be sold in several different outlets, including Google Play and Amazon.

For iPhone or iPad apps, app creators must register with Apple for $99 a year. Apple's terms allow the company to collect 30 percent of an app's profit, with the creator taking in the remaining 70 percent. Both Google and Amazon have similar terms.

"Just putting it on iTunes isn't going to make it successful, though," Olsson said.

Olsson advises app creators to treat an app launch just like starting any other business.

That means spending time researching price points, developing a PR strategy and setting aside a marketing and advertising budget.

"You need to create awareness," Acuña said. "You need to get it in front of people."

That kind of commitment also provides opportunities to develop additional apps later.

"Some will work and some won't, but to be successful, you are more than likely going to end up having more than one app," Acuna said.

Just as the cost of development can vary greatly, so, too, can the amount of money one can make. Rundle said financial success depends on a number of factors, such as the type of app (games tend to make more than other genres), how big of a launch it had (chart position at the end of the first day of sales can make or break an app's revenue), and how good the user reviews are (many 5-star reviews will drive sales, as other users will be wondering what they're missing out on).

While the top apps in the Apple store are making more than $50,000 a day, Rundle said there's a steep fall-off from there, with the vast majority taking in far less.

The great thing about the app marketplace is that users worldwide are demanding them, Mureta said.

"I was making money from countries I didn't even know were countries," he said. "That was a pretty amazing feeling."

Chad Brooks is a Chicago-based freelance business and technology writer who has worked in public relations and spent 10 years as a newspaper reporter. You can reach him at chadgbrooks@gmail.com or follow him on Twitter @cbrooks76.

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