How to Build Money Making Apps Without Losing Your Shirt

This is a guest post by Justin Malik.

Justin Malik, MBA, left his full-time job to pursue app development in April 2013 and has since launched over 60 apps in the App Store and is quickly approaching a million downloads. When not developing apps, he is blogging about the process and showing his own results on MoneyFromApps.com, creating tutorials & courses about app development, and listening to podcasts.

Justin Malik Post Image 1Don’t make the mistake we did, when you create your own app. In 2012, my partner and I decided to pool our money together, and even some from family, to build the next Instagram.

Longstory short—that app, an image-based social polling network named Pixtant, got around a quarter million downloads and built up over 100,000 followers on Instagram at one point. Sounds awesome, right?

Here’s the kicker: to date, the app has had a net loss of over $75,000. Since then, we’ve made that money back by employing almost the exact opposite strategies, many of which you’ve read right here at BlueCloud and that I wish we knew about earlier.

In this post, I’m going to summarize exactly how we turned our business from the red to the black with less than 5% of the initial investment cost of Pixtant.  This is about how to make an app without spending all your money, and to take it a step further, spend a very little amount of money to get 5x, 10x, and even 100x+ returns.

Think of Your Apps as Investments

Apps as Investments

Successful investors will tell you to diversify – that is, don’t put all your eggs in one basket. Knowing what I know now, I would’ve never agreed to sink so much money into our first app.

Instead, I would’ve diversified and built 5-10 solid apps at much lower prices to get my feet wet, understand the app publishing process, and learn what works and why.

Even if you believe with all your heart that your app is going to be a wild success, plan on your first app being a failure. I’m not condoning pessimism; instead, you should be realistic and consider the facts and the risks associated with app development. If you’re just starting out with apps, you need be able to recover from an initial loss and try again, since you will learn a great deal from your failures early on. In a nutshell, if you don’t want to lose all your money, don’t spend all your money on one app.

However, even if you spend your money wisely and diversify, you can still fail if your apps (investments) don’t generate revenue. That’s the second piece of the puzzle – you need to make more money than you spend. I know, this is real Einstein stuff here… the stuff that the New York Time’s Best Seller list offers. But seriously, them as such, you’ll be ahead of the game.

So let’s get into the specifics of how exactly you can lower your costs substantially while simultaneously increasing your revenues.

One quick note: iOS (Apple) development is my expertise, so I refer to the App Store instead of Google Play. However, the principles remain the same.

Enter App Reskinning

App reskinners, including Carter, get a lot of crap from others. I’m sure many have called him out on Twitter as the devil for taking this idea mainstream. They believe we’re ruining the precious app ecosystem by “spamming” the platforms. While some people abuse it, that’s not what app reskinning is all about, and even massive companies use this technique.

Before I get into that, I’ll briefly describe what it is for those of you who are new to BlueCloud:

App reskinning is taking one app’s code, known as a source code, and changing some of the content (most often graphics and/or text, but also features) to create another app.

App Reskinning

This is not a new concept and isn’t the same as cloning. When you “reskin,” by definition, you change something, hopefully improving upon the original in some way. As mentioned, reskinning can include changing graphics and/or text. Think about a Bingo game. If it’s successful for you, why not change out all the graphics and rebrand it for a special holiday or event, or to something random? Ever heard of the company King.com Limited? If not, chances are you’ve heard of their game: Candy Crush Saga. They also released “Candy Crush Soda Saga,” which is essentially a reskin of the original, and like the original, it hit the top of the charts.

The whole idea of “templates” is based on this same principle. If you’ve ever used a template for anything, like emails, or websites (WordPress themes for example), then you’ve basically reskinned something. Even a new menu item at McDonald’s can be like a reskin – they take existing ingredients and products to create something that’s slightly different and that cater to more people. Business efficiencies are made this way.

From this perspective, if I were starting over, I would certainly launch with an app that has already been created for me. If I’m interested in publishing in the Casino category, I could easily find a slot machine source code or a Bingo source code, even right here at BlueCloud. Instead of spending thousands of dollars, you can spend a couple hundred and also save months of development time by using this technique.

One of the most annoying and time-consuming things about developing from scratch is testing and finding bugs. Even if you hire someone else to develop the app for you, it will be riddled with bugs and you will have to go back and forth to explain them to your developer. It is a painful process and can delay the release of your app by months. When you buy a good source code, the one less thing you need to worry about.

If you’re looking for a source code that fits the genre you’re interested in, you should buy from a developer you trust (and bonus points if it comes with a video tutorial showing you how to reskin it yourself) that alone can save you hundreds of dollars, even if you don’t want to learn the ropes on your own, because you can simply send that video over to a developer and show them that the app can be reskinned in an hour. Speaking of that…

Learn the Ropes

Entrepreneurs are often looking for the get-rich-quick and easy solution to getting started with apps. They come to me with an idea, and want to throw money at it because they’re so sure that after the app is published to the App Store, everything will come together. My partner and I are guilty of the same thing with our first app. Unfortunately, that rarely works out.

Learn Ropes

You really need to put time and effort to learn as much as you can, and in my opinion, learning the basics of app development can mean the difference between a profit and a loss. I’m not asking you to take a college course on programming -far from it. All I’m recommending is that you follow an app reskinning tutorial on your own when you’re starting out.

Not only will this save you time and money because you won’t need a developer, but it will also make you more knowledgeable about the subject when it comes time to talk to a developer. For example, if they tell you that it’ll cost $5,000 to implement a currency system like coins in your app, you can tell them off (based on our true story). If you find that this stuff comes easy to you, you can take it a step further and learn basic SDK integrations so that you you’ll know how to show ads or put in analytics. It’s easier than you think, yet developers will charge hundreds of dollars for this service.

A full reskinning course will even show you how to upload an app to Apple, which you can then do yourself when you want to release a new app, make small fixes, or even if you want to change your icon, screen shots, or keywords. A developer will often overcharge for simple stuff like that. Along those lines, you should do all non-development pieces yourself, if you choose to do those things.

For example, if you want to optimize your app keywords, don’t hire App Store Optimization experts. You can learn this stuff very easily with some basic research and tools. Likewise, if you plan to have a Facebook and Twitter page for your app, don’t hire someone. That won’t be worth the money. That’s probably the only thing we really got right with our first app, Pixtant—it was our own doing that got us over 100k Instagram followers at one point.

Last, there are some very basic graphic reskinning tutorials out there, but the basic principle is that you can license some stock graphics for a few dollars and literally just resize them and save them over the old graphics. That’s how easy it is to reskin an app at its most basic level. Learning this simple technique can save you thousands of dollars in graphic design charges.

When you learn how easy it is to reskin apps yourself, your cost to create one goes to almost zero, thus increasing your profit margins by insane amounts. After you publish one, five, or even ten or more slot machines or Bingo games at a fraction of the cost (and time) of developing an app from scratch, you can take your earnings to invest in a new source code, or if you’ve made enough money, develop a new project from scratch. The best part about it is that you will have learned so much from publishing those initial apps that you won’t make the mistakes that a beginner would. That leads us into the next point…

Quantity > Quality When You First Start Out

I might get some backlash here, but this has been my experience for my company, my projects outside of apps, and learning from others, including Carter.

When you are new to anything, getting something out there is far more important than spending a ton of time and money making that something perfect. I believe this applies to many areas in life, including sports. You can practice a sport for months or years before playing your first game, but the fact of the matter is, a lot of that practice and refinement of your skills might not work out when it comes to playing your first game. You will learn more from the actual games than from practice.

This is even more critical with apps because if you spend a ton of time in development, by the time you release the app, the landscape will have already changed. Competitors might have entered the space, and worse, Apple or Google Play might have upgraded to a new look/feel and possibly with new rules. You’ll then need to update and fix your app, so the development process restarts, sending you back down the rabbit hole. By the time we released Pixtant, there were already standards in place and we were outdated. At that point, we couldn’t afford to make changes.

Justin Malik Post Image 2Instead, if you make your company about efficiency and speed while reskinning to lower costs, a new iOS update will actually present you with opportunities instead of threats. For example, with the iOS 8 update, Apple finally allowed custom, third-party keyboard apps to be released to the public. My partner and I were able to make nice positive returns by publishing custom keyboard apps way before anyone else using a simple and cheap source code.

I’m not saying to ignore quality – you can find some great quality source codes out there and you should pick good graphics—but the goal in the early stages is to publish as cheaply as possible to reduce risk.

If you follow this plan and you release 5-10+ apps, then all you need to do is figure out which ones are the winners and why, and then repeat.

Track, Then Track Some More

Microsoft Excel can be your friend. When you have multiple apps in the App Store, you won’t learn nearly as much if you’re not tracking everything. This may sound daunting at first, but once you establish what you’re tracking, this becomes fun and a lot easier, especially when you consider services like AppAnnie that will track a lot of this information for you for free.

If we go back to the idea of apps as investments, then you can quickly start to come up with the basic metrics you should track for every app you release. You’ll want to know:

  • How much money it made
    • Better if you break it apart into sources of revenue (in-app purchases vs. ads)
    • If you track each ad network separately, then you should also include how many impressions each ad network displayed in your app. That way, you can calculate eCPM to see which ads work the best for which apps
  • How many downloads it got
    • You can then calculate ARPU – Average Revenue Per User
  • Which source code this app used
  • How much you spent developing the app
    • You can then figure out if you’ve made a profit or not

With those basic pieces, if you’re tracking your results daily or weekly, you’ll inevitably figure out which apps to publish and want to tweak. At that point, you’re entering a new world…

Outsource, Scale, and Consider Bigger Projects

So many new app developers contact us and want to skip right to this step. The problem in doing that is that they don’t know how the app will perform.

Outsourcing and scaling are expensive endeavors, so this should only be applied when your own method is already proven and you are able to closely predict how much money you are likely to make with another release of an app. If you can tell me, based on your own historical data, that the app you release should make $5,000 in its lifetime, then you’re in a good position to start hiring virtual assistants and/or developers.

If you’re not there yet, don’t jump the gun, or you’ll likely start scaling something that is inefficient, not optimized, or worse, not profitable.

The same principle applies to building your own project from scratch. The timing is critical: you should only build your own custom app if you’ve already proven with your own money making apps, that you have a huge chance of success. If you haven’t reached that point, then your risk goes way up, your costs will be high, and you’ll be following in my original footsteps, which I’m hoping you’ll avoid.

However, when you reach that point where you consistently make money producing apps and you’re ready to develop from scratch, I have some helpful tips to keep your costs lower:

  • Wireframe your app – Wireframing is the process of laying out the user’s experience: where the buttons located, what screens come up if the user clicks on those buttons, etc. This is a long, difficult process, but will save you time and money long-term
  • Document every possible feature – I can’t stress this enough. Developers will mark up the price for additions and changes, so you need to make sure you’ve clearly established every single feature that the app will have up front (in-app purchases and how many, ads and how many and where they are located, “rate my app” functionality, integrating analytics… everything)
  • Set a budget – Clearly communicate your budget to the developer so that you don’t spend beyond that number. Pay per project instead of by the hour
  • Try to build an app after a new iOS version is released – If you release an app just before a big Apple change, like a new iPhone release, you might need to make a lot of updates. App updates will cost you more because as mentioned before, developers know you’re stuck with them at this point (hiring a new developer to work on someone else’s code can be a nightmare)
  • Test it over and over – You can’t count on the developer to catch his own bugs
  • Find out the “warranty” – For how long will the developer fix bugs that are missed? Will the developer update the code if Apple changes something?

If this sounds complicated, that’s because it is, and this is why I don’t recommend building apps from scratch until you’ve reached that level of expertise. However, if you’re at this stage, start simpler because this can be a very long and drawn out process and you’ll get better at wireframing, communicating, and testing with time.

Furthermore, you want to properly vet your developer before giving them a big project.

Follow Warren Buffett’s Advice

“Rule #1 – Don’t lose money. Rule #2 – Don’t forget Rule #1” – Warren Buffett

When it comes to apps, if you treat them as the investments they are, you’ll quickly see that diversification, along with lowering costs and improving revenues, is the path to success. The quickest route to failure is by investing all your money into one (risky) project.

Feel free to comment your love & hate regarding this process, and you can reach out to me directly at MoneyFromApps.com or ask questions in our Q&A, where we guarantee a personal response. Best of luck with your app ventures!

-Justin

 

Justin Malik, MBA, left his full-time job to pursue app development in April 2013 and has since launched over 60 apps in the App Store and is quickly approaching a million downloads. When not developing apps, he is blogging about the process and showing his own results on MoneyFromApps.com, creating tutorials & courses about app development, and listening to podcasts.

How to Make An App
 

COMMENTS

  • Justin Malik Justin Malik December 5, 2014

    Thanks for letting me take part in your blog, Carter. You know I’ve been a reader for years and I’m stoked to be a part of it.

  • Carter Thomas Carter Thomas December 5, 2014

    @Justin – BOOM!

  • Simon December 6, 2014

    Boom indeed. Awesome article Justin, bang on.

  • Shahid Mahmood December 6, 2014

    A great article for new App developers given the current dynamics of the development business. I did some research as I am also planning to dive into App development (using Unity3D) and your thoughts are 100% aligned with the successful lean startups.

  • Jub December 6, 2014

    Great post Justin! Wish I had seen this a few months ago 🙂

  • Ehsan December 6, 2014

    awesome article

  • Matt December 6, 2014

    Thanks for sharing all your insights! I cannot stress enough that your approach works. From my own experience : first app, built from scratch. Crash, lost all money invested. Second app : a reskin (I discovered Carter’s work!). It crashed but I lost a fraction (10%) of the previous lost. Third app, a reskin again, cheaper than the previous one. Result : doubled the money and built a sufficient user base to work on an update. Keeping costs down is crucial. Second thing that you can’t set aside : good graphics. Graphic level has improved a lot. If your graphics are cheap, no chance you’ll interest a prospect…

  • John Wilson January 22, 2015

    Great article on here.I love to reading this post.very. That is very helpful for me thanks

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