Some Thoughts on Mobile Application Business Plans

Mobile developers are struggling to determine the appropriate business plans for their applications.

Over the past few weeks, we've been talking to a lot of mobile business professionals--some veterans of the mobile marketplace and many just getting started. With easy and accessible mobile platforms like Android, writing a mobile application is often the easy part, but monetizing your application can be a real challenge. We're going to be talking a lot about different mobile application business strategies this month, but we thought we'd kick this topic off with a few high level thoughts. With so many new players in this field, we're seeing many developers and development companies struggle to figure out how to make money with applications. Choose the right strategy for your application and business. Choosing the right business strategy can be a challenge in any business. In the mobile marketplace, it's essential to have a clear picture of how you're going to make money from your application. Of course, this can be the hard part. This is especially important when you’re a team of one or two, with no business background. Try to settle on a strategy that most suits your application (mass-market game with heavy social marketing, vertical market niche app with targeted premium users, etc.) Your business strategy (and business plan) also needs to jive with the amount of time and resources you’re willing to devote to the project. There’s little point in spending time, effort, and money mass marketing a vertical market application and there’s little reason to build premium specialty features into a mass market application. Lastly, make sure your pricing plan works with your business model. Mass market applications are often priced cheaper in hopes of higher volume. Vertical market applications are often priced higher, but provide comprehensive feature sets for their target audience. Focus on one specific business strategy to start. Don’t try to please everyone. We see a lot of fledgling developers try to incorporate many different business strategies simultaneously in hopes of reaching the maximum number of users (and thus make the maximum amount of money, right? Wrong!). This can be a huge waste of energy and resources--especially in the short term. The resulting application often has a mishmash of features (trying to satisfy everyone at the same time) and provides a mediocre experience for all users. It also makes it nearly impossible to price the application appropriately. Instead, try to focus on one strategy and do it well. Once you've got a good thing going, consider how to grow your business or application from there by adding other types of users or even different versions of your application. Avoid using the wrong business strategy and adapt as needed. One of the problems right now is that for many, there's not a clear path to success. Instead, you’ve got people trying everything. This is frustrating for developers (who want to make money on their apps) and especially for users (who are often willing to pay, but only if they get something of value). There’s little method to the madness of how applications in a given store are being priced. In any given category, you’ll find a bunch of free apps, some cheap ones, some moderately priced ones, plus a couple really "expensive" ones. This would be acceptable if users could determine WHY applications are priced a certain way. Unfortunately, the way that many current application stores, such as Android Market, are functioning now, the features of an application often bear little impact on the pricing of the application. Many applications are priced incorrectly. Some apps where just written and thrown up onto the store and left there to see how they do. Choosing the wrong business strategy ends up hurting everyone-developers and users alike. Users don't trust the pricing schemes or the market to help determine what to buy. A badly priced application in a given category of a store causes market disruption (sometimes planned, but more often unplanned). This is yet another challenge developers need to overcome. Unfortunately, you’ve got to work with the market and adapt. Pay attention to how your application fits into the broader marketplace and adapt as needed. To summarize: Develop a business strategy that’s right for you and your app. Choose only one business strategy and do it well. Don’t choose the wrong business strategy, and if you find you chose wrong one anyway, change! Next Up: Free application business strategies

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