Mobile app industry insiders hear pitches for “great app ideas” so often that it’s become a cliché. Friends, acquaintances, strangers at parties — everyone has a million-dollar concept they’re on the verge of turning into reality.
Most of those app ideas don’t go anywhere. Some have already been invented, while others are too far ahead of their time. Many don’t have quite the potential the would-be entrepreneur thinks they do — or maybe the technology just doesn’t exist yet to make their idea happen.
And yet a few of them really do have that special combination of innovation, market appeal, and timing it takes to get funding and even become successful apps. If you think you’ve got what it takes, here’s how to get paid for your hot app ideas.
There are many different ways to make money on apps, but they break down into two basic categories: investors and the app itself. Some options for app monetization include:
- Direct monetization: The app is purchased by the user or paid for with a recurring fee. Depending on the app, the vendor may sell individual downloads to end users, bulk licenses to businesses and/or tiered service levels at different price points.
- The “freemium” model: The app is free to download and install and includes some functionality all users have access to. The user then has the option to pay for upgrades or additional features. This can include in-game items in mobile games, added functionality, software integrations for business apps, extra storage, additional vendor support or customization, and other beneficial features.
- Advertising money: Many apps make their money by displaying advertising. This may be paired with the option to purchase an upgrade that eliminates ads.
- No direct monetization: Some apps are never a profit source, but drive revenue for businesses in other ways, such as increasing sales, earning coverage, or building brand loyalty.
However, developing a successful app usually requires capital. Targeting investors is typically the best way to get paid for app ideas. Not only will it give you more resources to create your app, it also decreases your risk. Even if your app doesn’t ultimately prove commercially successful, you’ll make money and be better positioned to profit from future app ideas. Investment opportunities include:
- Startup accelerators: Accelerators are privately funded businesses that focus on developing business ideas (and the teams behind them), rather than established products.
The accelerator provides startups with seed investment, mentorship and coaching, and investment opportunities over a fixed period in exchange for equity in your company. They’ll help you develop your app idea and business plan, provide opportunities to network with industry leaders and prepare you for a final presentation where you’ll pitch your idea to tech investors.
- Incubators: Business incubators aren’t a new idea, but they’ve gained a much higher profile since the tech boom. Incubators are often funded by non-profits, universities, or other public institutions. They focus on a particular industry or need and provide companies with office space and various types of business services and support.
Incubators are different than accelerators (although the terms are sometimes used interchangeably) in several ways. They don’t exclusively focus on early-stage companies and they aren’t structured around a cohort giving a presentation to investors on a fixed date.
- Angel investors: Angels are individuals or small groups that focus on early stage companies, picking up at the stage of development where startup accelerators end.
Investing in startups is risky, and only a small number will ultimately be successful. But for investors who have an eye for promising startups, the risk comes with high rewards. For entrepreneurs, attracting an angel investor is a great way to get paid for app ideas — and acquire the resources to build a profitable business.
- Venture capitalists: While angel investors use their own money to invest in early startups, venture capitalists operate on a more conservative model. These organizations invest the money of a group of investors in companies that are already somewhat established. VCs can allow small, successful companies to expand rapidly, but they’re not as relevant to entrepreneurs with a new idea looking for initial funding.
- Crowdfunding: You don’t always need an investor with deep pockets to make money on your mobile app idea. If you can attract enough small donors, you can get a great infusion of capital and build your consumer base, before you’ve even gone past the prototyping stage.
Crowdfunding is a great tool for niche technology with dedicated fan bases. The wild success of Oculus VR all started with a Kickstarter. Even though VR wasn’t a mainstream technology at that point, there were enough VR enthusiasts who wanted a high-quality, off-the-shelf product to make a successful launch. Two years later, the company sold for $3 billion.
Refining Your Mobile App Idea
A good idea can come from anywhere, but a marketable idea takes refinement. As an entrepreneur, you should hone your mobile app idea so that it meets four qualifications:
- It fills a niche.
- It can be monetized.
- It’s feasible for you to prototype.
- It appeals to investors.
Filling a Niche: Brainstorming a Mobile App That’s Original Enough
Originality is overrated. Apple didn’t invent the MP3 player, nor the smartphone. Microsoft didn’t come up with the first GUI. Not only did Angry Birds borrow its concept from earlier physics games like Crush the Castle — gamers had been flinging things at structures for decades before we started slinging birds with anger management issues.
A mobile app idea doesn’t have to be the first of its kind, or even the most powerful. But it does have to fill a niche better than any other app. Often, design is what differentiates a successful app from an also-ran and Angry Birds is a good example.
If you’ve ever played Angry Birds, it’s easy to see why it was more successful. The game has a fun, cartoonish look to it that works well with the gameplay. The color palette is vivid, and the shapes of objects (like walls and hills) are easy to distinguish.
In comparison, Crush the Castle looks flat and unpolished. The grey stone and brown wood walls don’t visually pop against the background, and the texture of the rocks and grass seem to highlight the graphical limitations the developers faced more than showing off how they overcame hardware limitations.
And then there are the characters. The round, wide-eyed piggies and fierce little triangular birds are much more distinctive than the generic medieval figures. Even if the games were absolutely identical in gameplay, Angry Birds is just more visually appealing to a typical casual gamer.
Apps aren’t always differentiated by design quality. Other factors like user flow, simplicity, novelty, integration, and branding can differentiate your app and make it more appealing to users and investors. Spend some time looking at your potential competitors and brainstorming ways to make your app more appealing to a particular target audience.
If your competitors provide rich functionality, is there a market for a simpler app with a more intuitive interface? Is there an opportunity to create a more appealing UX, or make different design decisions to appeal to another demographic? Remember, your app doesn’t have to be one of a kind, or even the best — it just has to be the best choice for a particular audience or use case.
Can I Build a Mobile App Prototype?
Prototyping is the most effective way to pitch your ideas to investors. Not only will building a mobile app prototype help bring your idea to life in a way a static wireframe can’t, it will also give you more credibility to investors. You’ll be able to show investors that your idea is fully fleshed out — not just a concept, but a project already on its way to production.
With the right tools, it isn’t hard to build a prototype (check out our article on mobile prototyping fundamentals for more information). You can do it without writing a line of code, or ever taking a design course. What can be more challenging is creating a UX and user flow that’s better than the competition.
You should use a mobile prototyping tool to sketch out and refine your app idea. However, once you have the concept down, it’s time to honestly assess your own skills. If you lack the background, consider hiring a designer to improve your initial prototype by adding in custom graphics, and tweaking the layout and flow as necessary. This will help you make the right impression on discerning investors.
Mobile App Monetization
Monetization doesn’t necessarily mean that your app starts generating a profit overnight. Many apps take months or even years to become profitable. They spend their time and resources expanding their user base, developing new features, and refining their app, before harnessing paid features, in-app purchases, or other monetization schemes to draw a profit.
But if your goal is to make money on your app idea, you still need to know how to get there — and communicate that idea clearly to potential investors.
Do some research into your competitors and how they monetize their apps, as this will show you what expectations consumers have. If competitors are giving their apps away for free and making money on ads, for example, customers may not be willing to pay to download your app or they may expect added functionality to justify the purchase cost. Conversely, if you can offer an app at a lower price point than your competitors, that may provide an edge among consumers — and an appealing angle for investors.
Appealing to Potential App Investors
Different investors have different interests, preferences, and ways of evaluating mobile business ideas. Some tolerate high risk in the hopes of high profits, while others are relatively conservative. Some are looking for a seasoned team with proven experience in the industry, while others are primarily looking for an innovative concept with a sound business plan. You need to research your investors in the same way you’ve researched potential customers and find out what they require to fund your idea.
As Business of Apps points out, building your professional network is key to success. In addition to investors, you’ll want to meet people who work with them, such as startup lawyers, recruiters, and fellow entrepreneurs. Even if you’re not ready to fund or sell your app idea, networking can help you prepare ahead of time.
Just as importantly, spend some time reading up on tech startup funding, through publications like VentureBeat. The more you learn about tech investors and what products they’re funding, the better you’ll be able to target the appropriate investors.
Pitching Your App Idea
When you pitch investors, you’re not just selling your mobile app idea — you’re selling yourself and your team. You need to hand them a clear, well-designed pitch, typically in 10 minutes or less, with no gaps or missing details. Investors need to know:
- The goal of your app proposal.
- What’s unique about your app (and also your team).
- How the app works (at least on a basic level).
- Your target consumers.
- What the competitive landscape is like, and how your app will disrupt it.
- Your marketing plan.
- Your timeframe.
- Your resource requirements (particularly capital).
- Projected profits.
Think of your pitch not as a separate project, but as the goal of the project. As you brainstorm exactly what your app will be, you should be thinking about the above points — remember, it’s not just your app you’re selling, but your whole business plan.
Practice pitching, like you would any other skill. You can try out your whole presentation on friends, explain it to your children, give business contacts a quick elevator pitch or just practice it with your team. Not only will you get more comfortable and gain valuable feedback, but you never know when you’ll run into a valuable contact who might help you secure funding.
If you get turned down (and you probably will the first several times), don’t look at it as a failure but as a learning opportunity. Ask the investors for feedback on your pitch and business plan.
Lastly, watch how potential investors respond. Was there a segment that really seemed to pique their interests? A moment when you lost the room? A question you could have answered better? Take notes, so you can do better. With a lot of tenacity (and a little luck) you’ll woo an investor next time.
Proto.io lets anyone build mobile app prototypes that feel real. No coding or design skills required. Bring your ideas to life quickly! Sign up for a free 15-day trial of Proto.io today and get started on your next mobile app design.
Originally published at blog.proto.io on July 5, 2018.