The 5 Second App MBA

Written by Reinder de Vries on July 21 2018 in App Business

The 5 Second App MBA

Why pay $200k for an MBA program when you can learn the same in this 5 second video? Let’s talk about the App MBA.

  1. The App Store Is Dead
  2. The App MBA
  3. Long Live The App Store
  4. Further Reading

The App Store Is Dead

According to research from 2016, more than half of the App Store’s independent app developers are living below the “poverty line” of $500 USD in revenue per month. Studies from 2014 and 2015 show that only 24% of indie developers make between $1k and $10k a month.

When the App Store launched, in 2008, its roads were paved with gold. Anyone smart enough to make an app found themselves with plenty of app downloads. If you monetized your app, an influx of new users would almost guarantee you made money with your app.

These days, smartphone users install fewer new apps, use fewer apps on average, and spend more time on their smartphones. You could argue that apps have gone mainstream, when we spend more time with household names and are less open to trying out new apps.

I think something else happened, too. The App Store’s early days were a goldrush, and that idea stuck with developers. They aren’t quick to change, so many developers these days will still build an app in the hope that people will download their app.

“If you build it, they will come”
— Field of Dreams (1989)

Is that true? Developers take the above quote too literally. If you believe in it, they will come. And if you work hard, and take action every day. That baseball field won’t build itself!

Take a marketing-first approach. Find your audience and connect with them, before you build your app. That’s what Bear app does, and they’re awesome.

So, what’s the key take-away here? Treat your app as a business.

The App MBA

What’s a business? That’s where the App MBA comes in.

A successful app business…

  • provides value
  • that app users want or need
  • at a price they’re willing to pay
  • in a way that satisfies expectations
  • at a level that’s sufficient to continue operations

(Adapted from The Personal MBA by Josh Kaufman)

It’s obvious that an app business needs to provide value. For many apps, that’s simply solving a problem. A currency converter app converts currencies. A game is entertaining. A note app takes and saves notes. A dictation app sends your audio recordings to a transcriptionist. A to-do list app manages to-do’s.

Benefits are often more important than features. Is it an MP3 player with 1 GB of storage or is it “1000 songs in your pocket”? Do you need 1/4 inch drill bits or 1/4 inch holes? Do people go to the best restaurant in the world, the three-Michelin-star Osteria Francescana from Massimo Bottura, because they’re hungry? Think about what your app means to people. When in doubt, help people solve a challenge they are facing right now.

People often mistake the price of a product for what it cost to make. The materials of the iPhone X cost $370, yet its retail price is $999. Is the other $629 just for the Apple logo and design? No! People gladly pay $999 for a smartphone, because it allows them to tell a story to themselves about who they are. The price is a signal that fits that story. A $370 iPhone X is simply not the same as a $999 iPhone X.

Delighting users with your app, instead of merely satisfying their expectations, is more important than ever. Design matters, and so does UI/UX. If you’re not convinced yet, read Don’t Make Me Think by Steve Krug. It’s an app developers job to make decisions on behalf of the people she seeks to serve. It’s this work that makes an app appealing, not the app itself.

And of course, the most important aspect of a business is keeping the ability to operate it at a level that’s worthwhile. That simply means that you need to make enough money to remain operational, and ideally a lot more.

This is where the $500/month developers, and those far below it, make the most mistakes. Did they validate their app ideas? Did they take a marketing-first approach? Do they talk with their users on a day-to-day basis? Are they selfish or empathetic? Are they making their app grow with the user, or are they trying to get as much people as possible to download their app?

If you can’t keep building your app, it’s because you didn’t treat it as a business.

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Long Live The App Store

In 2016 I argued that the App Store is dead. What’s closer to the truth, is that the App Store is changing. The App Store has lost much of its early glint, and it’s just a marketplace now.

That doesn’t mean it’s dead. The app economy has grown far beyond the App Store itself. This growth means opportunity – just not the easy opportunity you might have hoped for.

Building an app is simpler than ever, because you’ve got proven tools and technology at your disposal. And it’s cheap! Publishing an app costs $99 a year, and serverless back-ends are either free or affordable at $20/month. The cost of development is manageable, ranging from $5k to $25k to build a basic Minimum Viable Product (MVP), or you learn how to code and build it yourself.

In 2017 the App Store took a curated content approach, as it highlights apps with editorials. App publishers have a few more tools to reach audiences, like Search Ads. The Cost per Install for app advertisements is still growing, which means that publishers can afford to pay a higher price to acquire customers.

And now that the App Store has matured, and has become an accepted distribution channel to make change happen, you’ve got a dozen marketing strategies at your disposal.

What about lean business validation? What about creating a community, and launching your app specifically with and for those people? What about finding the smallest possible market instead of the biggest, and growing your impact with 1, 10 or 100 customers?

The creative app developer has her work cut out for her. Long live the App Store!

Further Reading

You now know the five basic tenets of the App MBA, and why they matter. So, what’s it going to be: a $500/month app or a product that makes an impact? It’s up to you. The App Store’s barrier-to-entry is lower than ever and there’s plenty of opportunity in the marketplace.

Want to learn more? Check out these resources:

Reinder de Vries

Reinder de Vries

Reinder de Vries is a professional iOS developer. He teaches app developers how to build their own apps at LearnAppMaking.com. Since 2009 he has developed a few dozen apps for iOS, worked for global brands and lead development at several startups. When he’s not coding, he enjoys strong espresso and traveling.