Mobile apps are an enticing point of entry for aspiring entrepreneurs. The business model for an app seems relatively straightforward, and there’s so much room for new ideas that it seems like anyone with a promising brainstorming session could eventually build an app worth millions. Looking at contemporary apps, it’s no surprise why this is such a common thought; Uber, for example, has more than 100 million monthly active users as of 2018, and is a multi-billion dollar company, potentially valued at more than a hundred billion dollars. Uber’s stats are mind-bending – in Q2 2020 alone, Uber generated $10B in gross bookings across Uber Eats and Uber Rides.It doesn’t take much effort to find stories of other breakout app developers, who sold their ideas for millions to hundreds of millions of dollars.
So is it really possible to make a fortune by developing your own app?
The Ingredients for Success
Let’s take a look at what it takes to be massively successful in the app world. We’re not talking about scraping by with a reasonable profit here; we’re talking about building an app that could make you millions, or even billions of dollars.
You’ll need these factors at a minimum:
- A truly novel idea. You won’t get rich by copying an existing competitor, or treading on familiar ground. You’ll either need to introduce something the world has never seen before, or offer a version of an existing service that’s indisputably better. The latter is hard to pull off, since you’ll likely be competing with a company that already has access to practically infinite resources.
- A clear path to monetization. There are many app monetization strategies to choose from, but they may work better on paper than they do in real life. For example, you could offer in-app purchases, but if no one wants to buy them, you won’t be able to generate revenue. You could use ads to supplement your income, but if those ads are too intrusive or annoying, your users won’t tolerate them.
- Flawless functionality. Ideally, you’ll have your app built by a custom mobile app development agency, which will ensure your app is as polished and functional as possible before it hits the market. If users don’t understand how your app works, if they encounter bugs, or if certain features are inaccessible, they’ll uninstall your app and never look back—no matter how groundbreaking the concept is.
- The ability to scale. Assuming you can make a few dollars or more from each user, the real secret to building wealth from an app is scaling that app up. Instead of reaching thousands of users, you’ll need to reach millions, but making that jump is difficult even for truly brilliant ideas. You’ll need to rely on a marketing and advertising strategy, consistently, while reaching out to new demographics and retaining your existing audience. That’s a difficult juggling act to maintain, especially as you reach new heights.
- Ongoing upgrades and new features. You also need to support your app with a constant stream of new features and upgrades. The new features and expanded functionality will reward your most loyal users, keeping them interested enough to use your app consistently, while simultaneously giving new users even more of a reason to join. Plus, the new updates will give you the opportunity to improve security, minimizing the risk of a brand reputation-tarnishing data breach.
Understanding Failure Rates
After reading these requirements for long-term financial success, you may believe you can succeed in each of these areas. However, the practical execution of these requirements is trickier than you may initially think. According to Gartner, only 1 in every 10,000 mobile apps will become financially successful. In other words, you’ll need to outcompete 9,999 other apps like yours to have a shot at becoming financially successful.
That’s not necessarily impossible; after all, many apps are created on a whim or on a minuscule budget, so it makes sense that they would naturally die out. But you need to understand why the failure rate is so high; apps are expensive to build and maintain, competition is plentiful, tech issues can break even a brilliant concept, and cash flow can stop you from scaling effectively.
The Bottom Line
So is it possible to make your fortune by developing a custom mobile app? The short answer is yes. If you start with a thoroughly researched business plan and you’re willing to invest heavily in your idea, there’s a chance that your efforts will be rewarded. Even if you’re able to generate a profit from your app, you may consider yourself a success.
The more accurate answer is that mobile app development is complicated, competition is thick, and failure rates are incredibly high. If you’re serious about building wealth with an app, you’ll have to make sacrifices and invest serious effort to make it happen.
