Are you breaking even on your mobile app?

About 60-65% of developers are not breaking even with their mobile apps. Congratulations if you are!  [Editor:  About 60% of mobile developers are not breaking even – see this PCMag article and app-promo.com infographic. ]

What is “breaking even”? That depends upon whether you are expecting to see money for your time, or not. You might be a first time app developer not expecting to make money. You might be donating your time for a cause, or engaging a particular app as a “labor of love”. In these cases, it’s reasonable to not expect money for your time.

Otherwise, you are likely expecting to at least meet the costs of developing an app. Understand, too, that as a business, depending upon your countries and laws, your business expenses are deducted from your earnings. Properly managing your expenses can save on your taxes. Even if you are not engaging app development as a business, it probably does have an impact upon your cost of living.

All of the following are expenses:

  • Cost of your computers and smart phones
  • Cost of Internet Service Provider and mobile subscription plans
  • Office Rent and if you work from home, you may be able to assign proportionate use.
  • Office materials not part of products or services sold
  • Utilities (electricity, water, garbage disposal, etc.)
  • Insurance (apartment/home/office/health/business vehicles)
  • Administrative fees and registrations required to do business
  • Possible to include educational expenses
  • Business travel and entertainment
  • Advertising and marketing costs

If you goal is to make a profit on your mobile app, these items and probably more (minus your time) can be used to help define your breakeven point.

If you do plan to make a profit, you do want to include your time. That is especially the case if you have no other form of revenue.  The same applies to any employees. Cost of labor is likely to be your #1 expense when it comes to mobile app development.

Wages and salary are significantly influenced by the country, sometimes the state/province, and even the city or neighborhood, in which you live. A programmer in New York City might be earning $100 an hour while the same developer in Ukraine might make $8-10 an hour.

As your own boss, you get to set your own wage/salary expectations. The only question is meeting them. Monthly wage is probably easiest to start with, as you know your monthly expenses – you want to recover those expenses and get ahead some.

The idea is that as long as you make $x per month, you can do what you want to do, indefinitely, for as long as you want. That’s an awesome position to be in. It beats having to do a job you detest, forever. It passes the “Hot Fudge Sundae or Hot Poker in the Eye” test, hands down.

Any extra money you make should stay in your business account or remain allocated to your business. Handling your extra “business” money is a completely separate topic.

Adding your real business expenses with your expected (reasonable) salary provides you a real breakeven point to work with. It provides you the basis of comparing and analyzing your prospects for success with a specific app.

There are a few points to conclude with:

  1. You should try to never be in a position to where you are reliant upon one idea for a mobile app. You want to have many possible projects on the drawing board. You want to evaluate all of them and assess which of them has the greatest potential to offer a return on your investment.
  2. Your app is an investment; the only question is how well it will perform.
  3. The value for your time considers what you would likely make in a comparable job as an employee in another company. The difference between how much you would have made as an employee and how much revenue your app pulls in is one standard for evaluating the return on your investment.

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Project Manager at the Opera Mobile Store providing Sales-Marketing support. Content development and research.

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