Smartphones rule the modern world. According to the Global Digital 2020 report, more than 4 billion people on the planet have access to the Internet due to affordable smartphones. People prefer to access the Internet from mobile devices, and smartphones generate 67% of all web traffic in the world. This is greater than all other devices combined.
Besides, App Annie, the American analyst company, has published the results of its 2021 research:
- 218 billion mobile app installs, 7% greater than in 2020;
- users spent $143 billion on purchases via smartphones, 20% greater than in the previous year;
- an average user spends 4.2 hours on the Internet via a smartphone, this is also 20% greater than in 2020.
These numbers clearly say: the mobile app market is continuing to grow, and entrepreneurs are making money on it. A business plan for the development of mobile apps will help you explore this market and select an actual niche for your app.
Business Plan vs Business Analysis
In each project, development should be preceded by a planning stage, which consists of at least two stages:
- Business analysis – analyzing the needs of the target audience, collecting app requirements, and determining project goals. This stage should give you the answer to the question – Do users need the app?
- Business plan – estimating the cost of development and launch, defining a monetization strategy, and estimating the return on investment. This stage provides an answer to the question – Is it profitable to build the app?
A business plan typically includes business analysis as part of it. A business plan should also contain the following sections:
- Estimation of terms and development costs for the first version of the app, the so-called “beta version”.
- Estimation of timing and cost of implementing a stable version. Please note that when contractors talk about development timelines, they usually mean the beta version, because neither they nor you know what the stable version will look like. Therefore, feel free to multiply their score by two.
- Marketing plan – how you will promote your app in stores and other channels, such as social media. At this stage, you decide if you focus only on “organic” download growth or plan to use advertising for your app as well.
- Financial plan and evaluation of the investment return period. This part is most important – the fate of the entire project depends on it. Remember that by abandoning an unprofitable project early on, you can save significant financial resources.
5 Steps to Create an Effective Business Plan
Here are the key steps that you need to follow in creating an efficient business plan for your mobile app.
Step 1: Define the platform
First of all, think about the platform for the future app.
Today there are only two main app stores on the mobile market: Google Play (Android) and App Store (iOS). Decide in whose hands you would like to entrust the fate of your app. It’s much easier to do this by answering the following questions:
- Will your app be paid or free (with ads)? Most apps on Google Play are free, and the monetization system involves displaying ads.
- How much revenue do you want to get? As of 2021, the revenue generated by the Apple App Store and Google Play is 2 to 1. Apple offers generous compensation to top developers who create paid quality apps rather than give them away for free. However, statistics show that today Google Play is gaining momentum much faster than its main rival, and is even trying to compete with Apple in terms of profit margins.
- Do you want to fit in or quickly achieve your goals? It’s quite difficult to place an app in the App Store, especially for new developers. If you want to get a serious number of app downloads in a short time, then take a closer look at Android.
Step 2: Analyze the market
The market analysis includes the research of both the target audience and competitors.
Competitor analysis involves collecting information about your competitors and similar apps. There is no need to research all apps in your niche, it’s enough to select three or four market leaders for the analysis. After that, answer the following questions:
- How will my product be better? Write down how your product will outperform the market leaders and what target audience it’s designed for. Prepare a Unique Selling Proposition (USP) for your users. Keep in mind that, inspired by your own idea, you’ll most likely be biased in your assessments, so let other people read your business plan and carefully consider their comments.
- What features will the app include? List all functions that your app can perform and sort them by the frequency of use. Be sure to evaluate whether the market leaders have these functions and whether they are a must.
- What is the purpose of the project? The goal of any project is not just to implement certain functionality. Try to articulate the goal in terms of what emotions it will bring to the user. After all, all mobile games and most mobile apps are purely for the entertainment of users. Additionally, a project goal statement is important so that all of your employees and contractors have a clear focus in their work.
Then you should research the target market. Choose a certain group of consumers to aim your product at. Define this target audience based on demography, habits, lifestyle, and online behavior. This so-called buyer persona is much more than just the profile of one buyer. It is an entire map of the buyer’s actions that reveals a deeper understanding of their decisions. It can be a particular worldview as well as problems and criteria that encourage them to choose exactly you.
To expand your target audience, you should also create a landing page for your app. Make sure that this page includes the app’s name, a list of its functions, promotional videos, etc.
Step 3: Estimate the costs
To estimate the costs correctly, you should decide on functionality that the app should include. The more complex the app, the more expensive it is. User scenarios, the number of screens and states, buttons, fields, the amount of business logic, and the server infrastructure require many hours of development and subsequent testing. After understanding the business logic, you can dive deep into the billing approach and have extensive experience estimating the costs. Here are the most expensive components:
Screens, actions, and data in the app
For each screen, you should choose the optimal arrangement of elements and buttons, think over the business logic, and take care of the user’s convenience. This involves a lot of project resources, from the project manager to the QA specialist.
User interaction begins after they open the app. The user registers, goes through the authorization procedure, creates and edits a personal profile, sets up notifications, and then makes a purchase. It’s possible to implement each of these elements in a different way. If your app needs to have multiple user roles, such as buyer and seller, then you need to think about custom scenarios for everyone. This makes development more expensive.
Using the built-in functions of smartphones
Previously, a mobile phone could make calls, send messages, transmit data via Bluetooth, and take photos. Today, you can use a smartphone to pay for purchases, verify your identity, measure your heart rate, and so on. To create apps with access to these functions of mobile devices, developers use APIs. For such an interface to work correctly with every smartphone, it must be correctly configured and tested. This increases the overall development time and affects the final cost.
Integration with payment systems
It depends on the number of payment methods: by card, by paying with stable coins such as USDT, by using a wallet, via Apple Pay or Google Play, etc. Each additional payment processing method requires more time on implementation and testing.
Typically, designers and developers use Apple and Google guidelines. But sometimes there’s a need for a unique interface design. To create it, you need to do some serious business intelligence and involve the UI and UX design professionals. Animation is another cost item. The more complex and unusual the transition from one interface element to another, the more expensive it is to develop.
Mobile app development for iOS and Android is very different. These platforms use different programming languages and development tools, so programmers with different skills and experience are needed.
It is believed that Android development is easier for beginners, so the cost of Android developers is lower than that of iOS specialists. On average, an IOS developer rate is 15-20% higher than an Android developer rate.
The process for testing an app on each platform is also different. There are many more smartphone models on Android than on iOS. Because of this, testing and debugging take more time, which also increases development costs.
Step 4: Prepare the app for the app stores
Before you upload your app to the app stores, you need to follow certain preparation steps to make sure that it gets to the top. In general, when calculating the position of apps in the top, the following indicators are used:
- The number of installations in the last 2-4 days.
- The total number of installations.
- User ratings and reviews.
- The number of failures.
- The total number of apps uninstalled by users.
- The number of launches and returns on different days.
For search, the following is also important:
- the relevance of the title, description, and keywords to the query;
- the number of installs from the search for this query;
- the conversion from viewing the app page to the install.
To prepare your app for the app store, follow these steps:
- Choose a title. The title will be shown in the general list of apps presented in the store. The potential user will see the title first. It should be easy to remember, not have the same competitors in its category, contain the product features, and be easy to read and write.
- Choose a name. After the download, the user’s device will display a name under the icon. It’s important to think it over carefully and use the limit wisely, as there are only 12 characters.
- Write a description of the app. Developers often put high hopes on the app description and stuff it with keywords. However, if you have a lot of conversions and few downloads, a smart store system will lower you in search results. The description should be as simple as possible for humans, not robots. List the main pros and cons of the app, as well as the needs that it can solve. Tell about the benefits for a potential user, functional features, differences from other apps, and give information about upcoming updates. Mention the rewards, if any – this greatly affects the user’s perception.
- Select a category. This stage is almost as significant as the selection of keywords and the development of icons. Apple has 25 categories, and Google has even more. It’s difficult to select them for your app, and it can take a lot of time. Have you noticed that when you browse through the “Strategy” category, you sometimes find a racing game? Advanced developers use this trick on purpose. If their app contains elements from another category, they place it in a category with less competition, thus increasing the chances of their success. If you cannot decide on a category, analyze the market and competitors and choose a niche with less competition. Make sure that your category corresponds with the essence and meaning of the app.
- Choose the keywords. Apple has a block of keywords that will help you increase queries. Correctly selected keywords will also have a positive impact on the search results. You should not include plural words in keywords if the singular keyword already exists. Also, it is not recommended to write the names of categories, do repetitions, add the word “app”, names of other apps, include someone else’s trademark, insults and obscene language.
- Select the icon. The icon is the first thing that catches the user’s eye. It should be easily recognizable from hundreds of other icons. Keep the icon as simple as possible, avoid unnecessary details.
- Add screenshots. If your app is complex, add some screenshots to the illustrations. Do not overwhelm the screenshots with unnecessary captions and descriptions, display only the key points.
Step 5: Draft the plan for marketing and promotion
It’s crucial that you present your app correctly in the modern competitive mobile market. Basically, here’s what you should consider in your marketing plan:
Collecting good reviews is an integral part of promoting your app in the app stores. To do this, you can offer the first buyers a gift or a discount in exchange for leaving a review, as well as refer to reputable specialized websites and blogs.
The most important thing here is the impeccable quality of your app. It’s crucial to not only correctly write the press release of the app but also choose the date of its launch. This date should not coincide with the release of popular apps or their updates; otherwise, they will get all attention. It’s necessary to coincide the time of release with the launch of your app to the market, the release of a new update, or another key event. This will make the press release interesting.
The next stage in the promotion of your app can be a series of emails to the subscriber base of your app’s website. It’s quite important to create a competent structure, design, and concise text of the newsletter. Here’s a list of some email marketing services you might find useful.
Consider the advertising and marketing budgets in your app’s business plan and see if it’s beneficial. This method is also very costly. Therefore, take into account the following:
- the cost of contact with the user for each media channel,
- the cost of each download of your app,
- the ratio of advertising costs to revenue from the project.
Social media ads will give you at least two advantages:
- users spend over 70% of their time on social media;
- the amount of available user data makes it possible to set up wide targeting.
However, it’s important to set up this targeting correctly and clearly understand the target audience of your product.
Video ads on YouTube
Traditionally, an app ad is shown to YouTube users before watching a content-relevant video in the “Pre-roll” format, 10-15 seconds long.
The first benefit of this channel is that with the help of a promotional video, you can more deeply convey the idea of the app to the target audience, which helps increase conversion.
The second benefit is that you pay exclusively for views. In this case, payment is charged only if the ad has been watched to the end. And the price per impression varies from $0.01 to $0.02.
Learn how to create a complete app marketing strategy in our free 10-day email course.
Over to you
In today’s extremely competitive mobile market, it’s impossible to release an app without a proper business plan. We hope that our article has helped you move in the right direction. Good luck!