$80,000 a Month in App Sales by Outsourcing Everything
mixergy.com
mixergy.com
Let's assume an iphone app gets CPM of about $1 [1,2]
So if their first app grossed $100k, that means about 100M impressions. That sounds insanely high to me - 100 impressions each for 1M users? 10 impressions for 10M users?
When I then see that they're trying to sell books for $99 a pop so you can cash in on their winning techniques [3], it rings of late-night infomercials telling me how to get rich buying foreclosed homes.
I don't have hard numbers, but my impression is that @tferriss took the same approach - making the bulk of his money off of book sales (and his prior supplements business), pitching virtual assistant techniques that never would have made that kind of money for him.
So the real 4-hour work week strategy they're copying is to give the impression of success with little effort, and then sell people books detailing your special technique.
[1] http://techcrunch.com/2009/06/24/greystripe-ups-the-ante-in-the-iphone-ad-network-wars-launches-guaranteed-cpm-program/
[2] http://blog.jwegener.com/2009/07/26/debunking-average-iphone-cpm-ad-rates/
[3] http://www.freetheapps.com/create-iphone-apps/?hop=tdroneThey have ~2M daily users and 47M installs, generating 600M monthly impressions. That lines up pretty well with my estimate of about $1 CPM.
My already very low view of Andrew Warner just got even lower. slimy get-rich-quick guys give me the shivers.
It seems to me he provides a great resource to the tech entrepreneurship community in Mixergy and hardly deserves to be called a 'slimy get-rich-quick' guy.
If Andrew can be accused of anything, it is for writing a sloppy puff-piece and not submitting these fantasy claims to any scrutiny.
Overall I think he's a great interviewer.
When I interview someone who wasn't referred by someone I know or when I'm unsure of the numbers before an interview, I often ask them to log into their affiliate or paypal or bank account to show me activity using Skype's desktop share. Or I ask for their accountant to confirm their numbers. Or I ask to see their tax returns. I always keep what I see private.
In this case, I didn't need to do that because: a) $80k per month for iPhone makers isn't shocking -- as other have said in the comments -- b) anyone who checks out the app store on a regular basis will recognize the apps these guys made because they're often the most popular in their categories. You can check on this right now, and c) the big part of this story was that they outsourced everything and elance confirmed that.
Finally, I can't be 100% accurate with every interview I do -- not even close. I count on readers to point out when I get my data wrong and when I let my interviewee get away with lying.
I don't think that's the case here. But when it comes up, say something.
I respect readers' opinions and feedback. Anyone is welcome to call me "slimy," but there's no need to do that to get my attention.
My opinion of you (already low) dropped through association. I understand you're trying to keep up the pace, but sometimes the right thing to do is give up quantity for quality.
He made his money from this, and busted his butt to build that business.
4 hour work week is about how he was able to continue to live off that business, while devoting only 4 hours per week to it. It was an alternative path to selling it off or continuing to burn himself out as a hands on manager. There's also a lot in there of various things he tried and failed.
Overall, it's similar to the YCombinator ideal of busting your butt while you're young to solve the "money problem" once and for all. 4 hour work week is a different approach to the same goal.
Wisdom from my dad.
My inner entrepreneur says "Wow, great job guys! I wish you every success".
My inner software developer winces, and fears, both professionally and personally, that the ever-growing number of such low-quality apps will eventually make it pointless for developers to invest in creating a ConvertBot or Instagram.
(FWIW I currently make $15k a month from sales of apps $1.99 or higher)
I just wanted to bring up a point about free-app/knock-off vs. paid quality app.
I would draw a parallel with the fashion industry. Louis Vuitton, for example, will never go out of business because of Chinese knock-offs. Why? because the person who buys the knock off/cheaper product is not their target customer.
Same I think is true with iPhone/iPad apps. Those users who only search for free apps and put up with disruptive ads (let alone click on those ads) are not the target audience of a premium application maker.
Where the cheaper app maker has to churn out dozens of products to make decent revenue, a single app maker who focuses on quality and sustainable business model can really build a meaningful business in the App Store.
I love free competitors. They make excellent places to place ads. ("Want to try a solution for this that doesn't suck?")
- You're conflating a medium (the web) with an action (selling). An excess of crappy websites do not compete with a subscription to Dropbox for example, and there are not hundreds of Basecamp alternatives. A more accurate phrasing for your analogy would be "... made it pointless to charge for access to higher quality webpages". And I would say that yes, there are few examples of pay-walled webpages being sustainable businesses.
- Placing ads is great, providing that a) you can accurately target competitor products and b) the sales you gain are greater than your per-user cost of acquisition. If you have experience of making this work in the mobile space it'd be great if you would share.
I don't have any experience with mobile. Anecdotally, the CPM rates I've heard for mobile make customer acquisition seem prohibitively expensive for cheap apps, but an explosion of CPM inventory from a wave of free applications lacking in quality means that prices must come down eventually. Increase in supply tends to decrease prices, just like Demand Media exerts a downward influence on my CPAs (while shifting more of my spend away from quality sites and to Demand Media outlets).
Gimp, OpenOffice, and Linux didn't hinder the popularity one iota of Photshop, MS Office, and Windows (or OS/X) respectively. In fact, the free stuff augments the consumer need for high(er?)-quality alternatives to the free stuff.
That said, I don't think Dash of Color from FreeTheApps even dented Color Splash, which has been cemented in the top 20 overall paid apps for as long as it's been released. Nor has their FilterFX Free app displaced Hipstamatic.
There is _absolutely_ room for low and high quality apps in the App store, as there is room for quality software applications and repackaged GPL apps ported to Windows sold to people who don't know it's available free. Or, for that matter, the Big Mac and the $25 Kobe beef burger.
I just finished some iOS training and am working on my first paid app. What would you say is the key to getting where you are? Apps with true utility–or something else?
1) Create one app to throw-away - something that's simple, useful to you, and which you are confident you can create. Don't worry about there being hundreds of similar apps. This is your Learner app. Get it together in a few weeks and put it on the app store for $1-$2. Make sure you have some "please leave a review / send email" link that makes it a no-brainer for people to give you feedback. Read them all, but learn to distinguish between genuinely useful suggestions, and comments from people who feel your app really needs their pet feature.
2) Find a need that you think people would pay $3-$5 for, preferably a need that you yourself have, and work on that app using everything you learnt in #1. Get something basic but polished out, then iterate.
General tips:
- Polish is more important than features. - Ensure you get 6 friends to buy & rate your app (5-6 is the minimum you need for a visible rating). - Launch at $1 for a week, and cut the price to $1 for a week for every update. It does make a difference IME. - Read the descriptions of top apps and see how they sell themselves. - Read the reviews of apps similar to yours and see what people are missing. - Make it easy for people to send in-app email for support questions. Be the best support person they've encountered. Happy users recommend your app and leave very nice reviews (particularly if you ask for the latter after helping them).
I see a lot of apps cutting their price to $0 for a few days. Does this technique work? What are the advantages of doing this?
On a similar note, I believe Apple's charts may now be weighted to take price into account, at least in some form. I occasionally play around with app prices to see how sales/revenue/in-app purchases change, and last week I upped the price of one app from $1.99 to $2.99. Sales dropped from ~400 to ~250, but my chart placing was virtually unchanged (I think I dropped once place). I don't believe the ranking is based on sales over a period of days, though it may be a factor, since my ranking does increase/decrease with normal sales fluctuations.
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Most of us here could easily make a $200k consulting a year.
Does it make you happy?
No.
Would making shite apps and essentially scamming people make most of the people here happy?
No.
You gotta remember that the kind of person who does this kind of shit is basically a bit of a social pariah, a social retard. They're no different from the internet 'marketers' or the online pharmacies or any of that crap.
They don't care a bit about supplying shit and calling it gold.
To me there's not even a moment's thought about this kind of stuff, I have no respect for people making crap like this, only pity. To waste your life conning other people is a tragedy, not a triumph.
Your post sounds like nothing more than sour grapes.
It's just not in me. It's not sour grapes, it's just utter incomprehension on why anyone would spend their life exploiting others. I just don't understand the motivation behind it.
I actually do not think it's a perfectly valid way of life, I think it's evil and sociopathic. But that's my opinion and you have yours.
Happiness is different for everybody.
Exploiting what exactly?
And, what makes you think they aren't doing something they care about? They are attacking niches within the app store with extreme prejudice. And, that in itself is allowing them to do whatever they feel like doing. The ultimate goal of building a business is to gain the resources to help you manage your _time_ the way you see fit, whether that is through philanthropic causes, building lasting businesses in other areas, self-actualization, focusing on the family, or examining the finer things in life. The #1 goal on DHH's and Zuck's and Ballmer's mind-- the double super secret final endzone fat lady singing goal-- is money. Let's _never_ forget that.
And, how is making derivative apps and giving it away to make ad revenue "shite"? It's simply another avenue to success. I guess patio11 should just hang his head in shame for working on "yet another work scheduler app". This line of thinking is just lazy and supremely pompous.
Moreover, how does conducting a very public and financially candid interview merit being called "a social retard?" That's just such a vicious and insulting attack that I can't even begin to see why anyone would upvote it. Pathetic. And, the envy in you is so deep and bile-ridden as to be wading in it.
Also, making cash in order to buy the freedom to do the things that make you happy I believe is righteous.
Further, I fail to see how their actions are "scamming people"? They are creating FREE apps. If the user doesn't like it, they can delete it. It is not as though they are SELLING subpar apps and then giving people the finger when they as for a refund. There is no scam in a value for value transaction and, by downloading a free app, it seems to me they ought to expect them not to be of the highest quality and/or to have ads.
It's the same with online ads, should I just fill my site with mobile phone charging ads because they give me the best CPM or should I put ads there that actually may benefit a user?
Does SEO tend to be black hat (hire people to rate it?) or ad-driven?
For the ones where they didn't, I'd guess (based on nothing but a glance) that they depended on cross-selling to get rank traffic, instead of search to get rank traffic.
It does illustrate that there is still tons of money to be made in the App Store for building the right apps.
(Thanks for posting this interview by the way.)
They do $80k in monthly revenue yet "one of the founders still works a full time job"
That makes no sense...
Extraordinary claims ($80K a month) require extra-ordinary evidence.
They don't even really seem to know what their revenue is like, but their fairly certain about the large size of the numbers... normally, that's the smell of bullshit.
Tom Vu's girlfriend wants to see the proof of these claims.
I wish I asked them about it.
I'd be fascinated to see the financial statements, I bet we never will
Now THAT'S something. We're not even close to that!
It's interesting, however, that the poor quality apparently isn't stopping people from using it. Part of it might be that people don't expect much out of a free app, so if it's broken they just deal with it.
"We get that question a lot. It was kind of concern. So what we usually do in our first bid, in our first description we’re kind of vague. We say, ‘We’re looking for a developer for a simple photography app.’ And from all those people we’ll choose three to five that look kind of trustworthy, seem like they could do the job and then we’ll give them the wireframe bid. So we start off really vague so not everybody sees it. We’ll pick three to five people, we’ll give them the full details and then they’ll give us a more detailed proposal."
It makes sense that they seemed somewhat reserved at certain points of the interview, they don't want to give away too much and make their e-book less useful.
It's time to stop making excuses and realize that there is so much money to be made on this here internets that the best idea is to TRY HARDER.
caveat: Yes, this may be a bit slutty. But I don't know if you noticed this Halloween - slutty is in.
So it's not a scam if you make money off it?
OTOH, this does sound like a get-rich-quick scheme.
That said, they still get A+ in my books for just doing it. That's the biggest differentiator between people who find success and people who don't. Kudos.
If you come across anyone I should interview, email me.
1) Release a bunch of free apps. 2) Take the holiday season - the single month with the highest sales and traffic. 3) Round it up a little bit to get to $80K a month. 4) Find as many people as you can who're willing to believe the story. 5) Don't lie - just let people extrapolate - Say $80K in a month and let people assume that means $80K per month.
Their website is the classic long form sales letter.
Make it long so people get invested. Offer $2600 worth of value for just $300. Then knock another $200 off.
Appeal to the total idiots who think a 'free' ready to go app that is included will start making them $5,000 a day.
Quote examples like iShoot + kitchen table without telling the whole story i.e. the guy's programming experience and the actual number of months spent and the strategy he used.
A fool and his money are soon parted. These two gentleman are taking upon themselves this painful task.
If we set aside ethics it's just a strategy - One guy builds a super valuable product and sell it at high price to smart people who value it.
Another person builds a house of cards and targets people's greed and laziness.
Notice a few things -
1) Their insistence that they spend just 5 hours a week on this. 2) Their focus on showing earnings from a single month - the month in the year that has the most sales. 3) If you were to wish for a easy, no hassle way to make lots of money - You'd dream up exactly what they are claiming. It's absolutely perfect - you don't have to know coding, you need just 5 hours a week, and you'll start making $5,000 a day within 60 days.
We also use transpera and greystripe in some of our apps.
Outsourcing seemed to work great for these guys (good for them!) Is it because the apps were fairly simple, or did they get "lucky" with picking the right developer(s)?
So if you want an employee or permanent contractor then hire one, even from the other end of the world. Most freelancers will be more than happy to have a longer term contract with a fixed income. But you have to pay the bill...
A complex internet service with multiple technologies, web, multiple mobile platforms and your valuable IP is another matter and probably not advisable for outsourcing.
For some reason keeping my itunes up date has been a struggle. Thanks for telling me.