How I went from idea to profit in under 24 hours
giantrobotbattle.com
giantrobotbattle.com
Can I strongly, strongly, strongly suggest that you rethink the pricing and value proposition here? You're chasing away good clients because anyone who has ever done mobile or programming thinks that custom development offered for $99 implies not-great-things about your programming savvy or likelihood of following through on this deal. The "wantrapreneurs" (hate that word) you appear to be targeting will disproportionately have wildly inaccurate expectations of what you're selling for $99, because you appear to be promising them the fantasy of having their business come from idea to actual fruition at the cost of $99.
I am having difficulty finding strong enough language to communicate the unwiseness of this business model vis-a-vis accurate worries like "If you’re not careful, you may end up spending an exorbitant amount of hours on a project, driving your hourly rate into the basement." All the words I'm reaching for seem hostile and yet they do not nearly capture the scope of how bad of a decision this is.
I think this could scale well too if you find decent, dependable developers that want to make a quick buck here and there...
If you can pull together a group of designers and developers and provide the hosting and make the ever-so-painful submission process painless, you are basically creating an app-as-a-service business where the $99 prototype is the loss leader that gets you your customer base.
I'd be fascinated to see what kind of programming you'd get from places like Mechanical Turk. Has anyone done a $2 FizzBuzz request, and then compared all the resulting code?
There might be a good business model here, but I'm pretty sure it isn't going to involve these $99 app buyers suddenly turning into worthwhile consulting leads. My guess: In the best case scenario, this process can be entirely automated and take up no time for anyone.
But it is going to get huge. Think about web developers in 1997. They could charge a premium because there were few of them and few out of the box options (ie ugly template websites where you pay $50 for a full ecommerce site, 99designs, etc.).
Starting out doing consulting means you get to know a part of the market that most people are too snobby to touch (the whole "talking to your customers" thing) - though they are just as legitimate a customer segment as the people who will pay the egregious rates for custom.
(I once had a client whom I'd given a ~50% discount. Upon completion of the contract, he declared that he'd only pay me half of my already halved invoice. If this sounds like fun to anybody out there, by all means, pursue $99 app customers.)
If that's what he's going for, then it's workable, and I agree with you, it's a good market to target. But that's rather different from creating custom prototypes for $99.
The problem comes here: "guide you on submitting it to the app store." Good luck getting that to be scalable, easy, or worth your time/effort. I've run clients through this process. I've gone through it myself many times. It is tedious, complicated, and full of technical jargon. If someone could simplify the process so that a client can set that up in under 1 hour - I will subscribe to that service.
On second thought, maybe I should pay him the $99 to run my clients through the sign up process...
So you don't get to claim any profit until you complete the work you were paid to do.
How do you plan on finishing the apps fast enough to consider this a win?
To me this is the opposite of a good side project. You want your projects to generate passive income, not income that requires a non-trivial amount of work to recognize. If you can write apps, you should write apps yourself and generate ad revenue or sale revenue.
You should definitely reconsider this idea before you have oversold yourself to the point of never being able to meet your responsibilities.
As I mentioned in the post, I want to learn more about making money: what motivates people, what can I sell my labor/ideas for, how to make conversions, etc. It's definitely something I think I can pivot on later once I've gotten enough attention and traffic. Alternatively, maybe I'll figure out how to optimize the workflow.
You're right, it definitely has a scaling problem. :)
Lot's of people spend upwards to $99 for a startup weekend/hackathon to create apps over the weekend for nothing more than a chance at prizes and fun. Why not sell roughly 4 hours of my time for $99?
My only strong suggestion is to only take on 3-4 of these projects before completing them 100%, then doing a complete retrospective assessment of how it went. Keep everyone else in a queue. Do not accept money from everyone.
Maybe you'll hit a formula for "local business news feed & map view to locations for $99" where you can put out these apps in 1/2 an hour instead of 4.
Correct. For anyone who's rusty on their financial accounting and interested:
Assets - Liabilities ≡ Stockholder Equity
This is the fundamental identity in financial accounting, and most financial statements are really just different ways of breaking this identity down. Usually it's written as A ≡ L + SE, but I find A - L ≡ SE to be easier to explain.
If you receive a cash pre-payment, you record an increase in the assets, but you also record an increase in 'unearned revenues' - a liability account. Your profit is, essentially, the difference in stockholder equity from one period to the next, so you've had no profit or loss so far (as far as the books are concerned, you're right back where you started).
You also record all costs associated with the revenue in the same period as the revenue payment. This is separate from the 'unearned revenue' liability account. That prevents people from boosting their bottom line in a given period by getting a lot of pre-payments, without recording all of the costs that will eventually be incurred by following through on the service itself. (And the prepayment creates an obligation to follow through, which is a liability).
Once you perform the task, you've earned the revenue, so the unearned revenue gets transferred to an equity account. Then you've earned a profit, which is the difference between your cash received (equal to now-earned revenue) and the costs associated with performing the job.
So if you've already incurred the costs but have not yet followed through on the service itself, you're actually making a loss on paper so far, because you've earned $0 in revenue, even if you have the cash on hand.
(This is highly oversimplified, just in case there are any accountants on HN, but I figure any people who missed the chance to take Financial Accounting 101 may appreciate understanding how some of this works. Even if you hire someone else to do the finances of your startup for you, it really helps to have an idea of why two actions that have the same 'real' outcome can have very different effects on your financial health on paper!)
(that said, good post. not enough people think about A=L+SE when they do business)
You do bring up a good point about trust and validation, especially online. Freelancers have to deal with this all of the time when we ask for money up front for a job. Trust is everything in business.
Anyway this is a nice project and i really hope you or someone else will prove my calculations wrong! Good luck ;)
However, putting aside accounting stuff, I do not understand what you are trying to achieve? What are your use cases?
There are apps for prototyping (Balsamiq), there are DIY browser based web apps for getting one's app in the AppStore (AppMkr, etc)[with some ads, ya, but that's prototype, correct?].
You production process is not automated and does not scale.
So, what's the point?
The income isn't optimized (yet) but it's a start.
What would be interesting, as an experiment, would be to see if there is a way to build a larger app from a bunch of $99 app legos.
Break your app down to a range of small blocks that will all link together.
Buy out each block as you go and have money.
Maybe there are larger blocks available. Say - proof of UX concept for 99, core functions for 500, 99 additional change/feature, etc...
On that note, how does the app release work. Do you leave the client up to their own devices to submit the app? Do you provide them with all the assets upon completion(tar of code, etc)?
Every customer gets an archive of all assets once development is complete.
Working on products that nobody wants is the kiss of death for many projects-by actually finding customers, you've greatly reduced that risk.
That is still dirt cheap for anyone who wants to get an app made.
You'll do half the work for the same no eyes.
Like I mentioned, a lot of this is trial and error, but we all have to start somewhere.