Buying an App - A Guide to Acquiring a Mobile App Business

Whether you're looking to enter the mobile app business or expand your portfolio, app acquisition provides a shortcut to launching a successful app. In this comprehensive guide, we will explore various aspects of mobile app acquisition and monetization, including pricing considerations, category selection, cost elements, different approaches to buying apps, investment strategies, essential factors to avoid, and the growing trend of app subscriptions.

Content

• Understanding mobile app acquisition and the world of mobile app business.

• The benefits of buying an app compared to developing from scratch

• What to consider when buying an app

• What to consider when assessing subscription app monetization potential

• Different approaches to buying an app

• Post-acquisition strategies for success

Understanding mobile app acquisition and the world of mobile app business

Overview of the mobile app industry and its growth potential

The mobile app industry is thriving and has seamlessly become an inseparable part of our daily routines. Understanding its vast growth potential is crucial when considering app investments. According to Business of Apps, global mobile app and game downloads in 2020 reached an astonishing 143 billion, and experts anticipate this figure to nearly double, reaching nearly 300 billion by 2023. With nearly 7 billion smartphone users worldwide in 2023, it's no wonder that this industry is experiencing an unprecedented surge. The seemingly unstoppable surge in app usage and smartphone ownership leaves no doubt about the bright future awaiting the industry, opening new doors of possibilities to individuals and businesses alike. 

Statistics: the state of today’s mobile app industry and its growth potential 

• Global smartphone users increased by 49.89% in 2017-2022 (source: Statista)

• 7.33Billion mobile phone users in the world today  (source: Statista)

• Global mobile app and game downloads in 2023 are estimated to reach 300 billion (source: Statista)

• By 2026, mobile device users will increase to 7.455 billion (source: Statista)

• 91.21% of people own mobile phones today (source: Statista)

• By 2025, 72% of all internet users will solely use smartphones to access the web (Source: CNBC)

The benefits of buying an app compared to developing from scratch

One of the primary advantages of buying an app compared to developing from scratch is the time and cost savings. Building an app from the ground up is not a walk in the park. It requires significant resources, including time, skilled developers, and financial investment, all of which do not necessarily guarantee a successful launch or a market fit. 

By acquiring an existing app, you can bypass a big part of the lengthy initial development process and dive right into the benefits, such as an existing user base, brand recognition, and revenue streams.

Buying an app also brings the added bonus of market validation. When you acquire an app that has already gained traction in the market, you have the assurance that there is a demand for the features or value it offers. 

Statistics: how much does it cost to build an app from scratch?

Based on estimates by numerous research studies, the total cost of developing a mobile app in 2023 can range from $40,000 to $300,000 and up, depending on the complexity of the app. (source: SPD LOAD)
App development company costs can range from $25 to $200 per hour, depending on factors like location, features, and industry. (source: Clutch)

Statistics: How long does it take to create your own app? 

• Research: 1-2+ weeks

• Idea validation: 1+ week

• Product strategy: 2+weeks

• Prototyping: 1+ week

• Prototype validation: 1+week

• Design: 2-3+ months

• Development: 4-6+ months

• Prepare for launch: 2 weeks - 1+months

(source: Uptech)

What to consider when buying an app

Acquiring an app involves careful consideration and due diligence to ensure a successful investment. Here are essential factors to consider when buying an app.

App performance and metrics

"Measure twice and cut once" – a timeless adage that holds true even in the world of app acquisition.  Before buying an app, it's crucial to assess its performance metrics, like downloads, active users, user retention rates, and revenue. Investigate the app's growth trajectory over time, ensuring a consistent upward trend for future success. There’s more. Consider the existing user base and the vibrant community surrounding the app. Get to know those demographics, engagement levels, and the app's reputation within the community. Take a closer look at the user acquisition and retention strategies implemented by the app's previous owners, and weigh their effectiveness. Why? Because a loyal and engaged user base sets the stage for future growth and monetization. Analyze these metrics to build a strong foundation from the get-go.

Market potential and trends

In the fast-paced world of the app market, you can't rely on today's success for tomorrow's victory. So, it's not just about checking how the app is doing right now, but also taking a good magnifying glass to the market potential and industry trends. Think about the size of the target market, how much competition you're up against, and the potential for growth. Don't forget to uncover the app’s unique selling points and features that give it a leg up on the competition. Additionally, keep your finger on the pulse of the latest trends and user preferences in the ever-changing mobile app scene. That way, you can make smart decisions that'll stand the test of time.

Financial considerations

You need to take a good hard look at all the nitty-gritty financial details such as the app's valuation, revenue streams, and cost structure. Assess where the revenue is coming from—whether it's web or in-app purchases, affiliation, ads, or subscriptions—and identify if they can keep the cash flowing in the long run. Also, get a solid grasp on the expenses on the other side of the balance, such as the operating costs, from development to maintenance to marketing. 

Technology stack and scalability

Take a close look at the app's technology stack, which refers to the combination of programming languages, frameworks, libraries, and tools used to develop the app. Assess the quality of the codebase, including its organization, documentation, and adherence to coding best practices. A well-structured and maintainable codebase is essential for future updates and enhancements.

Consider the app's ability to handle increasing user demand and future growth. Evaluate its performance under heavy load and assess whether it can scale seamlessly to accommodate a growing user base. Additionally, analyze the app's response time, load time, and overall performance to ensure a smooth user experience even during peak usage.

Intellectual property and legal considerations

It is essential to verify that the app can run on proper ownership rights, trademarks, copyrights, and any necessary licenses. A careful assessment of any potential legal risks or ongoing litigation associated with the app is crucial. If needed, seek guidance from legal experts to meticulously examine existing contracts, licenses, or agreements linked to the app. It is of utmost importance to ensure that all legal aspects are appropriately documented and transferred during the acquisition process.

Team and expertise

Evaluate the app's development team and their expertise. Assess their track record, experience, and ability to support the app's growth and development. Consider whether the team will be retained post-acquisition or if you have the necessary resources to manage the app effectively. A strong and capable team can significantly contribute to the app's success after acquisition.

What to consider when assessing subscription app monetization potential

When it comes to acquiring or investing in a subscription app, there are several key factors you want to consider and cross off your list. While each app has its unique characteristics and circumstances, GP Bullhound's Consumer Subscription Software (CSS) framework provides a standard methodology to evaluate its potential for success.

Consumer Subscription Software 2022 Annual report by GP. Bullhound.

When it comes to subscription apps, recurring revenue is the most vital metric that serves as a comprehensive and monetizable indicator of an app's success. To assess the app monetization potential, consider the following components of recurring revenue proposed by GP Bullhound:

• Premium content: A subscription app should offer unique and compelling content that justifies users paying for it. Take into account the quality and exclusivity of the app's content to gauge its potential for generating recurring revenue.

• Proprietary data: The ability to retain and effectively utilize user data within the app is a significant advantage. Apps that can monetize and enhance their content based on proprietary data create a moat that is challenging for competitors to replicate.

• User acquisition: Consider the app's ability to attract and retain users. Evaluate the effectiveness of its user acquisition strategies, such as marketing campaigns, referral programs, or partnerships, to ensure a steady influx of new subscribers.

• Monetization & pricing strategy: Examine the app's approach to monetization and pricing. Assess whether the pricing model aligns with the app's value proposition and target audience. Evaluate the effectiveness of its monetization strategies, such as upselling, cross-selling, or offering premium features.

• Niche user base vs. large total addressable market (TAM): Determine whether the app targets a niche audience or aims for a broader market. While a niche user base can provide focused growth opportunities, a large TAM offers scalability potential. Consider which approach aligns better with your investment goals.

• Churn/retention: Assess the app's ability to retain customers and minimize churn. Evaluate its user engagement strategies, customer support, and ongoing efforts to enhance the user experience. A low churn rate indicates a loyal user base and the potential for long-term recurring revenue.

Learn from an investor what makes an attractive app! Listen to the Subscription Leauge Podcast episode, What venture investors look for in subscription apps with Eric Crowley (GP Bullhound)

Different approaches to buying an app

Whether you're an individual looking for a profitable app or a company searching for investment opportunities, knowing the different avenues to purchase apps is key. So, here's the lowdown on some popular places where you can get your hands on buying apps.

Marketplaces

Marketplaces are popular platforms where apps are bought and sold. These marketplaces can connect app buyers with sellers, allowing for direct transactions. Flippa is a well-known example. Utilizing filters on these marketplaces can help you narrow down the search based on exactly what you are looking for.

Online business marketplaces

Since mobile apps are often treated as businesses, you can find app sellers on various online marketplaces that specialize in selling online businesses or ready-made businesses. By searching for terms like "online business" or "ready-made business," you can discover app listings alongside other business opportunities. Acquire.com is a great example.

App template and unfinished app platforms

For those interested in purchasing app templates or unfinished app projects, platforms like SellMyApp, CodeCanyon, and Codester can be valuable resources. These platforms offer a variety of app templates and partially developed apps that can be customized and completed according to your requirements.

Investment and crowdfunding platforms

Investment and crowdfunding platforms provide unique opportunities for individuals and companies to invest in apps and startups to support their development to be part of their growth journey. These platforms provide a way to connect app developers with individuals or firms seeking investment opportunities, fostering innovation and supporting the app ecosystem as a whole. Some example platforms include Seedblink and seedrs.

Post-acquisition strategies for success

Embarking on the journey of acquiring an app is only the first step towards creating your app business kingdom and unlocking its true potential. To make the most of your acquisition and establish a lasting empire, you much invest in post-acquisition strategies that will take your app to new heights. These strategies revolve around enhancing user experience, driving growth, and optimizing monetization. Let's explore the effective strategies that will help you achieve your vision and ensure the success of your app business.

Strategy 1 - Conduct a comprehensive app audit.

Once you have acquired an app, assess the app's SWOT (strengths, weaknesses, opportunities, and threats). Expert app marketing agencies like App Masters can help you understand and assess every aspect and detail of the app's present condition. 

During the audit, consider evaluating the following aspects:

• User base and engagement: Assess the user base, demographics, and engagement metrics to gain a deeper understanding of user preferences and needs. This information will guide future updates and enhancements.

• Product evaluation: Evaluate the app's features and content to ensure they align with the app's purpose and deliver the value users are seeking. 

• User experience (UX): Analyze the app's speed, responsiveness, and stability. Improving these aspects will enhance user satisfaction and encourage continued usage.

• Pricing and monetization: Audit the pricing of in-app products and review all revenue streams. Identify opportunities for optimization and revenue maximization to ensure the app's financial success.

• Marketing strategies: Review the effectiveness of current marketing strategies and identify areas for improvement. Look for gaps, pain points, and untapped opportunities to optimize your marketing efforts and reach a wider audience.

Strategy 2 - Foster the growth mindset

In the fast-paced app industry, success often depends on adaptability and continuous learning. Many apps stumble not only because of a lousy product or poor market fit but also because they lack a holistic growth strategy. There's a key ingredient to overcoming this challenge: a growth mindset. This mindset is all about embracing change, learning from failures, and truly understanding your app users. Following are some strategies to nurture that mindset for your new business:

Stay curious, together

Throughout history, groundbreaking ideas have come from curious minds. That burning desire to explore, innovate, and seek new information—that's what we're after. Encourage your colleagues and peers to share ideas, learn from one another, and collaborate to tackle common challenges. Everyone in your app growth journey plays a vital role, and no team is more important than the others. It's all about working towards a shared goal. 

Learn fast, improve faster

Shifting to a growth mindset isn't just about generating ideas—it's about what happens next. That's when things can get tricky. You might have a gazillion ideas, but setting priorities and taking action is where the real challenge lies. Establishing a culture of quick learning and improvement is crucial. It's about testing ideas, gathering feedback, and refining your strategies efficiently. 

BlueThrone is running a jet-speed paywall & pricing A/B tests with Purchasely.

Strategy 3  - Invest in-app marketing and user acquisition

After successfully acquiring an exceptional app, it's time to drive its growth and attract new users. Developing a robust marketing strategy becomes crucial in this journey. Following steps can help elevate your app's visibility and user base.

Organic user acquisition

• App Store Optimization (ASO): Optimize your app's visibility in app stores through ASO. Improve keyword rankings, category placements, and strive for featuring opportunities to increase organic downloads. ASO expert agencies like AppTweak can help you increase your app’s visibility, create high-converting app pages & drive more downloads on the Google Play Store & Apple App Store.

• Website: Leverage your app's website as an organic marketing tool. Create a resource center with valuable content that addresses industry trends, thought leadership, and benefits of your app. Drive traffic to your website through social media promotions and ensure it is SEO-optimized.

• Reviews & Ratings: User reviews and ratings play a significant role in app adoption. Address user feedback, respond to questions, and use reviews as an opportunity to improve your app's user experience.

• Referrals: Encourage word-of-mouth marketing through referrals. Offer incentives for users to refer others, such as discounted in-app purchases, easy sharing options on social media, and rewards for active participation.

• Social Media: Utilize organic social media marketing to attract new users. Identify the platforms your target audience uses, create engaging content, post regularly to increase brand awareness, and run contests to encourage user engagement and sharing.

• Content Marketing: Produce valuable content tailored to your target audience's pain points and promote it through channels like email marketing, social media, and relevant online media outlets. Direct users to your app's product page and encourage them to download.

Paid user acquisition

• Social media advertising: Leverage the targeting capabilities of social media platforms to reach new users. Run targeted ad campaigns on platforms like Facebook, Instagram, Twitter, or LinkedIn to reach a wider audience.

• Search engine advertising:Utilize search engine advertising, such as Google Ads, to target users searching for keywords related to your app. Optimize your campaigns to appear in relevant search results and attract potential users.

• Mobile Ad networks: Consider advertising on mobile ad networks to expand your app's reach. These networks provide ad space and targeting options to reach a broader audience. Examples include mobile ad networks like Vungle, Unity, or AdColony.

• In-app advertising: Explore opportunities for in-app advertising by partnering with relevant apps that share a similar target audience. Place ads within these apps to reach users who are likely to be interested in your app.

Learn more about mobile user acquisition strategies.

Strategy 4 - Have a north star 

There's a lot of buzz surrounding the concept of the North Star metric—the one metric that truly matters. People often fixate on metrics like gaining a certain number of paying users per day, receiving a specific number of reviews per month, or raising a substantial amount of funding. However, these metrics can be considered vanity metrics, as they fail to capture the deeper insights that can drive real growth and revenue performance.

Rather than solely focusing on these numbers, it's crucial to dig deeper and understand the underlying meaning behind the metrics. For instance, obsessing over the number of reviews ignores the more powerful aspect—what are your customers actually saying in those reviews? 

Similarly, fixating on the number of paying users per day might overlook vital insights into how frequently and for how long users are engaging with your app.

Listen to Subcription League Podcast episode “Tips for Creating the Right Mindset for Business Growth by Hannah Parvaz”

To truly gauge your app's success, it's essential to consider a range of key metrics representing the customer and the company. Hannah Parvaz, founder of Aperture and a multiple-award-winning marketer, emphasizes the significance of setting up early on multiple key metrics and considering them as levers to impact the North Star.

Strategy 5 - Monetize and grow revenue with Purchasely

You've poured your heart and soul into going above and beyond, and after a long and challenging journey, you've finally launched or taken over an app. It's a momentous achievement, and you deserve to celebrate. However, the celebration isn't just about marking the app acquisition—it's about commemorating the beginning of a new phase focused on effective app monetization strategies that will drive maximum revenue generation. This is where Purchasely steps in. With its exceptional features and user-friendly interface, Purchasely empowers app developers to elevate their monetization efforts to unprecedented heights. 

Here's how you can tap into the power of Purchasely to unlock the full potential of your app and set yourself up for long-term success

Step 1: Build

Purchasely Paywall Builder

Implementing a new subscription model and creating a paywall within your app can be challenging and time-consuming. Without Purchasely, navigating these complexities becomes even more difficult. However, with Purchasely, you gain a streamlined solution that simplifies the process. Build a robust monetization framework swiftly, save time, and personalize subscription offers to maximize long-term success.

Step 2: Grow

Growing your app's revenue potential is a daunting task without Purchasely's no-code agile A/B testing feature. Experimenting with subscription packages becomes limited, hindering your ability to resonate with your audience. But with Purchasely, you unlock opportunities for app growth. Test variations on specific user segments, refine your strategy without impacting performance and achieve sustainable growth.

Learn about Price A/B testing with Purchasely

Step 3: Measure

Purchasely Analytics Dashboard

Understanding your app's monetization performance is vital, but it can be fragmented without comprehensive analytics. Gain valuable insights effortlessly with Purchasely's modern dashboards. Track user actions, understand intent levels, identify engagement points, and analyze cohort lifecycles. Measure success easily and make data-driven optimizations for long-term growth.

Step 4: Iterate

Maximize your app's potential through continuous iteration, made easier with Purchasely's streamlined workflow. Experiment, make adjustments based on data, and fine-tune your strategy. Find the perfect balance between user satisfaction and revenue generation. Evolve your app, seize growth opportunities, and position yourself for long-term success in the dynamic app market.