Blog Banner
What is the worth of your app and why is it right to sell it?
By: Admin Posted on: September 17, 2018 Category: App Development

Now when your app is hitting every mobile and it has been downloaded bazillions of times from the app store, then what is your next step. You have to move on and think something new so that people keep liking and using it. But if you don’t have enough time to maintain it because you have some other commitments to look after, or there is some other reason due to which you can no longer spend time on your app that it deserves. What do you do now? What will be your next step? How will you keep up the reputation of your app in the market?

Do you think selling is a good option? Why not! Selling an app that you have built with all your efforts and dedication will be a good reward for you. It will be the most suitable prize that you can give to yourself for all the efforts that you put in building this app and developing its customer base. The fame and position your app has achieved today, let someone else handle it and give it what it needs to do well in future. There are several platforms that give the opportunity to app developers to sell their app as they have thousands of active buyers who look for apps that can benefit them or their business.

How Much Is Your App Worth?

The value of your app means the highest amount that someone is willing to pay for your app. If you think that it could not help you, then you must read below.

  • App Valuation Type 1

It is important to know your net cash flow to perform app valuation. It can be calculated by summing up cash spawn by your app minus all expenses. The expenses may include the cost to update, maintain the app, app store fees, licensing costs and many more. You have to make sure that you should include all your cost. For example, if you have hired someone to develop this app, then you must include the amount that you paid to the developer. And if you have developed it yourself, you might have spent time on it, you must include the cost of your time, as well.

Once you have calculated the net cash flow, the next step is to convert that amount into the value of your app. You have to calculate value using multiples. This will be your friend in your business no matter you sell or buy.

For Example: Let’s say your app generates $100,000 in net cash flow per year. The “multiple” can vary widely depending on a range of factors, however for the vast majority of apps the multiple will be around 2x – 3x. So your app would be worth somewhere between $200,000 and $300,000. Not bad, right?

There are certain factors that can impact your multiple. These include:

  1. App Niche: There are certain niches that very much popular among buyers and they are more valuable than others, depending up competition, growth prospects and several other factors.
  2. Growth Prospects: If your app has grown consistently and it is still growing, then you could expect a higher multiple. The case is same if your app has numerous growth opportunities in future.
  3. Proven Marketing Strategy: It is important to understand how do you market your app. What strategies you are following. Are your marketing strategies sustainable?
  4. Time Commitment: The time you have spent on your app is the biggest factor amongst buyers.

 

  • App Valuation Type 2

This valuation step is pretty simple. Here, you have to find out what have similar apps sold for. You need to define your app in similar ways and generally speak the same factors that were considered for these already sold similar apps like growth prospects, marketing strategy, time commitment, and genre/niche along with other considerations like a number of downloads per week/month and net cash flow.

Both the above-mentioned valuation types are by far the most common approached that followed to sell an app. These two ways will not only give a value to your business, however, they are a great place to begin the biggest and most complex businesses.

How Do You Sell Your App?

Now when you have a clear picture of the real worth of your app, it’s time to decide the sort of price you would be keen to accept for your app. Let’s find out the how you can create the best sales pitch for your app.

Your main objective should be gaining maximum exposure. The more exposure you get for your app, the higher the probability of finding a buyer who is willing to give you a good sum for your app. As mentioned before, you need to find out a platform that serves as a Number 1 marketplace for buying and selling digital products. They should be well-reputed and experienced in performing digital deals. Generally, such platforms make selling process easy for the entrepreneurs and things work in a proper flow.

How To Move Towards The Highest Multiple?

There are certain rules that create a road towards the highest multiple. These include:

  • Rule1: There is something very important that you need to remember – don’t mislead. This can never lead you in the right direction and in the end, the buyer will find out some other good deal and you will end up selling nothing.
  • Rule 2: If your beginning days in the business were not good or may be in the middle of the process, something bad happened to the app, then be honest with the buyers. Tell them what had happened and how they can avoid the same situation in the future.
  • Rule 3: Always keep backup of all your claims such as revenue, costs, and profit with proper evidence. Buyers always ask for proofs as they can’t trust strangers.

We hope this information would have helped you in selling your app or if you are in the research process, then also it would have helped in taking your research in the right direction.