Part 3: Valuation: How your app is valued on the open app market
Our series Selling your app: A guide to a successful exit is moving into the hands-on, practical information stage. Over the coming weeks, we’ll go through four key areas to consider when selling your app, giving you everything you need to know to make a successful deal for your app:
- Valuation: How much is your app worth?
– Buyers will be looking at how they can make a return on investment
- Preparation and practicalities: What practicalities do you need to think about?
– From the basics (what are you selling) to the safest way to get paid
- Routes to Exit: How would you like to sell your app?
– This includes considering how much work you’d like to put into the process and costs you are willing to pay, which impacts your choice of how to sell
- Checklist for app sales: Which options for exit are best for you?
– We’ll give you a full checklist and help to choose the best route for you
Valuation: How your app is valued on the open app market
When entering the app market, app developers can have very different expectations for how much someone might pay for their apps. Many have invested considerable time and effort in building and maintaining their apps and can feel quite attached to their product.
However, no matter how hard a developer has worked, app buyers will be focusing on other aspects when they are considering whether to acquire an app. They will be evaluating what return on investment they can expect from an app acquisition.
The evaluation can be driven by a range of different factors, including installed base, revenues and the amount of time the app has been available (see table). It’s not all about revenues and profit: If an app has a good user base but limited revenues, an app buyer will consider how they can generate a better return going forward and might still proceed with the purchase based on that analysis.
Given how uncertain the consumer app market is (apps often only have a brief period of success), buyers need to be able to see quite a rapid return on investment, however. Ultimately, an app buyer will be making their evaluation based on a mix of different factors and how they inter-relate.
Depending on their strategy for taking the app forward, they may place greater emphasis on one or more of these factors. It is worth considering how your app rates for each before stepping into the app market to sell your app.
What’s your app worth? Click on the infographic to learn about some of the key factors used in the app valuations.
We’ll see you next time for details on Preparations and Practicalities around selling your app, including proof of data that a buyer might ask you for before they enter a deal and the safest way to get paid. If you’d like to discuss an app you’re interested in selling with Appsbuyout, please contact us or get an instant valuation or offer HERE.
Follow us on social media to find out when the next installment is out.