What happens when, after building a quite successful app that has been used by millions of people, you find it too time-consuming, and so you want to sell it? Well, that has been the case with too many apps in the past.
But before you can sell an app, you need to have an idea about its worth. You need to make a detailed valuation of the app before approaching the prospective buyers to sell it.
Here are the critical aspects of evaluating the value of an app so that you can sell it at the right price.
Active User’s vs Abandonment
Just corresponding to the number of app downloads and active users, users’ abandonment of the app is a critical consideration for evaluating an app. It refers to the users losing interest in your app after first use or after downloading it.
When the rate of abandonment for your app is high, there must be some problems concerning the onboarding process, which must be examined. To boost your app’s value, you need to improve the user onboarding so that the rate of abandonment decreases.
The Financial Metrics
It doesn’t require any explanation that excellent and reliable financial records are the primary backbone of an app and make a significant contribution to the value of an app. The app needs to follow the accounting best practices from the very early stages to make things transparent.
You can use Quickbooks or other software with similar capabilities that help your app follow accounting best practices to offer a transparent view of your financial fundamentals.
Business Growth
An app is a business, and to make it saleable, it must showcase its actual growth and growth opportunities. It is quite practical for the investors to take an interest in an app with upward trending growth metrics than one with declining graphs.
To showcase your business growth over time, you need to have very detailed documentation. For this, you should use industry-standard tools such as Google Analytics to keep the measurements and growth figures.
Coding Quality and Documentation
Technically speaking, coding makes the backbone of all apps. This is why any prospective app buyer will try doing a thorough analysis of the app’s code besides focusing on data architecture and documentation.
This is why making an app saleable. The app developers and publishers need to follow industry benchmarked coding best practices from the early stage and ensure thorough documentation.
App Revenue and Risks
The risks concerning app revenue increases when the revenue of an app depends mostly on a single product or just a single monetization method. This duly increases their vulnerability to unforeseen risks that can flare-up.
Other risks that are most important include the reliance on a single platform. If your app is only on Android or iOS, it can be vulnerable to changes in policies from any of these platforms. Native apps for each platform are particularly vulnerable to such risks.
Active Users
For most apps, the number of active users on a monthly, daily or weekly basis is a key consideration for judging their value. This clearly shows the popularity and market acceptance of the app.
Age of the App
This is a key driver, but any measure cannot improve it, unlike many others. The number of years your app is existing is a key consideration for the app’s stability and sustainability. When your app maintains certain metrics on the positive side over the years, it makes a great impression on the app buyers.
Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLTV)
The customer acquisition cost (CAC) and the customer lifetime value (CLTV) are two major considerations for every app buyer. While the first refers to the money spent on new customer acquisition, the second refers to the revenue generated by the acquired customers over the app’s lifetime.
Reviews and Ratings
One of the keys and most crucial considerations that any buyer will not miss is the ratings and reviews that an app receives from various platforms. Reviews and ratings make the foundation of the social proof of the popularity and market acceptance of an app.
This is why an app from the very beginning should be cautious about elements that generally frustrate users. For instance, sending endless requests for rating and reviewing the app can have a detrimental effect. On the other hand, when the user is seemingly happy and happily engaged, a pop-up message requesting a rating and review may end up getting a positive response.
Traffic
Finally, traffic like websites is also the lifeblood of an app business. Can you get enough traffic flow to your app store listing and the website featuring your app or to your social page for the app? If yes, your app marketing is gaining enough traction, which will increase the app’s saleability.
Whether the app uses organic or paid search, the app publisher needs to document where the traffic is being generated.
Conclusion
All these factors are equally crucial for judging the good value of an app. An app that does excellent business gets good resale value as well.
Juned Ghanchi, co-founder and CMO at IndianAppDevelopers company offer startups and big enterprise to hire developers in India who are skilled in iOS, Android, AI, ML etc. Juned has extensive experience as a software development adviser and strategist.