The Financial Side of Building Mac Apps(tyler.io)
tyler.io
The Financial Side of Building Mac Apps
http://tyler.io/2014/07/a-candid-look-at-the-financial-side-of-building-mac-apps-on-your-own/
43 comments
Tyler, as someone who constantly thinks about different avenues of working on my own, it's really informative to hear stories such as yours. Plus, your story is usually the one people gloss over. We usually hear about the two projects a year that make billions and the ones that completely fail. It's refreshing to hear about an app that made money and gave you the financial stability to take a couple more risks. Thanks for sharing!
Thanks! My original goal was extremely simple. Earn $X to do Y home improvement project. But as the app took off I've readjusted my goals. I've never thought about becoming "rich", instead, I see it as a wholly possible way to earn just enough to support my family and be happy.
Congrats on the success.
Most of this post tracks my experience and is roughly, true for cross platform or Windows development. Shareware predates app stores.
(Though most shareware authors don't call themselves shareware authors anymore, since distribution techniques have changed and the word never helped sell software.)
Most of this post tracks my experience and is roughly, true for cross platform or Windows development. Shareware predates app stores.
(Though most shareware authors don't call themselves shareware authors anymore, since distribution techniques have changed and the word never helped sell software.)
Do you know any desktop applications, be it cross-platform or single OS, that were made independently (not by a company), bootstrapped and are now profitable? As far as I know Paint.net was made by one person and it's now his full-time job, but it's dependant on donations and I'm more interested in a "traditional" business model.
I know a few dozen apps that fit that bill. Bingo Card Creator started as a cross-platform desktop app (that was my only product from 2006 through 2009, when I released the online version). It was bootstrapped and was/is profitable.
A few others off the top of my head: Perfect Table Plan, Poker CoPilot, Mixed In Key, Balsamiq Mockups (though that eventually turned into "a company"), etc. You'll note that BCC doesn't belong in the same league with any of the above.
A few others off the top of my head: Perfect Table Plan, Poker CoPilot, Mixed In Key, Balsamiq Mockups (though that eventually turned into "a company"), etc. You'll note that BCC doesn't belong in the same league with any of the above.
I've been talking to iOS / OS X indies over the past few weeks and with very few exceptions, all I hear is "revenue down X% over the last Y years". We've seen this first hand, too.
Luc Vandal wrote a good article [1] about it. I'm very interested in hearing about other people's thoughts and experiences - contact details can be found on my HN profile.
[1] http://lucvandal.com/2014/07/03/theindielife/
Luc Vandal wrote a good article [1] about it. I'm very interested in hearing about other people's thoughts and experiences - contact details can be found on my HN profile.
[1] http://lucvandal.com/2014/07/03/theindielife/
> may lose traction because a VC funded company is offering a free alternative and has near to unlimited funds for market it while they figure out how to monetize it.
This is what got me. If you are doing well, startups are going to look at getting into your market. And you can't compete against free.
This is what got me. If you are doing well, startups are going to look at getting into your market. And you can't compete against free.
I've been doing indie Mac dev for about ten years now [http://www.expandrive.com] and I keep arguing that we could be in a golden age for being an indie Mac dev if it weren't for everyone having fled off to do mobile development. Apple keeps selling more and more macs and now has an easy distribution channel built right into the machine for you. Make something useful. Sell it for $20-60 bucks. It's sustainable.
I generally agree with you. One of the interesting bits of information from the article is the financial boost from paid updates. You can sort-of approximate this on the MAS but none of the options are ideal.
In my opinion, you absolutely must give people the chance to try your product. This means having a trial build on your website, which most Mac indies do but it's a bit problematic for paid apps, as I presume a lot of people on the MAS itself are unaware. It's in the best interest of everyone to have trials - for customers, so that they don't feel duped and actually buy a product they're happy with and for developers, so that they acquire real customers, not play a game of "can we convince people to fork over money without trying".
Moreover, it's in the best interest of customers to actually provide paid updates - they can vote with their wallet whether a business should survive. But without the proper availability of paid updates, customers are left with no choice, even if they did want to support developers. Unfortunately, the voice of a vocal minority instils fear in developers to try and charge for such updates.
Given the current climate, our plan for the future is to lower our initial price and offer major versions as paid updates. Instead of, say, charging $40 for the current version + $20 for an update, we'll just always charge $30 for the current version. As a side effect, it lowers the entry for everyone and your real customers can still vote with their wallets and support your efforts, if they choose to do so. One of the downsides is the introduction of a new SKU which is not that much of a problem (before the MAS, you had to do the same anyhow). It's usually wise to provide a way for customers to stay in touch with you and hear about updates but only if they want to (don't smack dialogs repeatedly in their face, that's just not nice).
In my opinion, you absolutely must give people the chance to try your product. This means having a trial build on your website, which most Mac indies do but it's a bit problematic for paid apps, as I presume a lot of people on the MAS itself are unaware. It's in the best interest of everyone to have trials - for customers, so that they don't feel duped and actually buy a product they're happy with and for developers, so that they acquire real customers, not play a game of "can we convince people to fork over money without trying".
Moreover, it's in the best interest of customers to actually provide paid updates - they can vote with their wallet whether a business should survive. But without the proper availability of paid updates, customers are left with no choice, even if they did want to support developers. Unfortunately, the voice of a vocal minority instils fear in developers to try and charge for such updates.
Given the current climate, our plan for the future is to lower our initial price and offer major versions as paid updates. Instead of, say, charging $40 for the current version + $20 for an update, we'll just always charge $30 for the current version. As a side effect, it lowers the entry for everyone and your real customers can still vote with their wallets and support your efforts, if they choose to do so. One of the downsides is the introduction of a new SKU which is not that much of a problem (before the MAS, you had to do the same anyhow). It's usually wise to provide a way for customers to stay in touch with you and hear about updates but only if they want to (don't smack dialogs repeatedly in their face, that's just not nice).
Do you think the exposure the Mac App Store offers is worth Apple's 30% cut along with the lack of upgrade options for customers? Why not also (or in place of) sell your software directly through your website?
I'm the author of the article in question, and with my current sales infrastructure, I'm able to spin up and sell a new product (SKU) in a matter of hours. Since I've been doing this for seven years, am I now overestimating the amount of work it takes to setup and sell your app independently?
I'm the author of the article in question, and with my current sales infrastructure, I'm able to spin up and sell a new product (SKU) in a matter of hours. Since I've been doing this for seven years, am I now overestimating the amount of work it takes to setup and sell your app independently?
I don't know about your jurisdiction but in most EU countries, the sale proceeds from Apple lie outside the scope of VAT. Thus, you need to subtract your effective VAT rate and the net effective rate that you end up paying on the MAS is about 10-15%. Which is very close to what you would pay for, say, FastSpring ("You have the option to pay either 8.9% flat or 5.9% plus $.95 per transaction" [1]). The biggest advantage of the MAS is that it's a distribution channel preinstalled on every single Mac - that's extremely valuable.
As you say, you would ideally sell on both the MAS and outside. In terms of selling outside the MAS, it does come with some overhead, mostly related to VAT. Even worse, the EU is changing the VAT rules starting from 2015 (the rule change itself is designed to remove the competitive advantage of big companies to be based in EU states with low VAT and sell products in countries with high(er) rates):
> Currently, the place of taxation for digital services supplies is determined by your location as the supplier of the services. However, from 1 January 2015, the place of taxation will be determined by the location of the consumer.
It's not a big deal since you can just sign up for the VAT MOSS but it's still more hassle than just putting up an app on the MAS. Note that all of this applies after your exceed the VAT threshold, which is different in different EU member states.
[1] http://www.fastspring.com/pricing.php [2] http://www.hmrc.gov.uk/posmoss/
As you say, you would ideally sell on both the MAS and outside. In terms of selling outside the MAS, it does come with some overhead, mostly related to VAT. Even worse, the EU is changing the VAT rules starting from 2015 (the rule change itself is designed to remove the competitive advantage of big companies to be based in EU states with low VAT and sell products in countries with high(er) rates):
> Currently, the place of taxation for digital services supplies is determined by your location as the supplier of the services. However, from 1 January 2015, the place of taxation will be determined by the location of the consumer.
It's not a big deal since you can just sign up for the VAT MOSS but it's still more hassle than just putting up an app on the MAS. Note that all of this applies after your exceed the VAT threshold, which is different in different EU member states.
[1] http://www.fastspring.com/pricing.php [2] http://www.hmrc.gov.uk/posmoss/
We can't get in the MAS because we can't comply with the rules, but the ease of telling somebody to go purchase an app from a store where they already have their credit card on file is huge. I run a custom version of Potion Store, so it's only the cost of a Linode plus credit card processing. But I see most other indie devs who sell on their own use FastSpring [or similar] which charges about 10%.
The word of mouth value of telling a non-techie to go install such and such app and have it be just like their phone is huge. They don't have to figure out what a DMG, where it went after they installed it. Etc.
We did the opposite. We raised the price [$50] and will only provide a year of free updates. Extra years come at a comparatively small cost. People hated being asked to upgrade regularly and we obviously didn't want to go years between adding major features. It seemed like the only way.
One interesting thing we have done, is offer a "lifetime upgrade" option for both upgrades and new purchases. About 30% of our customers buy it. It costs 50% more on a new purchase or 100% more if you're upgrading, but you get all future upgrades. It's a win for customers who want that, and it's definitely a win for us.
One interesting thing we have done, is offer a "lifetime upgrade" option for both upgrades and new purchases. About 30% of our customers buy it. It costs 50% more on a new purchase or 100% more if you're upgrading, but you get all future upgrades. It's a win for customers who want that, and it's definitely a win for us.
Even though your particular split between upfront + recurring costs is different than in my example, it's still in the spirit of sustainability. I honestly have no idea how the economics pan out if you had $50 app and $X yearly upgrade (or is it $X for 1yr of updates?) compared to, say, $20 each 1.5yrs. But in both cases, I think you'll have a chance of building something that can last.
Interesting stats about the lifetime upgrades - thanks for providing those. I guess it works as long as all of your users don't buy it (which means your recurring revenue drops to 0 at some point and you're back to square one).
Interesting stats about the lifetime upgrades - thanks for providing those. I guess it works as long as all of your users don't buy it (which means your recurring revenue drops to 0 at some point and you're back to square one).
Just raise the price until only a reasonable percentage do then! ;)
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The web has risen in the same timeframe though, which offsets people's willingness to pay for desktop software, at least in theory.
Couldn't agree more.
I'm also a Mac Developer, my app is Codebug (http://codebugapp.com/) an Xdebug client for Mac. I created this app in 2012 while I was learning Objective-C/Cocoa, and it's been a very cool steady growing since day one.
Specially the increase your price part. I actually added a bunch of new features and increased the price. Guess what ? The sales didn't drop at all, matter of fact they increased. I get a lot more top-quality users and people who actually engage with the app and are prone to spread the word. Also, I'm selling it from my own website, not from App Store. Sorry Apple, I already pay you $99 dollars a year for your dev program. Not going to share 30% of my profits with you :P
iOS or Mobile app doesn't appeal me at all from an indie dev perspective. Everything pretty much has been done, and there's this stigma of not charging your app of what it's really worth. Everyone is doing Free, In-app or 0.99 cents apps. Screw that, I need to put food on the table.
TL;DR: Make a good product, keep improving it, price it right and you will succeed in the long run.
I'm also a Mac Developer, my app is Codebug (http://codebugapp.com/) an Xdebug client for Mac. I created this app in 2012 while I was learning Objective-C/Cocoa, and it's been a very cool steady growing since day one.
Specially the increase your price part. I actually added a bunch of new features and increased the price. Guess what ? The sales didn't drop at all, matter of fact they increased. I get a lot more top-quality users and people who actually engage with the app and are prone to spread the word. Also, I'm selling it from my own website, not from App Store. Sorry Apple, I already pay you $99 dollars a year for your dev program. Not going to share 30% of my profits with you :P
iOS or Mobile app doesn't appeal me at all from an indie dev perspective. Everything pretty much has been done, and there's this stigma of not charging your app of what it's really worth. Everyone is doing Free, In-app or 0.99 cents apps. Screw that, I need to put food on the table.
TL;DR: Make a good product, keep improving it, price it right and you will succeed in the long run.
I’m always interested when mac app developers either don’t ever support, or support and then abandon the Mac App Store.
I can understand wanting to minimise overheads as much as possible - I just wonder what the total cost difference is for a 3rd party payment system, hosting the files, handling refunds etc (plus potentially lost sales), vs the 30% cut Apple take..?
Also, I find myself much more likely to purchase an app if I can do so via the Mac App Store. It’s so ridiculously easy to purchase/install and re-install when required; I already trust Apple with my credit card; and I don’t have to worry about whether the store front in question is secure.
The last part in particular is a big issue to me - your site is not available over https, so I have no way to know if the link from your site to FastSpring is the one you intended or if I’m being MITM’d and getting a link to send $60 to some russian hacker, as the destination page is on a completely different domain, bares very little resemblance to your site, and is also not hosted via https. When I tried to access the initial order page over HTTPS I was given a ridiculous message telling me "Secure Connection Not Allowed”.
The “technical infrastructure” page for FastSpring touts “hardware accelerated SSL” - so I can rest assured that the message telling me I can’t use their store front over SSL was encrypted with great efficiency.
The only part of FastSpring that seems to be accessible over SSL is the final order page - but I’ve already followed multiple links and form submissions from non-secure pages, so I could be looking at anything by this stage.
That FastSpring put a big “Norton Secured” badge on the top of their http only initial order page is both ridiculous and dangerous.
All of this makes me wonder how much extra value that 30% cut can give back to the developer...
I can understand wanting to minimise overheads as much as possible - I just wonder what the total cost difference is for a 3rd party payment system, hosting the files, handling refunds etc (plus potentially lost sales), vs the 30% cut Apple take..?
Also, I find myself much more likely to purchase an app if I can do so via the Mac App Store. It’s so ridiculously easy to purchase/install and re-install when required; I already trust Apple with my credit card; and I don’t have to worry about whether the store front in question is secure.
The last part in particular is a big issue to me - your site is not available over https, so I have no way to know if the link from your site to FastSpring is the one you intended or if I’m being MITM’d and getting a link to send $60 to some russian hacker, as the destination page is on a completely different domain, bares very little resemblance to your site, and is also not hosted via https. When I tried to access the initial order page over HTTPS I was given a ridiculous message telling me "Secure Connection Not Allowed”.
The “technical infrastructure” page for FastSpring touts “hardware accelerated SSL” - so I can rest assured that the message telling me I can’t use their store front over SSL was encrypted with great efficiency.
The only part of FastSpring that seems to be accessible over SSL is the final order page - but I’ve already followed multiple links and form submissions from non-secure pages, so I could be looking at anything by this stage.
That FastSpring put a big “Norton Secured” badge on the top of their http only initial order page is both ridiculous and dangerous.
All of this makes me wonder how much extra value that 30% cut can give back to the developer...
I guess I would point out that if it wasn't clear before it is clear now that iOS spps in a mature market behave much more like content than applications when it comes to getting news users, retaining them, and all the other pirate metrics, me hearties. Think music or ringtone store rather then desktop apps. The mobile experience is just not that sticky in most cases, and Apple has absolutely no interest in helping you build a long-term relationship with them.
Tyler, you kick ass. From the way you build up to the numbers, you seem almost apologetic for your app's success. You don't have to apologize for making money on software, even if it is unfashionable.
I think you're able to charge $49 where an RSS reader can't because your audience is more professional. I'm one of thousands of other webmasters who have ...started GUI frontends for Apache, so I know what this is worth. Now, you going to add support for Nginx? :)
I think you're able to charge $49 where an RSS reader can't because your audience is more professional. I'm one of thousands of other webmasters who have ...started GUI frontends for Apache, so I know what this is worth. Now, you going to add support for Nginx? :)
Nginx is high on mine and my users' wish lists. I'm still trying to figure out if it's even possible to integrate with VirtualHostX (which is Apache focused) given the UI differences Nginx support would dictate or if it would be best to break Nginx support out into a new, standalone product. Some users might see a separate product as a money-grab, but I'm really at a loss as to how I'd combine Apache + Nginx support into a single product.
Some users might see a separate product as a money-grab
Some users don't think software developers should charge money. They make up an extremely small percentage of gross revenue and, accordingly, people whose opinions you should give the time of day to.
Some users don't think software developers should charge money. They make up an extremely small percentage of gross revenue and, accordingly, people whose opinions you should give the time of day to.
Definitely should be a separate product, with perhaps 10-20% off a bundle of the two. This also helps price discriminate your audience. People who actually need to monitor both probably work for big messy companies that can afford $90.
Maybe split it up into packages? You have a set of core features but can buy support for more advanced features for either Nginx/Apache or both. That would be my first hunch however I think it goes against what you've been doing with your app (pricing especially) though.
considering you'd be targetting two different webservers, i don't think so. you'd also be expanding the potential userbase. Besides, I haven't heard of anyone who uses both nginx & apache.
eh?
Then make me a first, i reverse proxy from Apache to NGINX, having NGINX as a caching layer for static assets etc..
That's not too uncommon imho...
Then make me a first, i reverse proxy from Apache to NGINX, having NGINX as a caching layer for static assets etc..
That's not too uncommon imho...
Thanks for sharing. I also do mac development, and I have one app today + another in the pipeline. My current App, Maxel (http://maxelapp.com/) sells at a 8 bucks (for a download accelerator, pretty busy market), which I don't think I could pull that off on mobile.
Now that's just a utility. Business type apps can command $40+ if they're good, and the top sellers are often high-priced.
Now that's just a utility. Business type apps can command $40+ if they're good, and the top sellers are often high-priced.
Tyler - thanks for that really detailed account. Aside from the financials, I'm curious how you manage working alone? Did you ever consider finding a business partner? Do you work at home alone, or do you find some kind of shared space?
I know from a brief period working on my own thing at home that it starts to feel like an echo chamber.
For the first five years, it was myself, alone in my home office at night and on weekends. My wife went to bed early and I'd have 10pm - 1am every night to hack around - plus random times on the weekend. After I went full time with it, I toured a few co-working spaces in Nashville, but most of them were either geared at MBAs who co-work for less than eight hours a week, or too expensive. So, even after going full time, it was still just me in my home office. But my working hours changed to a normal 9-5 routine. My wife also works from home, so I never went crazy from lack of human interaction.
As for business partners - never really considered one. I don't think there's enough work to go around. But I do partner with two designers, when needed, and have a few close friends who also do Mac development I can bounce ideas off of throughout the day.
As for business partners - never really considered one. I don't think there's enough work to go around. But I do partner with two designers, when needed, and have a few close friends who also do Mac development I can bounce ideas off of throughout the day.
This is exactly how I am building SonicWeb (http://www.sonicweb-radio.de), for 4 years now. You need to have a lot of patience and persistence if you take this route. There is always this nagging feeling that things don't move along fast enough. And you need to get used to program when your tired, very tired sometimes.
What about angel investors? With some money what do you think you could might be able to do that you can't do now?
This is not the kind of business that angel investors are interested in.
An investor (be it an angel or, at a later stage, a VC fund) is interested in an exit at some point.
There's just no way a simple utility like VirtualHostX will ever generate profits that would warrant an exit event (which are limited to a sale to someone else or an IPO).
If there's no exit event, an investor doesn't get his money back. He might own a chunk of profitable business but it's paper money.
An investor (be it an angel or, at a later stage, a VC fund) is interested in an exit at some point.
There's just no way a simple utility like VirtualHostX will ever generate profits that would warrant an exit event (which are limited to a sale to someone else or an IPO).
If there's no exit event, an investor doesn't get his money back. He might own a chunk of profitable business but it's paper money.
"Angel investors" and "angel investors in the valley" are not necessarily the same thing. Also the idea was not to invest in the particular product but in the entrepreneur and his capabilities.
I've had two offers from companies wanting to buy out VirtualHostX. Unfortunately (or perhaps fortunately), neither company made compelling arguments for me to give up steady, stable income.
Can anyone recommend some good books/resources to pick up Mac App development over iOS? So much is focused on iOS, and would like to get some personal recommendations.
Whichever route you take, you _must_ watch any relevant WWDC sessions - they contain a lot of valuable information, and more importantly, in many cases, information that's not available in the docs.
If you want to do Mac dev, I strongly recommend joining lynda.com and watching Simon Allardice's Objective-C and Cocoa programming videos. You can watch all of them in one month, and it will be $25 well spent. Also, there is Lucas Derraugh's very good AppleProgramming channel on YouTube: https://www.youtube.com/user/AppleProgramming
Aaron Hillegass's "Cocoa Programming for Mac OS X" is how I got started. Likely, his new books only focus on iOS development. But this book pre-dates the iPhone. I learned Mac dev from it in 2005. Highly recommended for the basics.
Thanks. Just for those curious, his latest book is from 2011:
Cocoa Programming for Mac OS X (4th Edition) http://smile.amazon.com/Cocoa-Programming-Mac-OS-4th/dp/0321...
And apparently there is an update coming in October:
More Cocoa Programming for OS X: The Big Nerd Ranch Guide (Big Nerd Ranch Guides) http://smile.amazon.com/More-Cocoa-Programming-OS-Guides/dp/...
Cocoa Programming for Mac OS X (4th Edition) http://smile.amazon.com/Cocoa-Programming-Mac-OS-4th/dp/0321...
And apparently there is an update coming in October:
More Cocoa Programming for OS X: The Big Nerd Ranch Guide (Big Nerd Ranch Guides) http://smile.amazon.com/More-Cocoa-Programming-OS-Guides/dp/...
The More Cocoa Programming for OS X: book has been in O'Reilly Rough Cuts beta for several years and the tech is pretty old at this point. Not sure if it ever will see the light of day. The Cocoa Programming for Mac OS X is updated regularly and the training program is ongoing so I imagine it will continue to be updated.
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Mi-Fi Monitor for Mac (there's an older iOS version[3]) alone has been much more successful than I ever imagined, despite being a simple little utility, doing no advertising, and having an automatically limited market of potential users (people who own a Novatel Mi-Fi).
At the time the original iOS version was written, it was just something I myself needed, not something I intended to publish anywhere. But as I discovered after putting it up for sale, a lot of other people needed it too. Novatel's own executives were using it, I talked to one of them on the phone for quite a while, 2 others emailed me about it, I reported some API bugs to them, etc. Very satisfying experience for me.
And then when I put up Mi-Fi Monitor for Mac on the MAS, it got featured on TUAW[4], which caused sales to skyrocket far beyond the iOS version and far beyond what I expected from something that was originally a "scratch my own itch" thing.
I'd love to build something larger for Mac and go down the indie path, but I'm primarily working as a consultant now on both platforms. I do absolutely love when Mac projects come my way though, I like building for that platform a lot more than iOS.
[1] http://infincia.com/apps/mi-fi-monitor-mac
[2] http://infincia.com/apps/codepoints
[3] http://infincia.com/apps/mi-fi-monitor-ios
[4] http://www.tuaw.com/2011/12/13/daily-mac-app-mi-fi-monitor/