How to Sell an App
A comprehensive guide on how to sell your mobile app online to get the most out of it. As the mobile app market continues to be on the rise, more people are getting involved in the industry. Sometimes, it can even be better to invest a bit of cash and buy a mobile app, improve it, add some marketing, and voila, you have a promising business. If it were just so easy!
However, today, we will look at the other side. You have a mobile app with installs, reviews, and maybe even some revenue from in-app purchases, subscriptions, or advertisements. You have a digital asset that, like with every asset, is valuable, and can be priced and sold. The questions that you probably have are:
- How can you prepare your app to sell it?
- How do you sell apps online?
- How much money can you make selling an app?
- How much does it cost to sell an app?
- How can you sell an app to a company?
- How do you sell an app to a publisher?
- Should I use a broker’s agency?
- Where can I sell apps?
- Who buys apps?
- How do I start selling an app?
In this post, I will talk about my experience and what I know about how to sell an app.
How to sell an app: what you need to prepare
Make sure that your app is eligible for an app transfer
When you come to sell your app, you do it by transferring it to another app developer account, but before you do, you need to make sure you are eligible to transfer your app.
To be eligible, at least one version of your app should already have been released, and at the moment of selling the app, it should have one of the following app statuses:
- Ready for Sale
- Prepare for Submission
- Developer Removed from Sale
- Invalid Binary
- Developer Rejected
Also, you need to check that your app meets the following criteria:
- No version of your app can use an iCloud entitlement
- No version of your app can use a Passbook entitlement
- You have accepted and agreed to the latest version of the paid and free app agreements in your App Store Connect account
You can see all the transfer criteria on the Apple transfer criteria page.
Can I ask Apple to help me? Shall I inform Apple about selling my app?
The answer to both of these questions is no. Apple doesn’t have any products to assist you in the buying or selling of app businesses. The only thing you have to do is transfer the app to the buyer, and that’s all.
Switch to a subscription revenue model (optional)
From my experience, subscription-based apps are more appealing to buyers. As Sensor Tower highlights, global subscription app revenue from the top 100 subscription apps has climbed 34% Y-o-Y to $13bn, which is a $3.3bn increase since 2019. Although subscription apps offer multiple revenue opportunities (you can combine subscriptions with ads or one-time in-app purchases), there are a couple more reasons that make subscriptions highly attractive to investors.
Firstly, subscription apps provide more reliable income – due to their very nature, businesses (and your investors) can predict future revenue.
Secondly, it tends to be much easier for subscription apps to engage users, as they will want to get as much value out of their subscription to the app as they can. When it comes to investing in something, it is most probable that the investor has already done their research beforehand to ensure the app meets their requirements.
Prepare your revenue infrastructure
One of the questions that you’ll receive from potential buyers is about how stable your revenue infrastructure is. This could be compared to a real world issue like a leaking roof. Replacing an entire roof is much more expensive than building it right in the first place, and just like this, a potential investor will try to understand whether your infrastructure is stable and easy to maintain, so that they can easily support it. Investors really do take this into consideration!
To attract an investor, your subscription monetization infrastructure needs to:
- be able to cover all potential subscription cases: such as tracking different in-app products and prices, be able to plan changes, respond to downgrades or upgrades, detect billing issues. Basically, there is a wealth of technical things that you should consider.
- have the server-side receipt validation be able to track all subscription events accurately.
- have cross-platform subscription management implemented in order to handle subscribers across Apple/Google and even the web.
- have the tools to manage the data, and be able to send it to marketing and product platforms.
- make it easy to hand the data over to someone who acquires your app. Ideally you shouldn’t require full time engineers on your team to do and support it.
You can try to build a subscription infrastructure in-house, but you are likely to waste a lot of resources, time, and focus by building it yourself and then having to support it.
It’s better to plug a solution like Qonversion into your app which only takes a few lines of code, which will mean that you can then take your mind off getting the right data. One of our clients Fitita – a dieting app, tried building their subscriptions infrastructure in-house and spent well over 6 months on it. They eventually decided to use Qonversion, which allowed them to turn their attention back to focussing on their revenue growth, and as a result, were accepted by the startup accelerator Y Combinator.
At this point, we feel it is important to reemphasize the following: investors will measure and look at the budget they will need to have in order to support the technology stack and whether it is scalable.
How to sell an app for the best price
The potential value of how much you can sell an app for depends on many factors, and you never really know the actual valuation. It’s all about numbers and negotiations, although you can use some typical techniques to come up with a respectable figure. We also have another great article on how to increase your app’s valuation and sell your app to investors. Check it out here
The common technique to use to get a figure is a 1 – 5 year forecast or X12 – X60 of your monthly net revenue. Net revenue is what you get from Apple after they take their commission.
Let’s say you receive $5,000 in monthly revenue. You don’t do any marketing, and all revenue is organic. You have monthly churn, but new subscribers cover those losses. That means you still have 5,000 revenue per month. Also, it’s important to not forget to take your operational and developer costs for maintaining the app into account at this moment.
What this means is that you can start negotiations at $5,000 x 60 (5-year multiplier) = $300,000
Does the buyer think it’s too expensive? Well, now, the onus is on them to explain why it is overpriced and to make a counteroffer.
Do not be afraid to start in the highest valuation range, so you can get an idea of the real price that buyers are willing to pay. Consider such factors as:
- How unique is your app/technology? Apps based on templates are less valuable.
- How many organic installs do you have? For example, if you have 1 million installs per month but your revenue is $5,000, then your app has huge potential to increase revenue with a new monetization approach.
- Do you have any leverages to increase your app’s revenue? If so, you have two options: add this knowledge as part of your offer or act upon it and if it works, you can then increase your selling price.
- Churn. Just keep in mind that apps with low churn have a much higher valuation than apps with one-time purchases. They also allow for the forecasting of your subscriber LTV which can help to increase the valuation even higher.
One final way that can be useful in evaluating your app is by monitoring offers made for other apps.
Growth metrics that affect how much you sell an app for
Your ability to clearly communicate your financial and other metrics is one of the key factors in convincing investors to fund you or buy your app. You should know the metrics that affect investor decisions off by heart.
Annual Recurring Revenue (ARR)
ARR represents the total value of all active subscriptions at a given point in time, and is typically calculated on an annual basis.
Monthly Recurring Revenue (MRR)
MRR refers to the amount of revenue your company expects to generate every month.
This is how much revenue you get on average from a subscriber. You can also have metrics like 1-year LTV, 2-year LTV, and others. You should focus on maximizing the LTV and make sure that it is higher than your subscriber acquisition cost so that your app can grow profitably.
You can easily track your historical LTV with the Qonversion cohorts dashboard.
First and foremost, it is important to have accurate data that can distinguish between voluntary and involuntary churn. Involuntary churn happens when, for example, the user’s payment information on the App Store is not up to date and Apple simply can not complete the charge. Voluntary churn is when a user makes a conscious decision to cancel a subscription.
Once you have accurate data that shows why users have canceled, you can then use this data to automate customer communication. This can be through measures such as reminding users with billing issues to update their payment information, as well as polling users who cancel voluntarily to understand what is driving the churn so you are then in turn able to address it.
Qonversion tracks data from all subscription statuses, such as billing issues, and cancellations.
And you can quickly set up push notifications or use webhooks to build any custom logic on your side to create win-back campaigns.
Visibility in the App Store / Google Play
Some investors look at your App Store and Google Play rankings, and the nature of the traffic.
It’s important to pay attention to the organic traffic you are getting. There are a lot of tools to measure and improve it. I would personally recommend tools like AppFollow or AsoDesk.
One of the tricks for increasing organic traffic is by also investing in the Apple Search Ads. It’s a known fact that the more users you acquire through Search Ads, the more organic traffic you get from Apple. But it is worth emphasizing: investors take whether you have organic or paid traffic seriously – it is much more appealing to buy an app that drives installs organically.
How and where to sell an app?
Now you are ready to list your app on marketplaces and send it directly to buyers. Below you can see some websites where you can sell your app:
I had experience with Flippa and had a quick conversation with Appbusinessbrokers.
Also, it’s worth checking out the following websites:
How to sell an app to publishers
If you are selling your app or game because you are stuck and do not know how to help it grow, you can try another way. There are plenty of mobile app and game publishers who are happy to help you and share the success with you.
How does it work?
- You know how to build great apps or games but do not know how to do marketing.
- Publishers invest their expertise and marketing sources to grow your app or game.
- They then pay you a share of the revenue created.
Sounds good, doesn’t it? Below you can find some companies that I have experience with:
- The accelerator program run by Appodeal (Monetization and mediation platform).
- The publishing studio, Lion Studios by AppLovin (Advertising and monetization platform).
How can you sell an app to investors?
Attracting the attention of big publishers so that you can try and sell an app to investors or app acquisition companies who have the capital to buy your app business is a very complex task. Many of them are looking for apps that they can improve and invest in user acquisition to double or triple the revenue. Bluethrone is a company like this, that invests in apps to try and grow them even further.
On average, it takes a month or two to complete a deal. The process is usually as followed:
- Contact the app acquisition company
- The app valuation process which can take up to 21 days. This begins with the first stage which is a light evaluation that consists of a brief screening of your metrics, without digging too deeply into the figures.
- Deep valuation. This is when you get an official offer from an app acquisition company and tell them how your app works. During this stage, you have two options: You can either choose to sell it or leave it if you think you should work to improve on a few things first.
- Finalize the deal
How to negotiate the best conditions when selling an app?
The one thing that should be emphasized is that you should always remember that the best person to protect your interests is you! If your app has a great idea, and you know your app economics, understand each metric and they are all optimized, then your app will sell itself.
However, you may struggle with the negotiation and selling stages. In this case, you can hire a broker who knows how to sell an app. They could help you audit your app, prepare it for sale, present your app to potential investors and a wide database of buyers, and also help you to negotiate and even transfer your app. One of the pluses of hiring a broker is that with their help you can receive a number of offers in a short period of time so you can compare and choose the best one. As a reward for their help, they could take between 10-15% of the price which they sell/list your app.
After you finalize a deal with a buyer, it’s important to be prepared for a due diligence check that they will ask you to undergo. This will include checks on things such as DAU, MAU, the subscriber base, as well as other metrics. You can use Qonversion to collect your subscriber and other data in one place and even connect it to other platforms to provide them with a plethora of data. This could be something like sending revenue data to Amplitude or Mixpanel.