Foster Center for Student Innovation

Function, results and prices play into a business’ decision to invest in an app

Maniebiz features article on former tenant, Hasan Adil, owner of LableTop Software.

www.mainebiz.biz article by: Matt Dodge 3/5/12

Any company looking to establish a strong web presence can easily find itself caught in an arms race of technology innovations. As of July 2011, 82.2 million people in the United States owned a smartphone, and time spent on mobile applications recently surpassed PC- and laptop-based web consumption. The average user now spends 9% more time using mobile apps than accessing the Internet, up 88% from June of 2010, according to analytics firm Flurry.

With over 300,000 apps downloaded 10.9 billion times in the last three years, the mobile app market is expected to be worth $25 billion by 2015, according to a research report by firm MarketsandMarkets. Which begs the questions: What does a business consumer look for in an app? What functionality or revenue can it provide to a company? And how much should one expect to spend for its presence in the $7.3 billion app market?

"People have a misconception that mobile apps are a lot like making a website. There are lots of cost-effective tools to help [create a website], but there just aren't the same tools out there for apps," says Kerry Gallivan, president and founder of Chimani in Yarmouth, which builds mobile apps for national parks. As a rule of thumb, Gallivan says most companies can expect to pay three times as much on a custom app as they spent on their website.

APPles and oranges

Before forking out any money for an app, a business owner should consider several factors. The first is determining what you want from your app.

Apps generally fall into three categories, according to Michael DeSouza, CEO of Portland app firm Tap Tapas: apps for businesses, apps by businesses and apps that are businesses. For example: an app for a business might utilize a smartphone's camera to scan and track warehouse inventory; an app by a business might be a game that promotes the business' brand; and apps that are businesses can be fully-functional storefronts, or subscription-based services that offer daily workout tips for a fee.

A business owner should also have a purpose for an app, says Hasan Adil, founder of Portland's LabelTop Software. "If your company needs an app just to be in the app store, it might be too expensive, but if you're making an app that adds value to your customers, then [the investment] is worth it," he says.

 The next thing to understand is the fractured smartphone market. Launching iPhone years before competitors entered the market, Apple has managed to make its App Store nearly synonymous with the mobile app market, but it's not the only game in town.

While Apple has sold almost 60 million iPhones worldwide, Google's Android operating system can be installed on various smartphones, giving the search engine giant a leg up over its competition. (Google's Android platform leads with 41.8% market share; Apple's iOS has 27% and RIM's Blackberry, the smallest of the big three, has seen its market share drop drastically, now hovering around 20%, according to analysis firm comScore.)

The impact of this fractured market on a business interested in its own app can be traced to a simple truism in the world of software programming — no one speaks the same language. An app developed for Apple's iOS will work on an iPhone, but the same app will need tedious tweaking to work on any other smartphone platform. "There is no native code that can be shared between the two, and that can have an exponential cost effect on the bottom line," says DeSouza.

Tap Tapas, which has made apps for companies like Toyota Australia, has a loosely set minimum fee of $25,000 for any custom development project — "spending any less than that and the result is a less-than-desirable outcome," says DeSouza.

On the other end of spectrum are local firms like BizAppFusion, which offers template-based designs with prices as low as $147 in startup fees and a $57 monthly charge.

George Dooley of BizAppFusion, a service of Northern Lights Marketing, sees the template-based app as an affordable alternative to pricey custom jobs. Charging between $57 and $117 dollars a month, plus startup fees, BizAppFusion offers clients a range of plans that includes building out their own apps from a back-end site, customizing their apps with different pages, linking to a company's Twitter feed or Facebook page and allowing users to build a mobile website on the cheap. BizAppFusion is a web-based app, meaning it can be downloaded to any smartphone platform through the client's website.

With clients such as Maine Huts and Trails, Mt. Abram ski resort and Fox Ridge Golf Club in Auburn, Dooley says the app is perfect for the small-to-medium business that wants a mobile presence with low maintenance costs. "[Customers] can add and modify things as they please, they don't need us," says Dooley.

App maintenance is a key issue for businesses that make the investment. The most successful apps can gain an almost cult following — see "Angry Birds" — but even the dowdiest inventory-tracking software needs constant updating as companies release newer versions of their mobile operating systems.

"A lot of people think you just kind of build an app and that's it, but if you really want to make this thing work, it's all about maintenance, and the device renewal cycle is so short," says Gallivan. "That's also where it gets to be very expensive; unless you address the issue, people will go out and buy new devices and your apps won't work."

Gallivan currently has 10 versions of his national parks app on Apple's iOS and 10 on Android. "Essentially it's just 10 apps, but really it's a code base of 20 apps," meaning that 20 individual programs need tweaking with each new operating system release. "That's one of the big challenges; people don't realize that it requires real programming," he says.

For companies interested in enhanced smartphone connections, there is a third, less expensive option than creating an app: A mobile website, that is, a version of a company's website optimized for viewing on the smaller, more difficult-to-navigate screen of a mobile device.

"If your website is not optimized for mobile, people are not going to spend time trying to pinch and push it to make the thing readable," says Dooley. "With more and more people accessing the Internet through mobile devices, you need to have something that is compatible."

Mobile websites can be viewed through the web browser of any smartphone, but have limitations. "If you're simply regurgitating the info on your website, build a mobile website. But if you wish to take true advantage of [smartphone] features, then you need a [custom] app," says DeSouza.

The price tag

In a growing market like app development, the price tag on a product can fluctuate wildly. "I think the market is such that people charge what they want, it's like the Wild West; if they think they can get you to pay $50,000, they'll charge you $50,000," says Raphael DiLuzio, a University of Southern Maine design science professor and creator of two apps (read a Jan. 24 profile of DiLuzio on mainebiz.biz.)

Leading a micro-industry startup curriculum for enterprising students at USM, DiLuzio hopes to inject fresh talent into the local app market and moderate prices. "I want to help develop the intellectual capital and resources of individuals to help [establish] equitable and fair market rates," he says.

According to Gallivan and DeSouza, many pricing issues can be addressed if the client and developer have an earnest discussion around costs. "When negotiating a contract, you want to negotiate ongoing support fees. Generally these should be a lot less than upfront development costs — you at least want to bank for a couple of hours per month," says Gallivan.

Since the "product" of the app amounts to little more than thousands of lines of computer code, ownership can be an abstract concept. Gallivan says some clients find their data held hostage to the developer's server pending payment. "You want to make sure the code base is in a third-party repository so no one has the rights. Make sure no one has exclusive access to the code base so that any revisions on the [developer's] local machine are committed to a third-party server," says Gallivan.