Quantifying the Benefits

Your next step in the cost/benefit analysis is to determine the expected benefits from the creation of your app. This is a little trickier than estimating the costs to build your app, but this step is a crucial part of the cost/benefit equation. Keep in mind that most app developers are looking for monetary benefits from their first app. Therefore, you'll need to spend a little time estimating potential sales of your app. Be sure to refer to other chapters in this book to understand market sizing and appropriate pricing for your app.

Some developers offer a free app as a forerunner to another paid app or to demonstrate their skills and solutions, in an effort to obtain consulting opportunities. In such a case, you wouldn't list a profit benefit for your app. Follow these steps to help you quantify the anticipated monetary and nonmonetary benefits of your app:

1. Create another list, similar to the one you used for costs, of all the monetary benefits that will be realized with the creation of your app (see Table 11.3). First on the list is the overall direct profit you hope to achieve from the sale of your app. Next might be additional investment capital you hope to attract by building a fantastic app. Other benefits might be less tangible, such as decreased production costs, name recognition, and building a solid app development reputation.

Table 11.3 A List of All Monetary and Nonmonetary Benefits You Hope Your App Will Achieve Once Completed

Monetary Intangible Completion of App Benefits Benefits

Monetary Intangible Completion of App Benefits Benefits

*The profit assumption must be made by doing an estimate of your target market size multiplied by your app's per-unit price. For more information on sizing your target market, refer to Chapter 4, "Identifying Your Target Audience."

Totals_

*The profit assumption must be made by doing an estimate of your target market size multiplied by your app's per-unit price. For more information on sizing your target market, refer to Chapter 4, "Identifying Your Target Audience."

2. Assign some monetary and nonmonetary values to your list. In the example shown in Table 11.4, the developer has created a productivity app that will be sold for $4.99 on the Android Market. The app is expected to have 5,000 downloads over the next six months based on marketing efforts. Once you have filled in all the details for which you have information, add them up at the bottom of the table. Table 14.4 shows the inputs for both monetary and nonmonetary benefits.

Table 11.4 A List of All Monetary and Nonmonetary Benefits with Numeric Values Assigned

Completion of App

Monetary Benefits

Intangible Benefits

Profit from sale of app

$17,465 (after Google's 30% share).

Additional investment capital if app does well

None.

Decreased production expense due to standard, reusable app structure

$3,500.

Name recognition

Yes.

Yes, not quantifiable.

Building a solid app development reputation

Yes, I anticipate this app will lead to other projects, consulting deals ($10,000).

Yes, I expect this to lead to a stronger reputation in the app development community.

Totals

$30,965

0 0

Post a comment