Being the founder or owner of a mobile app that you’ve either acquired or built from the ground up can be extremely rewarding. It can also be demanding and a drain on your focus and resources. Sometimes, you might reach a stage where it makes more sense, financially or otherwise, to sell your mobile app and move on to other projects.
Whatever your reasons might be for wanting to sell, the process itself can get complicated quickly. Location of sale, legal restrictions and requirements as well as the brass tax of selling (valuing, negotiating, transferring rights) all impact how easy it is for you to sell your app to a willing buyer.
If you’re new to the process of selling, the list of requirements and best practices can easily overwhelm you. Being as prepared as possible and knowing what to expect can help you make the right decision when deciding where and how to sell and for how much. Read on to learn everything you need to know for how to sell your app.
App owners and founders may decide to sell for numerous reasons. Your reasons for deciding to sell could be personal or professional, or a combination of both. Below are a few common reasons founders may decide to sell.
Running and overseeing your app is simply taking too much of your time. Some founders simply create or purchase apps for the sole purpose of reselling or cashing out. If this sounds like you, it could be that you’ve simply achieved your goals or no longer want to pursue developing or managing the app further.
You may have seen immense potential when you first built or bought the app but market conditions can change over time, affecting an app’s value. Perhaps you don’t have the time, insight or capital necessary to further develop your app’s services and value proposition so it maintains relevance and profitability, and it would be better off in the hands of someone who does.
It may also be the case that you’re looking to sell because you have other business ideas and interests you want to pursue. To do this, you need the capital and the time, both of which you can acquire from selling your app. An added benefit is that you pay less in capital gains tax than you would from declaring the profit you earn as income.
You may have valid reasons for wanting to sell your app, but before you can begin the process, you first need to check and ensure that you’re legally able to sell it on the App Store your app is listed on. Apple for example has strict transfer conditions that help facilitate the sale of an app from one developer account to another.
Your app will need to meet certain transfer criteria before you can consider selling it. Additionally, Apple has limitations that prevent an app from being transferred between accounts. No version of the app can use iCloud Entitlement or Passbook entitlement and at least one version of the app must have been released on the App Store, among other requirements.
If your app happens to fall under one of these restrictions, you won’t be able to transfer your app to a buyer’s account. Instead, you’ll need to transfer your entire developer account to them as part of the purchase.
This means if you have other existing apps within your account, you’ll need to transfer them out of your account first or sell them alongside your primary app.
The process of selling your app consists of several steps, and it shouldn’t be rushed otherwise you may end up selling it for less than it’s worth or signing a contract that benefits the buyer and not you! It’s important to take your time here and follow best practices for selling, especially if you’re unfamiliar with the selling process.
The first step to selling is knowing the value of your mobile app. It’s standard practice to look at net revenue generation (gross revenue minus VAT and commission) and then apply a revenue multiple.
However, your app’s value isn’t just tied to its profitability (although this counts for a large portion of it). Potential buyers are also going to look at things like the app’s features, category, revenue model, user acquisition and growth, as well as churn rate. Also, keep in mind that the number you end up at might not necessarily be the final value you sell your app for.
If you need a hand in valuing your app, Appic offers free, comprehensive app evaluations.
Before taking the plunge and listing your app for sale, make sure there aren’t any obvious faults or issues with its code, development, or financials that potential buyers could pick apart during negotiations. The more work you put into making sure your app is operating as it should and generating revenue as well as user growth, the more profit you’ll be able to pocket when selling.
There are two ways to go about finding a buyer. One is to try and connect directly with a buyer either through networking or advertising. If selling is new to you and you’re not well versed with the processes and costs associated with the sale and transfer of ownership, there is a risk of something going wrong.
A buyer could default on a sale after seeing your unique source code or feature in development, or it could be something as simple as you getting short-changed in a sale. If you decide to go the private route make sure you know what to expect and prepare for it.
The other way is to sell your app in an online marketplace. They serve as a platform on which you can safely and legally conduct a sale that’s above board. They will usually have an existing pool of potential buyers on the platform.
This option might be the safer bet if you’re new to selling, as online marketplaces can help with facilitating the process, but the downside is that they generally collect a fee or commission for sales made.
At Appic, we specialise in vetting, evaluating, buying and growing innovative, high-potential mobile apps. We’re dedicated to realising an app’s full potential through development, marketing and growth - while giving you the freedom to choose how involved you want to be.
Whether you’re an owner or founder, we can help you determine where your app is at in terms of value and where it could go in terms of potential. We offer two options for app owners:
We keep our processes clear and straightforward so you know exactly what you’ll be getting out of choosing to sell to or partner with us. We also work to maintain your founding vision while expanding your app’s value. Our solutions are bespoke and we can customise our capabilities to suit your needs.
If you’re ready to sell your app, or simply want to learn more about what it could be worth, contact us and we’ll let you know how we can help.