Buy or Rent

I have noticed a trend nowadays for app writers to rent out their apps at £x a month. This is sheer greed in many cases. The only legitimate case for this is if they have to rent business premises and employ staff to give massive backup. If they need to give such large backup, there may be a design fault in the app.

Take an app with 380,000 users containing advertising. They get an ongoing income, probably not that large, but they offer an upgrade for an app with no advertising and some extra benefits for £2.75. Supposing 170,000 decide to buy it as they love the app and want to support the writer. That’s an income of £467,500 – without the advertising income of the non-purchasers.

Some information on this

The effective cost per 000 impressions, a measure that equalizes advertising revenue of apps with different click-through rates, ranged between $0.53 and $1.12 in 2012. An impression occurs each time a new ad is displayed to a user. So if an app averages 1,000 daily users who see two ads each at an CPM of $0.50, the app would generate $1 on average each day.

Now supposing there is a similar app someone is renting at £1.25 a month. Supposing they only have 85,000 users. That is a regular income of £106,250 but this is per month. One person is paying £1.25 a month which is £15.00 a year. Suppose he uses it over a ten year period? That’s £150.00 you’ve paid. And, overall, the app writer makes £12,750,000 – nice work if you can get it.

Take the Quickbooks invoicing app. £9.99pm = £119.88pa = £1,198.88 in ten years. And that’s for one app from one person!

My advice here is, do not rent software if you can help it. An exception could be that you are in business and the app will save you more than the cost, and you can write it off for tax purposes.

I have set up and run five businesses in my life, selling them when the work has become boring and there were no more “challenges”. Annual spreadsheets normally show income and expenditure. Mine showed income, variable expenditure and fixed expenditure. (as an example, telephone equipment came under fixed and calls – which I could control - came under variable). I never minded fixed expenditure too much, but came down hard on variable expenditure. Companies go into liquidation and people enter bankruptcy for not looking at the variables!