November 15, 2012

Top tips to fund your app

Developing apps are expensive. So we have come up with 5 top tips to get funding for your app development or at least bringing your cost down.

1. Crowdfunding

Websites like Kickstarter and Indiegogo are becoming ever more popular and there is no reason why you can’t harness these sites to fund your next app idea.

The core concept behind these sites is that you set your end goal (release your new fancy app) and a financial target (how much money you need) You then offer different tiers of rewards for different donation amounts. People interested in your idea can become a backer, each donating a small amount in return for specified rewards. By bringing together hundreds of micro donations, you can successfully fund your project while developing a uniquely personal relationship with the people who love your product. Your reward tiers will depend on the type and scale of app you are developing, but here are a few examples:

A £2 donation might get you an unlock code for the new app and a personal thank you in the credits.

A £20 donation might get you some swag (tees, stickers etc), a copy of the app and a mention in the credits.

A £100 donation might get you 5 unlock codes for the app, a personal letter of thanks from the founders, and all of the above rewards.

Obviously, reward value should increase with donation amount. Note the word value, not cost. Don’t offer to do their laundry for a year if they donate £50 or you will soon find yourself so busy with fulfilling rewards that you will have no time to actually make the app!


Pros: No seed money required. All you need is a great idea and the skills and time to develop it.
Cons: All or nothing! If you don’t meet your financial goal, all donations are returned and you get nothing, well at least on Kickstarter.[/alert_standard]

We’ll be covering Crowdfunding in much more detail in a later post, so stay tuned!

2. App Specific Crowdfunding

Websites such as Appbackr work in a slightly different way. Interested backers buy wholesale copies of the app which pays the developer instantly, no more waiting around for the app to sell enough copies to pay for itself. The backers then make their money back when the app sells in the App Store. This means it can be used to fund a new app idea, or bolster an existing app that has just been released to the store. Backers have a financial stake in the success of the project, so are likely to promote it to a wider audience.


Pros: Targeted demographic. People interested in investing/buying apps. Money upfront to pay for development costs/heating bills.
Cons: Smaller audience compared to Kickstarter/Indiegogo. Must meet set reserve price.[/alert_standard]

3. Alternate Payment Timescales

The typical App development payment model (at least for us here at ToD) consists of 2 or 3 payment instalments. One initial payment at the start of the project, and the rest spread through out the project.

It may be worth having a chat with your developer to see if they can negotiate on instalments. It’s sometimes possible to have different payment terms, which can help to spread the cost.

It might also be worth talking about deferred payment. (a 30%-50% payment after 3 months)

Bear in mind that your developer has bills to pay too, payment schedules are at the discretion of the developer and sometimes they won’t be willing to negotiate (they might have been burnt before).


Pros: Can help to stagger the cost of development over several months, allowing time to budget/win the lottery.
Cons: Depends on your developer. If you know them personally, you might have a better chance of negotiating more relaxed terms, but don’t expect any handouts.[/alert_standard]

4. Revenue Sharing

This is a great way of both collaborating and cutting costs. Essentially, you pay a percentage of the development costs (between 60%-70%) and the developer recoups the remainder by sharing a percentage of the money earned by the app from sales.

This is perfect if you’ve reached the upper ceiling of your budget and still don’t quite have enough. By giving the developer part of the sales you not only extend your budget, you link them into the project. Much like Appbackr, the developer is now (literally) invested in your app, and might even help out with marketing and promotion.

Combined with Alternate Payment Timescales, Revenue Sharing allows you to bridge the gap between your budget and the development costs of the project. You may also be able to negotiate on upfront percentage (sometimes as low as 60%) but again, this is at the discretion of the developer.

It is important to note, developers will not accept Revenue Sharing unless you can show you’ve done your homework with regards to market research and business planning. They will often want to see a detailed plan of how you’re going to market the app, who’s going to buy it and predicted sales. You are essentially pitching to them as a part-investor, so come prepared and be honest!


Pros: Extends your budget. Developer may promote and market your app.
Cons: Business Plan required. Must convince developers it is worthwhile. [/alert_standard]

5. Cut Costs – Help Out!

One of the most expensive and time consuming parts of any app’s development cycle is the testing phase. You can often save some money (and more importantly, time) by pitching in yourself with the User Testing.

Give Beta copies of your app to 10 friends or family. Tell them to use it, abuse it, and try to make it crash. Only by running the app into the ground will you route out the bugs and glitches. Tell them to be honest, if something does not work it needs to be fixed before end users get a hold of it.

You need to consider who you choose as your beta testers. It will vary depending on the type of app, but picking people who fit into the demographic you want to target is your best approach.

By assisting with this process you can free up your developers to actually fix the problems, rather than trying to find them out firsthand. This speeds up the development process and can shave precious pounds from the budget and weeks from the schedule.


Pros: Speeds Development Up. Frees up Developers to fix problems/refine app.
Cons: Consider your beta testers. Users who are uninterested/inexperienced may be more hassle than help. [/alert_standard]

Hopefully you’ve now got a clearer idea of what you can do to maximise your budget, wrangle a better payment schedule with your developers and cut costs by DIYing where it counts.

Keep an eye on the ToD Blog for more on everything mobile!