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Case Study - Providing App Development Solutions to Small Businesses: Part 1
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Case Study – Providing App Development Solutions to Small Businesses: Part 1

One of the most common excuses not to make mobile apps is they can cost a lot of money to develop.  However, I strongly believe that this limiting belief should not be what stops you from getting into app development and taking action.  So in order to prove this point to you, I’m going to do a case study and show you step-by-step how I am planning on making money to fund my own app ideas by creating apps for other people!  How is this possible?  Let me explain!

About the Case Study

In today’s world where everyone is attached to their smartphones, many bricks-and-mortar businesses are expanding into the app market.  The goal of these apps aren’t to make the business money from advertising or downloads, but instead to expand their branding, reach new customers, and connect with current customers.

Bigger corporations with lots of resources are taking full advantage of these types of apps.  However, many small businesses are lagging in this area as they struggle to figure out exactly how to go about getting a mobile app developed and live on the app store.  Also, many business owners are worried about what the ROI of having a mobile app is and therefore are hesitant about moving forward with getting one developed.

My plan to generate some income is to provide app development services to small businesses in my area.  For this case study I will be focusing on local pizzerias.  Why pizzerias?  Well, there are a few reasons why I am choosing this niche.  First of all, my family orders pizza quite often and I’m kind of embarrassed to say, the local pizzeria owner (and employees) know us by name.  I think that by using that relationship we’ve built with them, it will make it easier to make the sale.  Secondly, two of the major chain pizzerias – Dominos and Pizza Hut are successful making use of mobile apps to connect with customers and to actually let customers place order with.  That should be a big factor in showing local pizzerias that if this model can be successful on a large scale, it can also work well on a smaller scale for them!

About the App

The app that I will pitch to pizzerias will be fairly simple and will consist of four “pages” or “tabs”.  The first tab will be a general information tab about the pizzeria and will include a picture, location, contact info, and a small blurb about the business.  The second tab will contain the pizzeria’s menu.  The third tab will feature a basic order form where users can order pizzas with.  The fourth and final tab will be a page that will contain up to date promotions that the pizzeria is currently running.  The owner of the pizzeria will be able to change the promotions on this page via an admin panel on his or her computer.

I have pitched this idea to a developer I’m working with on another software development project and he estimated that he would charge around $400 to develop this.  However, something to keep in mind is that this will be the price for the first pizzeria.  After the first pizzeria, I can use the app as a template and just ask the developer to switch out the contact information, company info, etc. for another company’s information.  I would estimate that would cost $100 maximum for every sale after the first.

The Master Plan

My plan is essentially to approach local pizzeria owners with this app idea for their business.  I will discuss how I am planning on going about this in my next post.  Essentially though I will explain to them the advantages this mobile app would provide to their business and sell them on using me to develop their business’ app.  The price I am considering charging them is around $800 or $900.  This is still relatively cheap compared to what they would pay using a local developer.  For that reason I think I can eventually charge even more for this service – but for now I want to make it as easy as possible to make my first sale.  I will be asking for half of the payment up front and half after completion.  This allows me to create the app without investing ANY money myself and still make a great profit.

Granted, it will be a challenge to sell a business owner an app that I can’t physically show them.  However, once I get that first sale out of the way, it will become much easier as I will be able to use the first business’ app as an example to other pizzeria owners as what their app would look similar to.  In addition, I will make much more money after the original sale since it will only cost around $100 in expenses for each sale after the first since the developer doesn’t have to make the app from scratch again.

What Do You Think?

I am planning on documenting this journey from start to finish and hopefully prove to you how you don’t need to have money to start an app business.  You just need to be willing to put yourself out there and get started.

I do want to mention though that I am not planning to use this as a long term source of income for me.  While I think it will be nice for generating some cash to fund my app ideas, I don’t want to have to continuously sell to business owners for the rest of my life.  I prefer to use this as a short-term method of funding and invest the money into my own mobile apps that will ideally provide long-term passive income.

Do you think I can do it?  Do you think this is something that will provide value to business owners?  Let me know what you think in the comments section below!  I look forward to hearing your thoughts!

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Comments

  1. David Janner says:

    Hey Thomas,

    You can consider using free or cheap online app building services such as ibuildapp, Seattle clouds, buzz touch, etc to produce these business apps. You shouldn’t really need to spend 400 bucks on it. Some of them have more advanced feature like push notifications and gps notifications which can be a good marketing tool for the businesses. It can be a good way to start anyway to sort of validate he concept and the market before you invest cash. You could even create a portfolio of demo apps so that you have something to show.

    • Yeah I experimented with some free app builders, and my uncle and his business partner used Seattle Clouds to make their apps. However, from what I’ve found they’re not really providing what I’m looking for in regards to design and functionality flexibility. In addition, I know Seattle Clouds charges monthly fees and the support is terrible. So I think personally paying $400 for an app I know will be top quality is the right move. And remember – that I will only have to pay the $400 once.

      And the great thing is that I’ll get 1/2 of $800 or $900 up front so I won’t have to invest any of my own money anyway :)

  2. Hi Thomas, what can I say? this sounds a fantastic little idea, the $400 initial app price is incredible and that the owners can change the details from home on their computer is a very powerful tool. I really like the sound of this and pizza shops is just the start, with so many other food outlets and retail businesses there seems to be a huge potential.

    We are developing a game app at the moment just for a simple fun branding exercise, not sure how popular it will be but it is worth a go.

    I look forward to reading more and seeing how this all pans out. Great idea.
    Speak soon
    Andi

    • Hey Andi,

      Yeah I think this can definitely be done with most small businesses – not just pizzerias. And if this works out well I can additionally create templates for other types of small businesses as well whenever I need more funding.

      Really interested to hear how the game works out for you!

  3. Great post Thomas! We are thinking of offering similar templates to small businesses here. I’d love to talk more with you when we decide to assist the canadian small business market later on. :)

    • Hey Tapha,

      Thanks! I thought this might be right up your alley 😉 When I get some initial responses from pizzeria owners I’ll definitely get in touch with you and maybe we can turn it into a template that anybody can use and sell to their own local pizzerias as well!

  4. Absolutely. Just email me when your ready and we can talk more about what we can do. :)

  5. This is a great idea, Thomas!
    Apps don’t just benefit individual users and app developers. We appreneurs can fill a great need by offering solutions for local businesses who have no idea what it takes to build an app and how it can help them.

    We can be consultants for them. Man, you’re smart! :-)

    • Thanks Will! That’s exactly my thinking – we’d be providing tremendous value to the business owners because the fact of the matter is that most people don’t know the first thing about how to go about getting an app developed. It would totally be worth it if I were in their shoes. That being said – we’ll see if they feel the same way!

  6. Wow, $800 for a business to pay for an app? That seems a little high, remember apps isn’t quite comparable to a website. Is this price point something that a local pizzeria would be willing to pay for this solution? If so, you may be on to something here. If not, might need to revise your strategy some.

    • Hey Steve,

      I would definitely disagree about the price. I actually think $800 is probably too low and I should be charging more. The reason I say that is that first of all, most small business owners have no idea how to go about making an app. Since people see app development as complicated and highly technical they automatically assume they are pretty expensive to create.

      Let’s put it this way: If I wanted to create this app for myself my developer would charge me around $400. Even if someone learned how to outsource the development of their own app like I am doing, they would still have to pay $400. However, they most likely wouldn’t know what to look for in an app developer and they definitely wouldn’t have any experience working with developers. So they may end up spending $400-500 if they did it themselves, but end up getting a crappy app back because they hired the wrong developer.

      My service to these business owners is that I take the guess work out of it for them. I know I’ll provide them with an excellent quality app because I have used the developer I’m working with before and know he’ll put out a great product. Essentially what I’m doing is I’m eliminating a lot of the risk for the business owner. They don’t have to worry about selecting the wrong developer, learning how to outsource properly, etc.

      That’s at least how I look at it. Maybe you’re right and business owners will look at it as too expensive. No matter what though I’m going to definitely test different prices out to find the one that works the best. Maybe that will be $800, maybe $600 or maybe even $1,200. We’ll have to wait and find out 😉

      • I actually think $400 is a pretty good deal for your developer to charge you if he can create a quality app.

        You could probably sell the service to the local pizzeria for $750 or more. A local chain restaurant would be able to see the benefit more than the mom and pop, single store, neighborhood pizza shack though.

        The thing is that, like you mentioned, the major cost would be at the first customer who bought the app. You could even sell it for less than development if you really thought you could get others on board. Pay for it in the long term.

        • Hey Will,

          Yeah I think as long as the app is of good quality (which from this developer I know it will) $400 is a great deal in my opinion. The problem with chain restaurants is that sometimes the national company has an app (like Pizza Hut and Domino’s) so they wouldn’t have a use for mine. Also, some chain restaurants would require corporate approval which is a pain and I don’t want to have to deal with. So for those reasons I’m probably going to be targeting the independent local pizza places.

          Also, you’re probably right that it might even be worth it for the first app to give them a good deal and only charge like $350 just to get the ball rolling. However for this case study I want to prove to people that you don’t need any money invested up front to make this work, so I’m not going to do that. Plus I don’t think that will be a problem just because I think the app provides way more than $350 worth of value to the pizza shop owner.

      • Or another method you might want to consider is finding 4 local pizzerias who will pay you $200 to cover development costs and then some….this way the cost is much more bearable for mom and pop pizzerias and it still gets you to where you want to be. All other pizzerias could pay the $100 or so, but you’ll want to include something special for the pizzerias who helped you with the development part.

        • Another possibility I’m considering is that maybe before I tell them what the price is, I’ll be upfront and ask them what they would value it at…

  7. Hey mate sounds like a nice idea, Maybe you could show them sample screen shots to help the sell. You might need to even part make the app to show them. While $800 is cheap for an app you need to remember these guys probably think $800 is expensive and would not be willing to pay that much. I have worked with local businesses in the past and they can be super cheap with their funds. I like the idea of trying to find out what one of their pain points are and trying to fix that issue with an app for example this way if you have a solution the app would sell itself. Either way I think you have a good approach to get some cash in for your own apps…keep the cash flow coming 😉

    Keep us updated anyway hope your plan works out well

    • Hey Matt – Yeah the point of $800 being cheap but being perceived as expensive will most likely be my biggest challenge. I think once I get the ball rolling with the first app I’ll be able to have a live example for owners to actually hold in their hands and that will make it much easier to sell. But in the meantime I’ll have mockups and use larger companies as case studies. Hopefully that will be good enough for now, but we’ll see!

  8. Very interesting idea and one which I have been considering myself recently. I’ll be very interested to see how it works out for you.

  9. If I were you, I’d do it for free for the shop you said your whole family is known at and from there I’d use them as template, reference and launching pad to go to others.
    The main point is that the app has to do something fine to either their top-line or bottom-line. Just saying big players have app so should you won’t fly.

    • Hi Vivien – Looking back, you were probably right about doing it for free for the first pizzeria and getting a testimonial and an example app to show. I was trying to do it without spending any money up front, a much harder method. However sometimes it is better to spend a little money to get started so people can hold the app in their hand and play around with it before committing to a large amount of money. Plus I’d be able to show data on how the app has contributed to the test pizzeria’s revenue or profit further sealing the deal.

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