So, you’ve built an amazing app, it’s been downloaded from the iTunes and Google Play stores thousands of times, and you’ve received fantastic feedback. Except now you want to move on. Maybe you don’t have the time to maintain it, or maybe you just want to sell while it’s successful so that you can move onto something new. Whatever the reason, knowing how to value and sell an app can be a minefield. In this article, we’re going to hopefully break down some of these barriers, making the process a whole lot easier for you.
1. You Need to Get it Valued
Before you even think about selling your app, you need to work out how much it is worth. The main thing you’ll want to look at here is how it’s monetized. Your net cash flow is the most important metric that potential buyers will be interested in so it’s important to get this right. In order to work this figure out, you need to look at how much money your app makes, and how much your expenses are. Expenses should include everything from the fees you pay to the app stores, to the money it costs on maintenance.
When you have your net cash flow worked out, you can then value it through the method of multiples. The multiple to use will vary, but most apps sell for 2 to 3x the annual net cash flow. So, an app that makes $50,000 a year will be worth somewhere between $100,000 and $150,000. If your app looks like it could grow even larger in the future, or if it requires a very small-time commitment to maintain, you can expect this figure to be higher.
2. Find a Buyer
With your valuation in hand, your next step is to find a buyer. Unless someone has already reached out to you and asked to purchase it, the easiest way to do this is to list it for sale on a marketplace. App Business Brokers and Flippa are the most common marketplaces in which to sell apps right now, but there are others out there.
When listing your app on a marketplace, you’ll want to make sure to include as much information as possible. Include screenshots of as many metrics as you can, proof of your earnings, and information about the maintenance requirements. Also, be sure to mention whether you will provide any after sales support to the buyer.
If you don’t like the idea of listing your app on a marketplace, you can also use social networking websites like LinkedIn to find buyers, or reach out to larger companies in your niche to see if they would be interested.
3. Seek Legal Advice if Required
Finally, it’s very likely that no matter where you choose to sell your app, the buyer will want to negotiate for a better price. If selling through a marketplace or a broker, they will usually be able to help you with the negotiation to some extent, but it’s important to remember that they have very limited legal duties as far as your sale is concerned, so it’s best not to rely on them unless your app is worth very little.
If your app is worth a lot of money, it may be worth hiring an attorney to help you with the sales process. They will have your best interests at heart and will be able to negotiate on your behalf to help you achieve the best deal possible. They will also be able to ensure that the transaction is legally above board and possibly also help you have the app appraised by a professional. They’re almost always worth the cost.
Have you sold an app recently? We’d love to hear about your experience in the comments.
Cover Photo by Mikhail Nilov from Pexels