We’ve been reading about it on Twitter for the past 2 days, now even TUAW picked up the story of an iPhone Developer who wishes to sell his entire business for $100000. Leaving out of our consideration that probably nobody has this much money around anyway it’s still an interesting impulse to start thinking of how much your own iPhone business would actually sell at…. should you ever WANT TO sell it.
With the seemingly limited journalistic means of TUAW all the author came up with was some general quotes and rants. I dug a bit deeper and think it’s interesting to write down what I found in neutrally evaluating this offer. TUAW repeats the seller’s offer on how he will support you, hand over everything, yadi yadi yadi.
But we all are children of numbers and algorithms. So I think we deserve a little bit deeper analysis. This I will attempt in this article.
Usually the value of a business is estimated by taking the estimated future income for 5-6 years. The owner of this business claims $100-$150 of daily royalties. This is the amount that the owner quoted to me when I asked him. So this puts the value of this business into the theoretical range of $219 – $328k.
By asking for less than half this amount he’s basically telling the prospective buyer that he “needs out”. And offers an amortization of less than 3 years. Assuming of course that the sales stay more or less constant for this time. If we consider a decreasing long tail of the sales it might take up to 5 years so $100k is a realistic asking price.
As per my suggestion he also put sales data onto his site so that people might form a more founded opinion about his offer. This shows that his business shows a healthy growth until two months ago, with a steep decline in the last month. Total royalties earned so far are 28,156.57 Dollars shown on the chart. So 3-4 years worth of annual sales might amortize your $100000.
There’s a downside as well. If 87 apps ONLY make $100 a day, then this means that most of his apps can be only generating around $1 a day, which equates to 1-2 sales a day. This is the typical pattern of apps that very few customers are interested in but still – on a market of millions of iphones – there’s always SOMEBODY who is willing to spend a buck.
In case of business that don’t have any real income (like Facebook or Twitter) often investors judge the value by the number of customers. The theory goes that if you have millions of eyes on the product(s) then the company must be worth something. My friends over at Applyzer where so kind to provide me with a list of sales ranks for JBMJBM. Notice anything special?
| Name |
Rank |
Category |
Price |
Country |
| Aggieland VIP Card |
53 |
Business |
FREE |
Uruguay |
| San Marcos VIP Card |
86 |
Business |
FREE |
Egypt |
| Rule Of 72 |
55 |
Finance |
$0.99 |
Qatar |
| Sit Up Counter (Accelerometer Auto-Counter) |
61 |
Healthcare & Fitness |
$0.99 |
Pakistan |
| Sit Up Counter (Accelerometer Auto-Counter) |
63 |
Healthcare & Fitness |
$0.99 |
Russia |
| Antz |
66 |
Lifestyle |
$0.99 |
Argentina |
| Antz |
10 |
Lifestyle |
$0.99 |
Brazil |
| Antz |
12 |
Lifestyle |
$0.99 |
Colombia |
| Antz |
60 |
Lifestyle |
$0.99 |
Costa Rica |
| Antz |
41 |
Lifestyle |
$0.99 |
Czech Republic |
| Antz |
97 |
Lifestyle |
$0.99 |
India |
| Antz |
78 |
Lifestyle |
$0.99 |
Lebanon |
| Antz |
53 |
Lifestyle |
$0.99 |
Mexico |
| Antz |
31 |
Lifestyle |
$0.99 |
New Zealand |
| Antz |
80 |
Lifestyle |
$0.99 |
Panama |
| Antz |
11 |
Lifestyle |
$0.99 |
Qatar |
| Antz |
24 |
Lifestyle |
$0.99 |
Saudi Arabia |
| Antz |
99 |
Lifestyle |
$0.99 |
Singapore |
| Antz |
14 |
Lifestyle |
$0.99 |
South Africa |
| Antz |
26 |
Lifestyle |
$0.99 |
Thailand |
| Antz |
69 |
Lifestyle |
$0.99 |
United Arab Emirates |
| Antz |
25 |
Lifestyle |
$0.99 |
Venezuela |
| Antz |
9 |
Lifestyle |
$0.99 |
Dominican Republic |
| Antz |
45 |
Lifestyle |
$0.99 |
Estonia |
| Pool / Billiards Rules |
79 |
Sports |
$0.99 |
Argentina |
| Sport Rule Books – Locally Stored |
83 |
Sports |
$0.99 |
Austria |
| Pool / Billiards Rules |
27 |
Sports |
$0.99 |
Brazil |
| Pool / Billiards Rules |
13 |
Sports |
$0.99 |
China |
| iSexyRef2 (Sexy Referee Signals) |
80 |
Sports |
$0.99 |
China |
| iSexyRef2 (Sexy Referee Signals) |
99 |
Sports |
$0.99 |
Colombia |
| Hockey Rules |
78 |
Sports |
$0.99 |
Costa Rica |
| Pool / Billiards Rules |
79 |
Sports |
$0.99 |
Costa Rica |
| Soccer / Football Rules |
86 |
Sports |
$0.99 |
Croatia |
| Poker Rules & Hands |
54 |
Sports |
$0.99 |
Denmark |
| Football Rule Book |
84 |
Sports |
$0.99 |
Denmark |
| Pool / Billiards Rules |
44 |
Sports |
$0.99 |
El Salvador |
| Poker Rules & Hands |
96 |
Sports |
$0.99 |
India |
| Pool / Billiards Rules |
72 |
Sports |
$0.99 |
Korea |
| Tennis Rule Book |
75 |
Sports |
$0.99 |
Kuwait |
| Poker Rules & Hands |
48 |
Sports |
$0.99 |
Lebanon |
| Pool / Billiards Rules |
85 |
Sports |
$0.99 |
Lebanon |
| Poker Rules & Hands |
76 |
Sports |
$0.99 |
Luxembourg |
| Pro Rodeo Fan |
6 |
Sports |
$0.99 |
Panama |
| BIG Red College Sports Fan (Arkansas) |
61 |
Sports |
$0.99 |
Panama |
| iReferee (Referee Signals) |
76 |
Sports |
$0.99 |
Panama |
| iSexyRef2 (Sexy Referee Signals) |
91 |
Sports |
$0.99 |
Peru |
| Pool / Billiards Rules |
74 |
Sports |
$0.99 |
Phillipines |
| Poker Rules & Hands |
65 |
Sports |
$0.99 |
Portugal |
| Pool / Billiards Rules |
26 |
Sports |
$0.99 |
Qatar |
| Basketball Rule Book |
53 |
Sports |
$0.99 |
Romania |
| Pool / Billiards Rules |
82 |
Sports |
$0.99 |
Romania |
| Soccer / Football Rules |
93 |
Sports |
$0.99 |
Saudi Arabia |
| Poker Rules & Hands |
84 |
Sports |
$0.99 |
Turkey |
| Pool / Billiards Rules |
30 |
Sports |
$0.99 |
United Arab Emirates |
| iSexyRef2 (Sexy Referee Signals) |
72 |
Sports |
$0.99 |
United Arab Emirates |
| Pool / Billiards Rules |
53 |
Sports |
$0.99 |
Vietnam |
| iSexyRef (Sexy Referee Signals) |
62 |
Sports |
$0.99 |
Vietnam |
| Poker Rules & Hands |
32 |
Sports |
$0.99 |
Dominican Republic |
| Poker Rules & Hands |
12 |
Sports |
$0.99 |
Uruguay |
| Pool / Billiards Rules |
3 |
Sports |
$0.99 |
Moldova |
| Basketball Rule Book |
23 |
Sports |
$0.99 |
Malta |
| Twenty One (Blackjack, 21) |
19 |
Sports |
$1.19 |
Latvia |
| iSexyRef2 (Sexy Referee Signals) |
41 |
Sports |
$0.99 |
Latvia |
| Pool / Billiards Rules |
8 |
Sports |
$0.99 |
Ecuador |
| Twenty One (Blackjack, 21) |
57 |
Sports |
$1.19 |
Egypt |
| Gas Pedal |
80 |
Games/Racing |
$0.99 |
Slovenia |
Hm, these apps are absent from the biggest (read “toughest”) markets USA and Germany. This again serves to prove the point that the resulting income is luck rather than high quality produce. Since there is no focus to any market that could easily be upsold to new or improved products it is even more of a tough sell.
I am not saying that this guys’s apps are crap. I did only glance over the list and have a look at the rankings in Applyzer. But all the indicators tell me that this business comes with a maintenance hell. On his eBay page he gives “time consuming” as one of the reasons for his wish to find a buyer. I believe this to be a serious understatement. The first thing a buyer would have to do is to seriously simplify the portfolio. Most likely also folding several similar apps into one and selling the different content via in-app-purchase.
To also say something positive: This guy has to be commended for having the tenacity that is necessary to create that many apps and the stubbornness required to get all those apps past the critical eyes of the Apple Review Team. And finally for stirring some emotions in all small-time iPhone developers thinking to themselves “Hm, I could take a shortcut into a working business. Then I would not have to come up with so many app ideas”.
I came to the conclusion that I will have to pass on this opportunity because I don’t think this business is working or at least workable in the long term.
We've been reading about it on Twitter for the past 2 days, now even TUAW picked up the story of an iPhone Developer who wishes to sell his entire business for $100000. Leaving out of our consideration that probably nobody has this much money around anyway it's still an interesting impulse to start thinking of how much your own iPhone business would actually sell at.... should you ever WANT TO sell it.
With the seemingly limited journalistic means of TUAW all the author came up with was some general quotes and rants. I dug a bit deeper and think it's interesting to write down what I found in neutrally evaluating this offer. TUAW repeats the seller's offer on how he will support you, hand over everything, yadi yadi yadi.
But we all are children of numbers and algorithms. So I think we deserve a little bit deeper analysis. This I will attempt in this article.
Usually the value of a business is estimated by taking the estimated future income for 5-6 years. The owner of this business claims $100-$150 of daily royalties. This is the amount that the owner quoted to me when I asked him. So this puts the value of this business into the theoretical range of $219 - $328k.
By asking for less than half this amount he's basically telling the prospective buyer that he "needs out". And offers an amortization of less than 3 years. Assuming of course that the sales stay more or less constant for this time. If we consider a decreasing long tail of the sales it might take up to 5 years so $100k is a realistic asking price.
As per my suggestion he also put sales data onto his site so that people might form a more founded opinion about his offer. This shows that his business shows a healthy growth until two months ago, with a steep decline in the last month. Total royalties earned so far are 28,156.57 Dollars shown on the chart. So 3-4 years worth of annual sales might amortize your $100000.
There's a downside as well. If 87 apps ONLY make $100 a day, then this means that most of his apps can be only generating around $1 a day, which equates to 1-2 sales a day. This is the typical pattern of apps that very few customers are interested in but still - on a market of millions of iphones - there's always SOMEBODY who is willing to spend a buck.
In case of business that don't have any real income (like Facebook or Twitter) often investors judge the value by the number of customers. The theory goes that if you have millions of eyes on the product(s) then the company must be worth something. My friends over at Applyzer where so kind to provide me with a list of sales ranks for JBMJBM. Notice anything special?
Name
Rank
Category
Price
Country
Aggieland VIP Card
53
Business
FREE
Uruguay
San Marcos VIP Card
86
Business
FREE
Egypt
Rule Of 72
55
Finance
$0.99
Qatar
Sit Up Counter (Accelerometer Auto-Counter)
61
Healthcare & Fitness
$0.99
Pakistan
Sit Up Counter (Accelerometer Auto-Counter)
63
Healthcare & Fitness
$0.99
Russia
Antz
66
Lifestyle
$0.99
Argentina
Antz
10
Lifestyle
$0.99
Brazil
Antz
12
Lifestyle
$0.99
Colombia
Antz
60
Lifestyle
$0.99
Costa Rica
Antz
41
Lifestyle
$0.99
Czech Republic
Antz
97
Lifestyle
$0.99
India
Antz
78
Lifestyle
$0.99
Lebanon
Antz
53
Lifestyle
$0.99
Mexico
Antz
31
Lifestyle
$0.99
New Zealand
Antz
80
Lifestyle
$0.99
Panama
Antz
11
Lifestyle
$0.99
Qatar
Antz
24
Lifestyle
$0.99
Saudi Arabia
Antz
99
Lifestyle
$0.99
Singapore
Antz
14
Lifestyle
$0.99
South Africa
Antz
26
Lifestyle
$0.99
Thailand
Antz
69
Lifestyle
$0.99
United Arab Emirates
Antz
25
Lifestyle
$0.99
Venezuela
Antz
9
Lifestyle
$0.99
Dominican Republic
Antz
45
Lifestyle
$0.99
Estonia
Pool / Billiards Rules
79
Sports
$0.99
Argentina
Sport Rule Books - Locally Stored
83
Sports
$0.99
Austria
Pool / Billiards Rules
27
Sports
$0.99
Brazil
Pool / Billiards Rules
13
Sports
$0.99
China
iSexyRef2 (Sexy Referee Signals)
80
Sports
$0.99
China
iSexyRef2 (Sexy Referee Signals)
99
Sports
$0.99
Colombia
Hockey Rules
78
Sports
$0.99
Costa Rica
Pool / Billiards Rules
79
Sports
$0.99
Costa Rica
Soccer / Football Rules
86
Sports
$0.99
Croatia
Poker Rules & Hands
54
Sports
$0.99
Denmark
Football Rule Book
84
Sports
$0.99
Denmark
Pool / Billiards Rules
44
Sports
$0.99
El Salvador
Poker Rules & Hands
96
Sports
$0.99
India
Pool / Billiards Rules
72
Sports
$0.99
Korea
Tennis Rule Book
75
Sports
$0.99
Kuwait
Poker Rules & Hands
48
Sports
$0.99
Lebanon
Pool / Billiards Rules
85
Sports
$0.99
Lebanon
Poker Rules & Hands
76
Sports
$0.99
Luxembourg
Pro Rodeo Fan
6
Sports
$0.99
Panama
BIG Red College Sports Fan (Arkansas)
61
Sports
$0.99
Panama
iReferee (Referee Signals)
76
Sports
$0.99
Panama
iSexyRef2 (Sexy Referee Signals)
91
Sports
$0.99
Peru
Pool / Billiards Rules
74
Sports
$0.99
Phillipines
Poker Rules & Hands
65
Sports
$0.99
Portugal
Pool / Billiards Rules
26
Sports
$0.99
Qatar
Basketball Rule Book
53
Sports
$0.99
Romania
Pool / Billiards Rules
82
Sports
$0.99
Romania
Soccer / Football Rules
93
Sports
$0.99
Saudi Arabia
Poker Rules & Hands
84
Sports
$0.99
Turkey
Pool / Billiards Rules
30
Sports
$0.99
United Arab Emirates
iSexyRef2 (Sexy Referee Signals)
72
Sports
$0.99
United Arab Emirates
Pool / Billiards Rules
53
Sports
$0.99
Vietnam
iSexyRef (Sexy Referee Signals)
62
Sports
$0.99
Vietnam
Poker Rules & Hands
32
Sports
$0.99
Dominican Republic
Poker Rules & Hands
12
Sports
$0.99
Uruguay
Pool / Billiards Rules
3
Sports
$0.99
Moldova
Basketball Rule Book
23
Sports
$0.99
Malta
Twenty One (Blackjack, 21)
19
Sports
$1.19
Latvia
iSexyRef2 (Sexy Referee Signals)
41
Sports
$0.99
Latvia
Pool / Billiards Rules
8
Sports
$0.99
Ecuador
Twenty One (Blackjack, 21)
57
Sports
$1.19
Egypt
Gas Pedal
80
Games/Racing
$0.99
Slovenia
Hm, these apps are absent from the biggest (read "toughest") markets USA and Germany. This again serves to prove the point that the resulting income is luck rather than high quality produce. Since there is no focus to any market that could easily be upsold to new or improved products it is even more of a tough sell.
I am not saying that this guys's apps are crap. I did only glance over the list and have a look at the rankings in Applyzer. But all the indicators tell me that this business comes with a maintenance hell. On his eBay page he gives "time consuming" as one of the reasons for his wish to find a buyer. I believe this to be a serious understatement. The first thing a buyer would have to do is to seriously simplify the portfolio. Most likely also folding several similar apps into one and selling the different content via in-app-purchase.
To also say something positive: This guy has to be commended for having the tenacity that is necessary to create that many apps and the stubbornness required to get all those apps past the critical eyes of the Apple Review Team. And finally for stirring some emotions in all small-time iPhone developers thinking to themselves "Hm, I could take a shortcut into a working business. Then I would not have to come up with so many app ideas".
I came to the conclusion that I will have to pass on this opportunity because I don't think this business is working or at least workable in the long term.
Categories: Business
Good analysis.
I posted a link to your article as a comment on the TUAW story.
Good analysis but…
Looks to me from his chart, 86% of his sales come from US. So your little analysis seems skewed but the chart could be wrong too, who knows.
I think I will take a look into it further and ask the guy more probing questions.
Joe, the chart is absolutely misleading. It probably includes free apps and for the whole year. My data from Applyzer is a snapshot from yesterday. Don’t see US there anywhere. To me the only obvious interpretation is that there are not enough sales in the USA in the categories mentioned for the apps to be in the top 100 there.
By the way…here is the page with the charts http://www.jbrice.com/sell
I contacted JBMJBM, LLC and he verified and gave me numbers for these and most all the sales are from the US.
O’Yes and 4 of his apps are free and the chart is just for paid apps, I asked the same thing b/c I thought it could be skewed for free apps but it is not.
Well, numbers can be forced to say just about anything if you torture them long enough. Fact is, there are no hit apps, or else you would see at least one amongst the US Top 100.
Joe, why don’t you buy it for 100k cash then? You obviously already made up your mind that it is a good deal in your view.
In my article I am giving the reason why _I_ would not buy it. You are free to decided whatever you want. Personally I would only buy something that has an appropriate intrinsic value. Like existing licenses or some great technology that has R&D behind it.
To just go by the number that Apple transfers to a companies bank account every month does not constitute due diligence.
The owner contacted me and I sent him a list of deeper probing questions. Maybe he has a better, more positive, answers to what we are all thinking.
You seem really interested in defending the upside of this business sale. Are you a friend of Brice? If yes, you should disclose this.
I also disclosed that I used my friendship with the guys from Applyzer to get the publicly available top 100 ranking data compiled into this table I used.
I invited Brice to respond to my hard questions and offered for a follow-up article to present his view. Maybe even offer financial reports or the MyAppSales apps.db for download so that everybody can do his own projections and calculations.