When Marco Armant talked about licensing custom fonts for use in apps I did a bit of research myself because I wanted to know the modalities available for us iOS developers.

There are many businesses based on licensing fonts for use on desktop machines as well as web apps. But just to get a general feeling about this I semi-randomly picked MyFonts.com. They also have a fabulous app called What The Font? on the app store that lets you find fonts by snapping a picture of some text.

The font business has not really cared much about apps so far, but now with a Retina display in the size of an iPad this becomes a viable target market for them, as developers are trying to get an unique look by offering great fonts for apps that you read something with.

If you look at the MyFonts.com website you only find two kinds of licenses:

• Desktop – for a single user
• Web – multiple tiers based on many page views

What’s clearly missing in this list is a license that fits the use case for apps. You need to package the font in the app bundle to use it, but you don’t have something like page views in iOS apps.

So I asked MyFonts about that and they responded:

Yes, that is true; at present, we offer only desktop and web font licenses.

However, we are currently offering app licenses when requested.

App licenses allow fonts to be embedded into any applications including mobile, desktop, and server apps.

Embedding a font into an app allows the font to be used within the app to render any text at any size or orientation. The text may be fixed, variable or may have originated from user input.

The font(s) must be securely embedded into applications so that they can be used solely in conjunction with the application and not extractable or accessible from other applications.

The license price depends only on number of distinct apps and is based on the desktop font price:

each app: 25x / year or 75x for a perpetual license

For distributed apps, an annual license must be renewed while the app continues to be offered for sale.

For server apps, an annual license must be renewed while the app is continues to be available for use.

If an app is made available for multiple platforms, each platform-specific version of the app is considered a separate app.

Flash apps that can be run on any Flash platform count as one app.

I wanted them to further clarify this “securely embedded” part, to which they responded:

We understand that there are limitations to the extent to which you can hide fonts in the iOS environment. We just want to be sure that they are hidden to the greatest extent possible within the environment to avoid undue misuse of the property you have licensed.

So the basic price to license a single font for a single app is 25 times the basic price of the desktop font and you have to pay that every year that this app is on sale. Alternatively if you assume that this app will “live” more than 3 years, then it makes sends to go for the unlimited license which is at 75 times the base price.

They also have discounts if you want to license the font for more than a single font:

• 2 apps: 35x / year (or 105x for a paid-up perpetual license)
• 3-5 apps: 50x / year (or 150x for a paid-up perpetual license)
• 6-10 apps: 75x / year (or 225x for a paid-up perpetual license)
• 11-25 apps: 125x / year (or 375x for a paid-up perpetual license)
• unlimited number of apps: 250x / year (or 750x for a paid-up perpetual license)

Conclusion

Licensing fonts is definitely “de luxe”. On quick browsing I found fonts ranging from $0 to $16.50. Also you have to bear in mind that italic and bold are separate type faces. So you might have to license all 4 combinations for a font.

So that would mean $16.50 x 4 x 25 = $1650 per year.

This kind of expense you would probably only dare if you are pretty certain that you will make it up easily.

Today BinPress announced the winners of the component contest. I had the pleasure of being one of the judges.

BinPress had custom-built an internal microsite for us judges where we could download the source code and fill in a form with our judgements. That allowed me to go into the components I was assigned to and really dig into the implementation details. Sorry, but I need to be wagging my finger here, all of the ones I saw had terrible form, little to no code style, the project setup generally was a mess and documentation non-existent.

But nevertheless a ranking was possible – especially because there where other equally important judging factors besides code quality. And so the shining winners are …

• Third place goes to RadioTunes SDK for iOS which is basically a wrapper for FFmpeg to decode various formats of Internet Radio streams.
• Second place is won by AsyncMVP which I have no idea what it does. Neither do I care because it is for Android.
• First prize was iCarousel which gives us multiple forms of carussels, including cylindrical, flat and “CoverFlow” style carousels.

The grand prize winner combines amazing functionality with exceptional code style. He gets $1500 cash plus $10000 worth of other goodies.

So one way or the other participating in this contest was definitely worth it. For the winners because of the additional business their components are seeing now and the tangible prize money they are raking in. For BinPress because of the publicity and for me as a judge because I got to see code that other developers are selling. And the latter strengthens my own resolve to renew my efforts to write nicer code.

Mixergy.com had Calvin Carter, founder of Bottle Rocket Apps, for an interview that gives a great insight what made Bottle Rocket the force they are today. Carter candidly shares several amazing points that can help you improve your business as well.

Let me share my notes with you, in case you don’t have an hour to watch the interview in it’s entirety. A transcript is also available.

Before starting Bottle Rocket he ran a successful web business. The day after the first iPhone SDK was announced Carter founded Bottle Rocket.

He always put in some extra work: “Polish the undersides of tables” i.e. made sure a Website also looks great on Mac even though the client might only require Windows.

How Bottle Rocket became Big

They started out with 9 apps simultaneously, he gave one example where they thought the app would be a huge success and it wasn’t and another example vice versa. “If you fill a void you need to make sure your heart is in it.”

There was no seed capital involved, the company grew “organically”. Their first 9 apps were noticed by the media and made them known. “Without the cushion (of seed capital) you don’t get wasteful and make your decisions count.”

As part of their success he mentioned focus: only do mobile apps, learn to say NO if somebody approaches you with some work from your previous area. But you should work with “old business” clients to transition them to somebody who is passionate about your previous area.

There has to be some pressure, some discomfort. If you get a little bit comfortable you become complacent. When you run out of gas, put the throttle down. Don’t get spooked in the first 12 months.

For him it is never “just business”. Business is an extension of yourself of your character.

Bottle Rocket hat a multiple app strategy right from the beginning to “build a shadow” instead of trying a single app and if that fails go with another. This kind of massive approach breeds productivity and consistency. It also allows you to “fail as fast as you can” i.e. learn what the users like and what they don’t. Then you should “own your mistakes” i.e. stand by work that you don’t consider your finest hour but know what you learned from it.

He has noticed that apps that cost more get better ratings, possibility because they attract a different quality of user? You should analyze 1-star reviews to see commonalities to improve in updates.

How to get Big Brands

Bottle Rocket does no RFPs (Request for Proposal) because it goes against their app building methodology. It’s like “putting your worst foot forward”. So they tell clients that they have to respectfully decline because they don’t want to take away time from paying customers.

Instead they show them how they work, their process is published on their website. Their labs page shows the process from paper sketch to finished app.

What to say to these big companies:

• “This is what WE would like to see.”
• “We feel that this is not the best use of your brand.”
• “OUR name is on this to.”
• “We want this to be the best we can do.”

You should go after brands you feel passionate about and make the app personal. “Put your name in all your apps.” probably means that they never do “white label” apps where the user does not know who really made the app.

My wife took my Air and so for a moment I thought I could not write this blog post without going to the office. But I turns out that a reader had donated an Apple Wireless Keyboard that was unused so far. So I only had link that to my iPad 2.

I’ve been selling component code for many months now and so it somewhat irritates me when Verious comes out of the closet claiming to be the “first market place for mobile app components”. I was about to ignore that until today – on Flipboard – I read another such announcement: Appcelerator unveils – yet another – “open marketplace to unlock mobile innovation”.

Both statements are misleading and – as somebody on Twitter put it – these companies are just trying to cash in with the iOS craze. And there are more. Let me share my thoughts.

I started selling components out of necessity. I had been laid of by Amdocs a month earlier, facing the hard deadline of swimming or drowning two months later. Something had to happen that would allow me to sustain myself. I was dabbling in iOS on the side, now all my income had to come from it.

And strangely enough, the popularity (read: traffic) I had built in my site before let to sufficient sales to surpass my income from apps by a factor or 2 or 3. I was lovin’ it, dealing with developers is much different than receiving “feedback” from users.

Apps are 60% design (or thereabouts) if we believe what Apple says. That also means that by myself I could never hope to make apps that have hit potential. The dozen or so apps I released in my own name are more or less a playground for me to try out techniques and technologies. Whenever I deal with clients who are contracting me to build an app for them I am upfront about me not being a designer. I will only start coding once I see some fleshed out mockups and the artwork can be provided. Of course I could whip something together in Photoshop too, but that would be a waste of people’s money if I am charging my normal contracting rate.

Better do what you are good at. I found that I like to work as part of something bigger and concentrate on small areas that resonate with my expertise. I love to build things that somebody could take and put into his app. If I am paying for the R&D myself, then it will be a component that I am going to sell. If somebody else pays for it, then it is his.

Speaking of payment. The very first component that I built was DTChartView which I developed for an app that has since been threatened to be sued out of the app store. At normal market rates a library like that would be worth like 2 man weeks. You would have to hire somebody for 2 weeks, 5 days a week, 8 hours a day to build that and pay this person around $8000.

But in the example of DTChartView my business sense kicked in. I offered to be charging only a fraction of this ludicrious amount to the developer if I could also sell this component to other clients. We had a deal and my first component was taking shape.

So if you find yourself developing something that has potential as a stand-alone component you could formulate an offer along these lines: “You can either pay me full rate for this component and get exclusivity for it. Or I charge you 10% of the actual development cost and I get to sell it to other clients as well”. Capital on app development is always short, so most clients don’t need to own this part of the code exclusively.

I added a couple more small components and that allowed me this good start I had. Soon afterwards somebody approached me to build DTAboutViewController to have a flexible configurable about screen for his app. Same offer from my side. Same result, about a month later I had another component to sell.

Componetizing your software forces you to compartmentize your classes. No longer can you put model references in your view classes if you plan to reuse your code or make components out of it. And also it trains your business instinct because you start to consider which parts would be worth another developer’s cash.

Actually you can never actually sell your code. If you did that, then somebody else would own the commercial rights to it. Instead you actually sell licenses to incorporating the code into other people’s apps. Because of this there is another big schism between my personal philosophy and those of all these “marketplaces”.

I sell access to projects in my Subversion repository instead of binary builds for this exact reason. Because I am selling licenses, not code, it is ok if buyers see all there is under the hood of my components. This kind of access allows my clients to also reap the benefits of quick corrections without me having to do another formal release. They just SVN UP and they have it. If I am developing something bigger that I don’t want to touch the stable trunk for, then clients also have full access to the BETAs in my branches.

This tightens the feedback loop and I can be more agile in fixing problems and implementing new features. If the features are benefiting the project as a whole then I don’t charge extra. If they are a special case only of interest to one client then he has to pay for their implementation and gets them exclusively. See above.

One thing I hate about these “component marketplaces” that seems to be common practise is that you don’t get this kind of access to the versioning system where the components are being developed. Instead you get binary builds and thus the impression that you are actually buying a finished product. It might be just my personal impression, but I get the feeling that the developer (and shop owner) just wants to get my money but he is neither interested in entertaining my code critique nor contributions.

There is enough FUD as it is, but companies like Verious bank on it stating their DRM system for components as their unique selling proposition. Hey, somebody could rip off your code and sell it as their own! Be afraid, be very afraid. (and pay us because we help you.)

And I don’t think piracy of source code is an actually existing issue. Developers are honarable people by definition because they also don’t want to see piracy gnaw on their profits. In reality I get frequently surprised by people wanting to purchase the appropriate licenses out of their own motivation.

There is a great example in my Open Source project NSAttributedString+HTML. This is free software but comes with an MIT license. You can use it – even commercially – but you have to attribute it to me. In source code this means you have to include the LICENSE file. In apps this means you have to credit me, say in the About section. But I offer a non-attribution license for 75 Euros that makes allows usage without attribution. I actually sold more of these licenses than some other of my components. This tells me that if the price is right developers will prefer to pay it over (ab)using your source code.

I am interested in having a dialog with my clients. Of course I love to take their money too, but I love to hear suggestions and get feedback. Any kind of store system usually gets between you and your developers. It is their business to so so and they charge you dearly for it. Everywhere between 20 and 30 percent of sales.

Being a player in the component arena also means that you get contacted by all the other “marketplaces” hoping to score you as somebody to sell on their platform. Verious I immediately dismissed because of their DRM-philosophy. Another store is not launched yet. And yet another is launched, but is not harmonizing with my personal philosophy as outlined above.

Actually by writing this I might even drive away one of these players who is still actively courting me. But my integrity and your benefit is more important than business.

These are the things I want from a store before I will even begin to consider selling my components there:

• An affiliate system where I also get a share of sales of other people that I send to their store
• I want to be able to keep the descriptions of my components on my own site but only link to the shopping bag system on theirs.
• A software versioning system, Subversion or Git
• An inssue tracker that interfaces with the versioning system.
• Possibly an automated or continuous integration system that automatically builds binary packages of tagged revisions (for users who prefer a file dump)
• A system that allows me to communicate with my developer-clients about my components.
• An account management system that would allow me to elevate specific users to contributor status on certain components so that they can also commit fixes/improvements

If that sounds kind of like GitHub then you are understanding me correctly. GitHub is free for open source software and that is great. Unfortunately their business model is to charge for non-open repositories but they don’t give you a store. If GitHub would realize this then they could wipe out the “component marketplace” competition over night. Psst, nobody tell them.

If a component store wants to be worth a share of your hard-earned profits then they have to automate the above mentioned items for you. Add to that the traffic they might get on their centralized site. You as a developer should only have to worry about your code, all other infrastructure should be provided.

Imagine – if you will – a hobbyist developer who does not have his own SCM. He would sign up with this utopian service, develop his code in the provided git repository, track issues in the attached issue tracker, communicate with his peers and have the invoicing also taken care of. That is the vision that I am after ever since I first wrote about the Ultimate iOS Parts Store.

For lack of a partner that offers all of this I keep doing it myself. I did a quick query of Twitter about what percentage of sales you think would be appropriate of recommending my components. The median response was around 5%, much less than 20-30% that these other stores want as their cut.

I have a deal for you: if somebody mentions that you recommended a component when he purchases it, then you get 5%. If you have a component that I could put in my own store, then I am only taking 10% of sales for creating the PDF invoices by hand.

And if you already have your own sales system in place then there is also another possibility for us to collaborate. Let me add your components to my parts store as well and link to your affiliate system. I’ve been doing that for a month now with SensibleCocoa and we are very pleased with the results. (Disclaimer: I get 10% of sales of SensibleTableview)

We are all in this together. Don’t let somebody who is trying to profit from your success come between you and your developer-clients.

On my second day of the first BarCamp I awoke early and felt inspired to prepare notes for a talk on what I found so far to be the most interesting way on how to make money on this ecosystem that Apple has created for us.

When I gave this talk I ran out of time and felt a bit “incomplete” as there would have been several interesting points towards the ends of my note. But the room was full and judging from the fact that people asked several interested questions (and nobody left) people seemed to be ok with that.

Being a reader of this here blog you now reap the benefit that I translated my presentation structure filled in with some commentary for coherence. And this also contains the entire notes, the “Director’s Cut” if you will.

I’ve been developing on iOS for 3.5 years now, initially next to my full-time employment as system administrator. I was contemplating going part time and extending my iOS activities at the end of 2009, my reasoning being that I would be able to make up the difference in salary with iOS work. But the decision was made for me when my employer informed me that I was to be laid off. My salary was to be continued for 3 months – as seems to be usual – but I could stay at home from the next day.

So in December 2009, 1.5 years ago I went full-time. When you do that you have a choice, either to go general or to become an expert in a field. Feeling really good with the Apple ecosystem (no PCs at our house no more) I decided at that time, that I would focus only on that. This does not mean that my work is one-sided or boring. Within the confines of this Apple garden, I’m doing everything and all that comes to mind: own apps, contracting, consulting, components, tutoring, blogging, networking. Lately I found that I tend to prioritize higher paying activities higher, but I guess that’s just natural.

So much for my history, over the last few years I have sampled quite a diverse number of way how money can be earned with iOS development, and this article aims to give an overview to broaden your horizons and maybe give you some ideas.

Employment

This is the most obvious of all, but when I got started there really where no companies who would hire you. Much has changed since then. Big companies started to realize that iOS development has to be a part of their overall IT strategy since after the iPad 1 actually ended up in CEO’s hands.

I’m not saying that employment cannot be an enjoyable and satisfying experience. Many people are working part-time in tech companies while studying at the university. I’ve met people studying to be a medical doctor who where in charge of iOS development at some mid-sized companies. Getting a regular salary and benefits calms the mind and many people are absolutely satisfied by this.

Another advantages include receiving training on the job and if you leave you take your newfound skills with you. Contrary to other IT professions there aren’t hardly any expensive certifications that the employer might want to get his investment back for when an employees wants to move on. I’m referring to some Microsoft or Cisco certification courses that are usually very expensive. You are learning to program iOS apps for very cheap by working on problems with ever increasing complexity and most of the time by sitting next to a more advanced programmer (“pair programming”).

But even if everything is well and dandy some people just want to change, experience something new. Doesn’t have to mean that the company is bad. Some people are so much flowing over with great ideas that would would never find happiness working only on the projects that their employer hands them. Those guys are better suited for the other modes I am taking on below. Generally the term for employees leaving is “Attrition” and it is normal. I found 2-3 years to be the average duration in IT before somebody lusts for a change, often with a different company.

And you don’t have to feel bad if this describes you. You don’t owe the corporation any more loyalty than you get paid for at the end of the month. Nowadays companies are often described as individuals, but this is misleading. Corporations don’t have feelings that you could hurt by moving on. That’s why you are “human capital” and why your HR department is called “Human Resources” … or jokingly by some “Human Remains”.

Companies have several tools to fight this attrition, I’ve seen most US-based companies employing one or more individuals dedicated entirely to recruiting “new material”. These recruiters are souring forums, networking like crazy and more than every they are turning to GitHub and see who has written some great code. Another tool is to give the employee “buy-in”, essentially making him a part business owner as well. Big companies would do that by giving you stock options. Smaller companies can adjust the shares by allowing an employee to invest some saved up capital in exchange for a few percent of the company. Now it’s an entirely different story. You no longer work for somebody else, but instead work for yourself, at least a bit.

Interest fact: I have yet to see any European company with dedicated Recruiters. And I don’t mean HR. I mean people who for their entire working time are on the lookout for new employees.

Contracting

When i visited the San Francisco last month I found that there are way more open positions for iOS developers than there are developers who would want to be hired fixed staff. And when you cannot hire somebody into your company, what do you do? Right, you hire a contractor.

That’s how I started out myself as well. Initially you are blue-eyed and estimate too few hours and are doing iPhone apps for like 400 Dollars. Initially my own reasoning was: everything that I am making more than my cleaning lady is alright. Boy did I have an out-of-touch philosophy back then.

But you grown and learn, most of all you get smart in how to estimate actual work load and you develop the steadfastness to be able to say: I am not a designer. Ok, I can draw pixels in Photoshop, but you don’t want to pay my full consulting rate for something that I am not an expert in, right?

So besides of the theoretic problem of getting customers, the main disadvantages of contracting are that you are required to perform many activities that are taking away from your pure coding time: you have to manage, yourself and others. With others you have to communicate efficiently. You have to write invoices, because without these you don’t get paid. You have to pay taxes.

I solved the invoices problem like many Mac-people do: I purchased a cheap yet beautiful Mac app: Billings. Now at least the invoicing hurts less because of the ease of use of Billings.

To summarize: contracting teaches you many things, especially being tough and drawing the line

But just like employment it does have a critical flaw: you cannot work more than there are hours in a day. Minus sleeping, other activities, etc. 6-8 hours of highly focussed development work are realistic and physically possible.

Excursion: The Cashflow Quadrant

If you start out as an employee and I ask you “how do you make more with less” you might tell me: be self-employed! But actually self-employment still does not mean that you own a business. You own a job and if you don’t work you don’t make money.

I like to use the Cashflow Quadrant invented by Robert Kiyosaki to explain the difference. Employment (E) and Self-Employment (S) e.g. Contracting are the two items on the left side that you are the limiting factor of. B on the right side means to own a business and I being an investor. Owning a business means owning something that will make money even though you don’t physically work, like owning a company with 5 employees. And being an investor means that you give money to a business owner in exchange for interest or a share of expected profits.

I find that it is generally more enjoyable on the right side of the CQ, so I try to expand on activities that will give me so-called “residual income”. You do something once but continue to receive money from this.

Own Apps

The first obvious item belonging to the B/I side are apps that you wholly own. The many advantage being that you get to keep 100% of proceeds, except for what Apple takes and possibly taxes. The app store provides a great platform to build these mini-businesses on and with an ever growing amount of iOS users (more than 40 million iOS devices at last count) there will always be somebody to find your apps every day.

When I get asked if I already have a “really big” app then I always have to smile. My best selling app makes 30 Euros a day, but that’s not even my own. My own best selling app makes only 10 Euros, half of sales, half of in-app purchases. Generally 5 to 10 Euros per day seem to be the norm.

One way to potentially make up for lack of sales income might be advertising. The networks I myself use are AdMob, iAd and MobFox. Of these I want to especially mention MobFox, a small startup also from Austria, but they pay rates that are rivaling iAd. I wrote a component to combine ads from all these networks, DTBannerManager. This way I get maximum fill rate and the highest overall payout.

Then the guy’s eyes glaze over and with a dreamy voice you hear this: “With 10 Euros per Day I only need to have 10 apps. That’s 100 Euros per day, 3000 Euros per month, enough to live off”. Please stop laughing now. I thought that too. Any many other people do. That’s why we have a fair share of crap on the app store.

Fortunately Apple no longer approves apps that are make like with a cookie cutter. They reserve the right to reject simple apps that don’t provide any user functionality or that are more or less identical to established apps.

It’s still possible of course to make so-called “white label apps”. Those are fully functional apps that are branded by a specific customer. Like there’s a certain company I know that make a newspaper app that several Austrian newspapers have licensed and you would believe that those were made by the newspapers themselves.

Those apps with “limited user functionality” I am referring to are for example those sound board apps where you basically only have a couple of buttons which produce sounds when pressed. Fart apps, essentially.

Another strategy to make more money with an existing app is what Firemint did with Real Racing. There’s a game that you can buy and then there’s Real Racing GTI which is essentially the same game, but paid for by Volkswagen. The player probably does not care, but Volkswagen likes it when the players keep seeing their brand. I am hoping that we will see many more such tie-ins in the future as non-techie companies discover the iOS world as something that their core audience is also present in.

So here’s the bad news: you will NOT get rich with apps, not if you are just by yourself. Those early successes like the Trism game that made hundreds of thousands of dollars right after the start of the app store are a thing of the past.

Also, since apps are a business you have to see them as such. Does it make sense to pay a graphic designer to give an app a facelift that only makes a dollar a day? Probably not. Some apps might have the potential that you can make back such investments. But you have to really carefully choose. Be honest to yourself how much more in sales you can hope for if you make such an investment.

And never never make the mistake of saying “well, that’s my time, that’s free.” If your time really is free then I’d like to hire you off the spot.

I have like a dozen apps on the app store and these make around 1000 Euros per month. Not enough to live off but these have a cash-flow calming effect that I would not want to miss. There are two answers to this dilemma: You can either look for other ways of income. Or you could focus on one idea that it going exceptionally well. None of my ideas so far did the latter, so my decision was to go for multiple streams of income to add up to what I need to live.

Components

For my first component I was approached by Michael Kaye to build a charting class for his app BabyBubbles. I presented him with two options: either he gets the chart exclusively for a couple of thousand Euros. Or I make it into a component that hopefully several developers would buy for a much lesser price. Most of the time you don’t need exclusivity on some features like charts and so you naturally go with the cheaper way.

Most development businesses don’t have any issue with paying several hundred Euros for a component that would have cost much more if they were to develop it in house. They don’t care because their customers are footing the bill anyway. It’s just pass-through fees.

This component, now called DTChartView, was my first on my parts store that I started to sell over a year ago. I am happy to report that they continue to make up a substantial portion of my income. Developers are – in general – great customers, they hardly ever need much hand-holding. They are either smart, or my components are obvious how they are used. Maybe both.

Several component stores are trying to find a foothold in this developer-to-developer market, but they fail to provide many of the features that I expect in the Ultimate Parts Store, another project of mine. Maybe some day there will be such a store where you can sell your components easily and without this overhead that I have:

I need to charge 20% VAT from all private people, EU companies need to provide a VAT registration ID to not pay VAT, companies outside the EU pay no VAT. The reason being that you cannot physically export the software because you don’t actually buy it. You buy a license to access and use code in my subversion repository. And you cannot export that.

So at present I make out invoices for each and every customer personally, again with Billings. So that’s a task I actually like. I accept payment via PayPal or bank transfer and once I have received the payment I send out a quick start e-mail with some instructions how to access the repository and how to get started implementing the component.

Some other companies don’t let you have their source, for reasons of IP protection. One such example is RedLaser. But in my humble opinion I think most developers would want to see what’s inside and I don’t want to have to package binary libraries for every small change I make.

Do I fear piracy of software components? Not in the least. Actually I found that developers are the most honest customers of all. I offer purchase of an “Extended License” for when a developer is making multiple customer projects. And even though I have no way to police this, I have many developers contacting me, wishing to make this payment. Maybe that’s because we feel eye-to-eye and one developer usually does not cheat his peers.

I was also asked about how I’m deciding what to open source and what to sell. If something can be built to be covering most of the necessary features and can be self-contained then it will be a component for sale. For the CoreText component on GitHub the reasoning was this: I alone will never be able to implement all features and variants of HTML. I don’t want people to think that they are entitled to me implementing any and all special case they have. That is why it is Open Source. You need it? You add it!

The added benefit is that nowadays social coding Open Source platforms like GitHub are also one way how you can be discovered. It happened to me, Scribd liked what they saw and now I am doing contract work for them.

Licensing

Similar to white labels but still very interesting is the concept of licensing, sometimes also called “franchising”. I already mentioned this newspaper whitelabel app, but any technology can be licensed, apps or components alike.

One personal example is my iCatalog.framework which I developed in cooperation with International Color Services. I own the property, but ICS and me have a licensing agreement in place that has them pay me 10% of what money they are making selling iCatalog apps.

Originally I was approached as a potential contractor, but I was able to sell them on the idea that they don’t actually want to become a software development company or have the headaches of having to deal with contractors sitting in foreign countries. Instead I own a stake in this business and take care of the development, they take care of managing products based on it and selling it to their clients.

Many different modalities are possible here, from a small share all up to worldwide exclusivity. It’s up to you to agree on terms that you feel happy with. The point is that these royalties are independent of your working time and thus belong to the right side of the previously mentioned Cashflow Quadrant, just like your own apps.

Partnerships

Speaking of apps. It’s better to own 50% of something than 100% of nothing. I have several partnerships in place, some where I only act as publisher and reap 20% of the proceeds. On others I am equal partners with somebody who provided the creative, product spec’ing and marketing. Again, it’s up to you to find a balance between the partners so that both feel that they get more than either of you could have gotten by himself.

One mode that I like quite a bit is a mixture between contracting and partnering. Everybody needs to live, but in one instance I had the following agreement: I would discount my hourly rate to the rock bottom, at that time 30 Euros per hour to develop a Soccer Worldcup betting app. My partner took care of all the non-iOS tasks. I was paid for all the work upfront, at this special rate. Then when the app went on the store my partner would get all the proceeds until he made up the development costs and when this was achieved, we would go on to splitting the profits 50/50. Or put differently, I got an advance on my half of the profits.

With this I had some money to pay the bills, and my partner had limited his business risk to these expenses. A way better mode than if I would develop something not know whether or not this would be hot or not.

At the time of this writing I have a similar partnership in the works where I defined my first product for the Mac app store and my partner BytePoets is developing it. Here the roles are sort of reversed. I don’t know how to program Mac apps, but they do. But I get to spec the app, decide the features and the job of marketing and accounting will fall to me. They received an advance on the profits I am hoping for and once this becomes profitable they will receive 50%.

Businesses and Startups

Big corporations are reaping most of the profits on the app store. The likes of Electronic Arts and Rovio have employees and economies of scales that we can never rival. Also in addition to their own properties such large companies often act as publisher. That means some smaller company has entered into a deal with them whereby the big brand name is stamped onto the app, sort of a seal of quality. And this increases sales especially in matured markets where users feel often lost for they have too many choices.

And when some Electronic Arts is giving away all their games for free for a day they automatically get the social networking word-of-mouth that pushes all their games ever higher in the sales ranks.

BUT, a big but: I mentioned before that big companies continue to have attrition. For the longest time there was a letter by an EA employee’s wife complaining about the bad working conditions and inhumane situation at this company.

There’s one form of small business that kind of falls between a “real business” as described above and self-employment. I’m talking about somebody who does not have employees, but has several apps made by contractors exclusively. Yes, these actually exist, but doing this successfully is hard and so these are far in between.

But hey, who’s talking about founding a Rovio. That’s not realistic. But if you have a good idea you can and should build a startup around that.

Here the culture is sharpy different between the United States and Europe. In the USA the mentality is “fail early. fail often. But always get back up”. A typical billionaire sunk two companies before striking rich on the third.

Failure is an option in the USA, even an accepted fact of starting up over there. This is possible because venture capitalists and angel investors understand that 7 out of 8 companies can fail, but the 8th probably then makes you back what you “lost” many times over.

In Europe most of startups are funded by the people themselves, or their families. Somebody might also try to get a business loan, but with Basel 2 this has become next to impossible if you don’t already have much capital of your own. And you cannot fail if you are financed by that. Failure would mean bankruptcy, being tainted as a business person for the rest of your live.

There’s just more phantasy in America. In their startup culture somebody like yCombinator might approach you and offer you $10,000 for 10% of your business. And this achieves two things: right then and there you have invented the valuation of $100,000 and purchased a share in this company you just invented. Getting funding for so-called “early phase startups” – which don’t have any actually profits or even products yet – seems to be comparatively easy. Invent a social photography app with a few interesting twists, get $40 Million.

Because of this difference in mentality we Europeans have instead cultivated the “wait and see” approach. “No risk, no fun” is interpreted as: “We don’t risk and we don’t have fun”. Business has to be serious because we cannot afford to fail at it. I say, that has to change!

There is one company that set out to trying to change that for the better: STARTEurope was founded with a similar interest as yCombinator but with a fundamentally different approach. Instead of being the investor they focus on the networking aspect. There are events where you can attend either as somebody pitching his idea, or as a creative person (engineer or designer). Then the pitcher pitch and the creatives can choose which idea they like the most. They sit together and work on the idea for a while. When they are ready they present their result to a panel of experts and investors and the rest should be history.

Two of the names that already came out of this, that you might be familiar with, are Runtastic and Qriously. I especially love the idea of the latter: essentially in-app banners, but instead of ads they show questions: do you like A or B more. Ingenious!

Actually it sounds like very much fun, I guess we all should attend such a STARTup event some time, just for the fun of it. You never know …

For most Europeans there is one catch: because of the above mentioned reasons we are training ourselves to keep many irons in the fire at the same time, but for a startup to be successful you have to let go of all but one of your options and solely focus on that, at least for a certain duration until which it has to show profits or you have to pull the plug, without emotion.

Conclusion

Hopefully this article can inspire some thoughts off the beaten track. If your brain buzzes now with the feeling that there is so much more that you might want to have a closer look at then I did a good job.

I collected many experiences and I can say that almost all where worth it. In the least you should reevaluate the situation you are in yourself. You still have the option of being satisfied with what you have. But if you are overflowing with ideas then grab the best, build a team and astonish the world.

There are many adventures, wonderful people and amazing ideas waiting to be making your acquaintance.

Innovative startup Square continues to make waves with their app and reader combo that enables small-time businesses to access payment with credit cards. Imagine somebody with a camping table and self-made T-Shirts selling these on the street. For example I would have loved a T-Shirt to commemorate 2 weeks of iPad2 queues saying “I queued for iPad 2, but all I got is this lousy T-Shirt”. Without hesitation my Mastercard would have jumped out of my wallet to make love to a Square reader and app.

But then there are the established companies which feel threatened by Square. First and foremost VeriFone, a company that apparently seems to see themselves as the sole owner of the market for processing payment information. This is evidenced by the statements made on their website. Take for example their SEO-friendly site title: “VeriFone Official Site | Secure payment solutions for credit & debit cards, EMV, contactless, & NFC”. They have vested interests in technologies that require you to purchase their products.

Let’s have a closer look what’s behind this rivalry and also investigate if there really is a gaping security hole in Square’s approach as VeriFone claims.

We are especially interested in Square for they made a big bet on the iOS platform and their unique approach with repurposing the iPhone’s audio jack as input for the credit card data. They serve as inspiration for many other startups, the theory being, that if they can succeed in our marketplace then so we can too. Anything that draws more attention to iPhones and iOS should be a good thing for us small players.

Open Letter

But if you get too successful you will attract the attention of your competitors who might not shy away from drastic opinion engineering to have you fall from grace. It all started out by VeriFone making a website sq-skim.com where they have a letter and lots of SEO keywords trying to foster distrust in Square.

VeriFone CEO Douglas G. Bergeron claims to have created an app “in less than an hour” that would decode the scan data from a Square reader plug via the audio jack and extract the relevant credit card information.

When processing credit cards you have two channels where you want to maintain the highest level of security. At the highest level of abstraction you want to convey the users intent and identity to the credit card company so that a payment can be authorized. So in one direction your are dealing with individual customers who are interested in staying the only person who can make payments with their identity. In the other direction you have the credit card company with which you want to be on good standing.

So the technical challenge is how to transmit the user’s payment identity to the credit card company. Clearly it would not be sufficient to just send them an e-mail stating that Oliver Drobnik wants to pay for a T-Shirt. You need to somehow transfer the user’s payment credentials (usually the CC number, expiration date and sometimes als the CVC code) to the provider.

Of the two channels mentioned the customer-facing one is the weakest. Any waiter in a restaurant has an opportunity to note the necessary numbers on a piece of paper after he has disappeared with your card. This is what’s been jargonized as “skimming”. That could either be happening physically like this or even on a server. Every now and then we hear that credit card numbers have been stoled, leaked or otherwise been improperly distributed.

When Square set out to create a solution for the mass market of using iPhones as mobile terminals they were facing the basic question of how to make the process as similar to known payment metaphors as possible. That and not wanting to deal with Apple over licensing the dock connector. Their engineers came up with the ingenious technique of encoding the magnetic strip still present in all credit cards in a way that could be transmitted over the audio jack. And then packaging this into a small white plug that you can cary in your pocket.

I imagine that they must have sort of a PCM encoder on a chip in the reader and then use the audio-capture API of iPhone to get these numbers. If I had to do this then I would have needed substantially more than one hour to work out the encoding. Probably VeriFone has been working on reverse-engineering this for quite some time now. Judging from the effort they are putting into the anti-Square website they probably have a couple of fulltime hackers on staff now doing nothing but dissecting Square elements.

So that’s the first disingenuity of Mr. Bergeron. People reading his statement probably think “oh, just one hour? then it must be really insecure”. Square was announced in early 2010, so VeriFone must have spent more than half a year on this stunt, figuring out the encoding is far from trivial, even if it’s not encrypted.

A Magic Trick

When performing magic tricks with an astonishing outcome you never reveal how much effort went into preparing it. That’s what’s making it magical. How much less of a buzz would have been generated if VeriFone had honestly admitted: “We built the app in one hour after we spent 6 month figuring out how this PCM encoding worked”. Suddenly they go from being a security hero and app wizard to being noobs. Anybody can write an app to decode a PCM stream, given documentation on the encoding and looking up how to do PCM capture in Apple’s docs.

For unknown reasons Square did not opt to add encryption between the reader and the app. This is the major Achilles’ heel, claims VeriFone. Because of this they say that anybody can make apps to quickly skim peoples cards. But this is the second piece of a magic trick, called Misdirection. That’s when the magician directs your attention to something seemingly more interesting while having the real action happen outside of your attention.

Any kind of reader is basically a way to get numbers into the device without having to enter them manually. Even the square app allows for manual input if the magnetic strip fails. That’s not the real weak link and therefore I am calling this misdirection. The real weak link is what happens to your card once it leaves your sight. Because then anybody with criminal intentions can note down the card’s details only to sell it later via a shady newsgroup.

Counter Open Letter

Generally this week spot in the chain of trust is often quoted with the example of the malicious waiter. Also by Jack Dorsey, CEO of Square, in his response to the allegations. In reality a luxury restaurant is about the only place I can imagine where I would give my card out of hand. In all other physical places I would swipe the card myself, exactly for this reason. If I hand out the card then my payment credentials are no longer entirely only under my own control. This is also the reason why we are seeing smaller and smaller payment terminals to bring to the customer as opposed to having these old paper imprinters sitting somewhere at the back of an establishment.

Square HAS a problem, but it is not technical in nature as VeriFone will like us to believe.

The weakest link in the chain of trust remains in the step where you have to get the payment credentials into the Square app. A iPhone repair ship owner in Florida whom I twinterviewed told me that people have absolutely no reservations about swiping their card, probably because we have been conditioned to do so and because it is by far less painful than having to either give up control of our cards or having to enter the card number manually.

What’s really behind the attack

Square’s business model is dependent on being able to establish their solution (app+swiper+online) being seen as just as trusted as any other POS device. So the real nefarious intent of VeriFone is to discredit their way of input.

Theory 1 “Nefarious App”: if I had the scanner plug, I could make an app that would look exactly like the official one. Maybe even seem to do an authorization but then display a failure. Sorry, dear customer, there might be something wrong with Square at the moment. But in reality I would have saved the scanned details. Or maybe even use that to walk around pretending to be collecting donations or selling something inexpensive where I pretend to have gotten payment authorization, but really didn’t. Nothing ever suspicious happend, the customer got to swipe the card himself, it never left his control. Nobody made a photo or note of the details. So how could anybody suspect fraud?

Theory 2 “Hacked Official App or Spyware”: because there is no encryption a skilled hacker could modify the official app to log the PCM stream or even create a background daemon process that would scan audio input in the background without the official app not noticing that it is being spied on.

Theory 3 “Inception Mindfuck”: just as easy as I came up with these two theories I now got you to ponder techniques what other exploits there might be. Even if none of these are easy to pull of or maybe even impossible, there are still doubts that have been implanted into your opinion.

The question is whether encryption would have made any difference. From a security point of view, probably not. But it would have made a major difference by not allowing competitors to abuse it as an alleged security problem.

The big hope for the payment processing industry is taking shape with NFC (near field communication) where you could have your limited information on the owner’s intent to pay over a short distance be communicated wirelessly. VeriFone is heavily investing into this technology even though it has yet to be seen in real life use. If an iOS device, let’s call it iPhone 5, would have an NFC chip, it could receive the payment and provide this info to the Square app instead of the reader.

I suspect that VeriFone’s real goal is to discredit Square just enough to have them gain access to NFC later than VeriFone is able to establish a beachhead. If credit card companies think that Square might have security issues they would probably be hesitant to let them enter this new promising market of frictionless payments. I also suspect that if Square were a publicly traded company then VeriFone would stand to gain from a decreased valuation and make an attempt of a hostile takeover. But they are in private hands and probably will be for quite some time.

So what do we entrepreneurs learn from this debakel?

If you’re successful envy invariantly follows. It’s up to you to reduce exposure of your weak spots but you better be prepared when your main competitor declares war on you. As an engineer you might think that an additional security layer might not gain you any additional safety. But costs of having to undo the bad publicity drummed up by your competitor might by far outweigh the engineering cost of securing your interfaces up front. Better safe than sorry.

If anything then we now know that Square is a force to be reckoned with. A light-weight startup that exactly addresses what people want and does so in a way that shakes at the foundations of the established payment aristocracy. We’re keeping our fingers crossed that Square keeps on being so successful, as they are our beacon in dark and rainy startup nights.

How safe is Square? Safe enough in terms of credit card security. But not safe at all from being attacked by their competitors.

Somehow I was restless this night. When I checked my e-mail I see the reason why. My fine tuned app store antenna has been tingling as it usually does before something great happens on the app store.

There was a joyous e-mail by my US partner on the biggest project I had done in my iOS carreer so far:

All four RedCats iCatalog Apps have been approved by Apple and are now live on App Store.
Thanks for all the effort you’ve put, and continue to put, toward making this the best possible product.

The whole thing started when I got contacted on May 30th by Octavio Cifuentes at International Color Services asking for an “App Development Quote Request”. ICS specializes in digital pre-press services for top-brand retailers and cataloguers. They where looking for a contractor to do an app for them. To put it in layman’s terms, ICS is getting PDFs from catalog companies and they make sure that the colors match the clothes that are being sold. So they wanted to have a product to offer to their customers to take this PDF and make it into a digital edition for an extra free.

The Start of a Beautiful Partnership

At that time I was thinking about doing a magazine/catalog framework loosely based on the Wired-App. If you remember I reported on how Wired is saving all pages as PNG files and using an XML file to create the structure for the magazine. They where shooting over the target with that because they used full size PNGs for both orientations making one edition around 500 MB including videos. But the general way of doing it intrigued me.

When I responded to ICS’s request (after having done the usual NDA dance) I gave them three options:

• you can become a software company and hire somebody to work on this (not me)
• or you can outsource it to some eastern Europe or Asian country. But then you’ll need an experienced project manager to keep taps on your cheap labor. (not me)
• or you can partner with me. I retain full ownership of what I create, but you have the exclusive rights to sell apps based on the framework I’ll be creating

At first they where hesitant, but the more they thought about it, the more they realized that only the third option would give them what they wanted. I argued that if you let your partner retain a stake in the project the outcome will be dramatically different than if it’s just a job where you bill your hours. And naturally ICS did not want to turn themselves into a software developer.

I met with ICS’s CEO James Kearns in Milano, Italy, and there we shook hands on the deal. He’s an amazing person to deal with, a gentleman as he is a scholar. What I liked especially was that he offered to pay for my development expenses because I needed something to live off from while developing the framework.

R&D

A lot of experimentation was necessary initially, especially on how to render PDFs. The challenge there was twofold: 1) you could not render the PDFs directly because of the bad drawing performance that the iPad has and 2) because there where thin lines all around those PDFs due to some print-specific features that are being used. These lines are hairlines and disappear in printing, but they show up as 1 pixel lines in the PDFs. So we chose to pre-render the PDFs at a multiple of the resolution which makes the pages super-crisp and the hairlines disappear.

Much work also went into working around performance limitations of the iPad. In my tests the decompressing and drawing of a full screen image would take up to 300 ms which would cause enormous jerkiness. Only 3 frames per second is much less than the ideal 60 frames. I solved this dilemma by moving the page drawing onto a background thread with the help of CATiledLayer. But not without opening a bug report at Apple to complain about the bad image performance. Now scrolling on the iCatalog apps is smooth as button, only if you scroll very quickly you see pages pop up after a brief delay. But this is the best you can get without resorting to OpenGL.

Octavio was my counterpart at ICS and he did all the designing and stuff while I was able to concentrate on the programming of all the features. It’s not immediately obvious at first glance but there is a great deal of small things that we had to polish, polish and polish. I could not have done without a person at the creative helm. I don’t do design. I had some ideas about usability and experience in what would work in an app.  But I don’t like to push pixels around in Photoshop. So OC and me where the perfect team for this task.

Catalog vendors are particular when it comes to so called “Spreads”. If you open the catalog you have two pages next to each other and you might have something that is continued over both pages. So I had to create a way to animated smoothly between the portrait and landscape mode retaining info on which page you where. Say you start in portrait mode and rotate the page you where at was a right page. If you then rotate back you end up on the same page. This is one of the many details that make or break a digital catalog experience. And one kind of thing that you as a developer don’t think about, but need an experienced guy like OC to tell you.

Another thing that I am particularly proud of is the scripting engine that is the heart of all catalogs. Up until the minute that the apps got approved I was worrying a bit that Apple might see this as a rejection reason and I formulated in my head a response. All the interactions in the catalog are written as Objective-C statements that at runtime are converted to NSInvocations with the appropriate parameters filled in. So it’s not a real interpreted language or scripting engine per se, but more like a single statement parser. But it works great. Because of this I’m able to quickly add any new feature. All I need to do is to write the method to execute and then this becomes immediately available for use in all iCatalogs.

It’s only natural that iCatalog also supports video and audio playback but those you best see for yourself in the Jessica London iCatalog app.

Online Integration

All iCatalogs work great if you are not connected to the Internet. There are however two things that you might want to get connected for:

1. Sharing individual products or your entire Wish List on social networks
2. Purchasing

I knew from my experience that Apple would reject all apps that don’t work well if you are in airplane mode. That’s why I took extra care to fail gracefully if the internet connection drops out. Reachability 2.0 to the rescue!

Online Purchase integration is different for each catalog client. For the initial batch we chose to just integrate it with the existing online shopping bag. All your wish list and shopping bag items are kept on your iPad until you tap the checkout button. When you do – and if you have Internet – your choices are transferred to the online site and there you fill in your address and credit card info to complete the purchase. Down the road we want to get a proper XML API to transfer the shopping bag, but for now this method works great.

I saved much time when implementing the social sharing functions by not coding them myself but instead using ShareKit. This enables us to share items through a multitude of social media sites right out of the box. Fortunately the most pressing bugs had been fixed just in time for this release.

Edit This

The interactive areas where the second source of pride. I called them “Hot Zones” and they are basically rectangles you draw on the catalog page with the editor. Then you specify different actions for single tap, double tap or automatic execution on page showing. You can assign an icon, a sound and many other options to fully customize what such a hot zone would do. For example the feature “Swatch Match” is constructed such that you have multiple variants of a catalog page with different colors of a product which you can flip through by tapping the button.

Speaking of the Editor. Initially we considered doing an app to do the editing of catalogs. But since I never did a Mac app before I incorporated all the editing functions into the iCatalog project itself. This way OC can immediately check that what he sees is what he gets when putting together a new catalog. By running the editor version in iPad Simulator he gets the best of both worlds: the look and feel of the catalog on the iPad as well as all the benefits of the desktop like access to the files and multi-core rendering performance.

I might still do an editor down the road if the framework has stayed stable for some time, but until this occurs having an in-app editor is the best solution. This edit mode is easily disabled when building an app for a client by means of making a simple change in the PCH file.

How To Get Your Own iCatalog

I know that some people out there might be tempted to trying to do something similar. Maybe you have been contacted by somebody with a catalog or their agency and asked for a quote. While it has been an extremely rewarding experience for myself I would not recommend for anybody to undertake it unless the company looking for a digital catalog is prepared to pay at least 3 months worth of development for it. Not to speak of the ongoing work that is necessary to polish it and add new features as they become necessary.

The alternative to spending thousands of dollars is to license the iCatalog.framework. As I mentioned previously ICS is my international commercial partner for it. You can contact Octavio Cifuentes to schedule a demo and explore how ICS can help convert your catalogs into a compelling iPad experience. At any case I recomend to you check out any or all of the free iCatalog apps that are already in the store.

Update: Here’s a demonstration of the iCatalog framework and a peak behind the scenes on how such a digital catalog is made.

I previously reported about having gotten e-mail from a Microsoft representative. It turns out, that was only the US activities.

Today I got a phone call from a lovely lady (obviously native German speaker) from CBS, you know, those TV guys. CBS apparently also does telemarketing and they got hired by Microsoft to call all European iOS developers to try to see whom they might get on board of Windows Phone 7. CBS has received a list of developers from Microsoft who seem to have gotten it by scraping the app store.

Microsoft is offering the following trinkets to make the switch a bit more interesting:

• 75 Euros Sign-Up Fee waived if you have at least one WinPhone7 compatible app released by December.
• free tech support
• they’ll even reservere your app name for you on their store
• a slew of workshops
• a free copy of Windows 7 for your development PC
• a free mobile device

I interrogated the caller a bit about how their activities are working out so far in other countries and especially in Austria. She said that it’s going really well in Great Britain and Italy, and so-so in France and Germany. I was the third Austrian iOS developer she had called, but she just began. Well, having a name beginning with D got me on the third place of an alphabetical list it seems.

Hey, and you don’t have to totally switch. Just “make one app compatible” until December to not have to pay the sign up fee…

Being the solo-developer that I am I certainly don’t want to spread myself too thin. Also I don’t think that it would be wise to branch out to other platforms while I still have so much more to learn about iOS development. Some time ago I formulated my own credo to be “focussed on iOS, but diversified widely on one platform.” That’s my plan.

But you’re free to do whatever you like, if a free Windows 7 mobile phone is all it takes for you to turn your back on iOS then please DO leave.

When I quit my employment as Windows system administrator in December 2009 I had already been developing iOS stuff for 2 years. At that stage I had to define what my business should be comprised of and I decided on a multi-pronged approach. I simply lack the design capabilities and ideas to sustain myself on apps alone.

The Past

One of the multiple streams of income that a holistic iOS business can generate are sales of software components. Often there’s a functionality that you wished Apple would provide or made simpler to use but you lack time and expertise to write such a component. And you lack funds to hire a professional at a rate of several hundred dollars per day. What if you could share the development cost with dozens of other fellow developers? The pro would still get payed, but you trade exclusivity for availability.

This is what I created my Dr. Touch’s Parts Store for.

Often I get asked, how this is going for me. Here’s my first go at answering that: pretty well! I’ve been doing that for 7 months now, which provides a bit of data that we can slice and dice. Also I’ll tell you about the present state of affairs as well as present to you my vision of the future: The Ultimate iOS Source Store.

So far I created and mailed about 100 invoices since end of January. That’s about 14 per month or 1 every other day, roughly. It does not feel as much because I have a fast and efficient process set up:

1. If somebody has a question about how to order, I send them to my terms and conditions summary.
2. Once they e-mail me their order I add them to my Mac address book
3. I add them as a new client into Billings. (For EU customers I add the VAT ID number and “Reverse Charge” in the comments so that this get printed on the invoice as well)
4. I create a new project “Dr. Touch’s Parts Store” and add the ordered products from my blueprints
5. The invoice is mailed as PDF to the client, bcc’ed to my CFO and accountant.
6. Then I await payment either via bank transfer or PayPal.
7. Finally, after payment is secure, I mail a “Quick Start” e-mail to the client explaining how to access the Subversion repository and how to take the first steps integrating the purchased component.

This looks like much, but since this process only takes a couple of seconds every time I would never have guessed that it have been so many already. And I didn’t have any complaints so far, some customers apparently appreciate how I structure my components and are happy to return for more.

Billings is great for invoicing and tracking billable time, but I could not find any better way to get the invoice sums out of it to make a chart but to add them manually with my Calcbot.

Please forgive how this looks, I made a conscious effort to use Numbers and not Excel for this. But you can see that component invoices alone made on average 2000 Euros. This equals to about 2500 US Dollars. I intentionally decided on Euro as invoicing currency because a) it’s more convenient for me being in the Euro-Zone and b) PayPal converts it like a champ.

I find that due to the diversity of iOS developers and the diversity of apps they are making you have to have a wide selection of different things in your store because you cannot hope to match people’s current taste consistently with just one component. Sufficient diversity causes the above demonstrated consistency.

I have even more unreleased components up my sleeve that I am developing at the side. You know whenever I find myself creating something I stop and think if it would be of future value to me in a different project. And if the answer is yes or maybe then I prefix the class with DT (for Dr. Touch) and code it extra clean and extensible. This causes two things to occur: 1) my code is even cleaner more easier to maintain down the road and 2) with a bit of polishing and marketing I have a new component to sell.

The Present

At the moment that’s the way how it’s working for me. I’m quite busy with a big contracting project that at the same time builds up some Intellectual Property that I will be licensing exclusively to a US-based partner. So I’m certainly busy to an extent, that I have to pass on many contracts. Whenever I have some breathing space I’ll go into my tool chest and take up new components for my store, besides performing some long overdue overhauling of my own apps.

I have to admit, that I am not the original inventor of the idea of selling source code or libraries. There’s a myriad of such sites that sell PHP, JavaScript and other code. The first company I found selling something for iOS developers is Plausible Labs. They are selling a CoverFlow implementation, pre-compiled from $300 (indie license) up to $2500 for the source code. If you are a serious about app development that you probably make more than the $10000 which is the limit where you can no longer get the indie license but need to shell out $900 for the “standard license”.

I always felt these prices to be something over the top, so I’m setting mine in the range of 100 to 400 Euros based on how much work I have to invest. But hey, let me be honest, I just don’t have the balls (yet) to charge what other people are charging. Plausible labs charges $150 for contracting, my maximum rate is $75 per hour. Maybe next year.

But I’m not the only one who is selling components. Only recently I have been approached by several people who are trying it as well.

• Tarek Sakr is offering Sensible Tableview, making creation of tableview-based apps a breeze. Use promo code SCSTVOD6210 to get a discount. Price without coupon is $99.
• iCodeSource offers URL Manager for $199 (single seat), $499 (5 seat) or $999 (25 seat) license.
• Red Laser barcode reading library (no source), $2500 minimum license for free apps, then 10 cents per user in several tiers.
• Brian Stormont (Stormy Productions) sells the RadioKit SDK, allowing you to make a streaming radio app. $100 per unique app.
• The game Sapus Tongue is available as source code from $199 (“Basic”), $249 (with updates for 6 months) and $349 (“Premium”, allowing you to ask questions)

Even Cocoa Superstar Matt Legend Gemmell is thinking aloud on how to do it right, selling source code. Although many people are glad that he doesn’t charge for his source so far, especially MGTwitterEngine which powers quite a few iPhone twitter clients.

So we see that there is a need which more and more devs are trying to fill it. There’s a wide spectrum between free and ruinous. Personally I believe that my approach to be the one the balances income and liberties for the customers the best. If I had an online system that would manage pricing tiers for me then I might be tempted to also go with tiers from no-source-cheap all the way up to full-source-lifetime-support.

The market for iOS source software is in it’s infancy and more and more developers will find that selling components can supplement their income to a level where it might be sufficient to “do it fulltime”. Please bare with me as I lay out my vision on how it could be done in a smarter and more profitable way.

The Future

What I really would like to achieve mid-term is to get a business going where several developers offer their components in on standardized online way for people to see demos, maybe get a time limited static library to try and then purchase access to an svn repository where they can always get the latest version of the components they purchased.

Possibly multiple pricing tiers: cheapest is a one off static library, middle is source code access and most expensive is with personal integration support. There might be an option for customers to subscribe so that you get a credit every month that you can spend on a product or service or save for something that needs more credits.

Having (almost) all of your heart’s desires represented in a single store has several advantages:

• developers can concentrate on what they love: write great code and get money for it.
• customers can browse and are tempted to buy more
• representing a large share of the market there can be common marketing activities that will benefit all participants.
• Other people would be taking on all the hassles of account management, hosting, support etc.
• by bringing together developers of multiple calibers in one location multiple synergies become possible: we could have a suggestion box where people interested in specific components could suggest and vote on them and then one or more developers could set out to make them, sort of like a “Part Kickstarter”.

Also the owners of this business would vet other developer’s components for possible inclusion into this system. We would take a commission, say 30%, from those sales. Additionally a shared blog and advertisement revenues are thinkable.

This would need to be founded, funded, stocked and run as a real business. To succeed the goal would be to make this the only site people think of then wanting to save time purchasing a component instead of building it. There are sites out there that are doing that for WordPress templates and PHP or Javascript code, but I don’t think that this exists for Cocoa Touch yet.

Don’t know about funding yet, but I believe for this to work it has to been done professionally, with one or two people taking care of the administrative tasks and creating/running the website. And also doing marketing. This means there need to be sufficient funds to pay for hosting and manpower for at least half a year.

There are several levels to enter into this:

• founder, brings funds, receives share in business and profit in relation to percentage of founding capital
• admin, gets paid for his parttime or fulltime work creating and running the business
• dev, brings his components to the table. Receives 70% of sales

Forgive me if this sounds like a brain dump, because it is! I have no management training and I have founded and I am playing my iOS business “by ear”. So if you have something to contribute to this cause or would like to help me get this baby on it’s wheels then contact me.

UPDATE: I created a private Google Group so that the many people who are interested in participating have a somewhat more private forum to speak their mind.

Yesterday I found an e-mail in my inbox that gave me a bit of a spooky feeling in my stomach. Ordinarily such a mail would have quickly ended up in my trash if it weren’t for the details they put in there.

Why would Microsoft be contacting me? They obviously did a bit of digging or reading to know that I created the apps for CCS Publishing. They didn’t bother to check on my references page though. The ACLS app was done by somebody else. But still it shows a fair amount of data mining as they appear to have checked those apps’ rankings and then cross referenced them with who was the real author.

Here’s a facsimile of the e-mail to preserve the look and protect the mentioned e-mail addresses from spambots.

Analysis of the e-mail headers shows that the e-mail comes from Redmond via Microsoft’s partner extranet. The companies CompuCom and Excell Data Corporation are Microsoft partners doing their bidding using Microsoft’s mail system.

The author of the e-mail bears the title “US ISV Evangelist” identifying him as somebody whose task is to preach the Microsoft gospel to Independent Software Vendors located in the USA. CCS Publishing is, I am not.

The key paragraph meant to capture the reader’s interest is this:

Microsoft is looking at investing time and resources in assisting your company to extend beyond your existing platforms and unto our new Windows Phone 7 platform coming in late fall 2010.   This is a great opportunity to generate additional revenue and/or exposure from a net new channel.

The “investing” buzz word  is code for “we will make you rich if you help us rule the mobile world”. Apparently Microsoft is looking for iOS Developers to be pushing for an interesting lineup of Windows Phone 7 apps when they are launching it. Understandable. It’s the number of apps that make the success of a platform.

You could probably guess my response. I previously elaborated that my own strategy concentrates solely on the iOS platform. I am already seeing this approach bear wealthy fruits because my multiple iPhone/iPad-related activities are in a state of constant cross-pollenization. I’ve adopted Apple’s strategy to sharply focus your resources and not get distracted by “other things you could also do”. In short I love the business that Apple enables me to conduct, I am very satisfied by it.

Sorry Microsoft, my loyalty to iOS is not for sale.

Having some contact with developers around the globe allows me (and by extension YOU, my dear reader) a glimpse of what kind of apps are going to become available with the iPad on April 3rd. More importantly, we can ask those busy developers – who struggled to be first in the launch line-up – what they thought were the difficult steps in designing and building iPad apps.

Being the good soldiers that we are, we let them have the glory from being first while being able to learn from the problems that the one or other Apple mine would have caused them. Maybe this way we can save ourselves some grief and frustration if we can avoid their mistakes from the get go.

So here are 5 of the first iPad apps and what their developers learned from making them.

Rezepte

by Alexander Blach

About

“Rezepte”, which means “recipes” in German, is one of the most popular cooking apps in Germany, Austria and Switzerland. It contains over 7.000 recipes and descriptions of more than 2.000 ingredients from www.rezepte-wiki.org. Everything is kept offline so that you don’t need an internet connection when you are on vacation and want to cook delicious dishes. Version 2.0 will support the iPad and is going to be ready for sale when the iPad App Store opens.

Getting ready for iPad

It took me about a week to adapt “Rezepte” to the big screen. At first I wanted to do a separate version for iPad but then I decided to create a universal application. This would make it easier to manage both the code and the app in iTunes Connect. I did a few mockups in Photoshop first and then decided to make the recipe the focus of the app. So I used a UISplitViewController to display the categories in landscape orientation as well as popovers for things like bookmarks,
the shopping list and search. I tried to make the interface a bit similar to Safari because people would be familiar with it.

All in all I’m very happy with the result and can’t wait to test it on an actual device. You can navigate the iPad app a lot faster than on the iPhone and there is a lot more content on one screen. The conversion was easier than I thought at first. The iPhone developer forums helped a lot.

Rezepte is available on the App Store. App Homepage.

TapTyping

by Adam Wolf

About

TapTyping teaches you how to type on your iPad. The iPad’s virtual keyboard requires a whole new way of typing. Users can get past this learning curve with TapTyping and focus on what matters. The app features lessons ranging from beginner, where they gain skills in typing just the primary keys; to advanced, where they write type tricky & complex sentences containing symbols, punctuation, and numbers.

Not Touched

My partner Mark and I developed TapTyping without ever touching an actual device. This was a pretty huge challenge given that we were designing something based around physical interaction with the iPad. For now we focused on typing basics- the stuff we know we can’t get wrong. As soon as we can test out our lessons on the real hardware we plan on releasing an update with greatly improved typing advice.

TapTyping is available on the App Store.

myCoordinates Pro for iPad

by Dylan J. McKee

About

myCoordinates Pro for iPad is an application to allow you to easily use your iPad for navigation.
It aims to be simple and easy, while useful and functional.

Features include

• Current Coordinates (in Decimal or Minutes)
• Altitude (from GPS or USGS Altitude Database, in both Meters and Feet)
• Distance Tracking so you can easily see how far you’ve traveled
• Reverse Geocoding
• Map with easy zooming etc
• Ability to share map and location via various methods including email and copy and paste.

and more…

Without Orientation

One of the biggest challanges that I faced in bringing myCoordinates Pro to the iPad was having to support all four rotations of the device completely. This meant that I had to think carefully about designing and creating my user interface. Another challenge that I faced was deciding which features to include, since I did not want to overcomplicate the iPad app and aimed to keep it as simple and easy to use and understand as possible.

myCoordinates Pro for iPad is available on the App Store.

Cube Time & Expense Tracker

by Pedro Morais (Bitrzr)

About

Track time and expenses on your iPhone or iPad, manage them centrally at http://cube.bitrzr.com. Ideal for companies using Google Apps or freelancers with a Google account.

NDA Blues

Working under the NDA means you can’t Google problems, and are limited to the developer forums – but, overall, the process for creating universal apps is really well explained in the documentation. App review process – we had no idea we weren’t allowed to use scrollViewTexturedBackgroundColor in our dialogs.

Cube Time & Expense Tracker is available on the App Store.

Addicus HD, Poptweets HD

by Derek van Vliet (Get Set Games)

About

My company is Get Set Games. We’re an indie game developer based in Toronto, Canada. We’re launching 2 iPad games this Saturday, April 3, the day the iPad is released in the US.

The first is Addicus HD, which is an iPad version of a game we released for the iPhone and iPod Touch in November 2009. It is a number-based puzzle game that has you tapping on cute, numbered mushrooms in order to add up to a goal number. You also race against a timer to reach each goal number.

The second is Poptweets HD. This is also an iPad version of an iPhone/iPod Touch game that we released just last week in March 2010. It is a celebrity trivia game with a twist: all of the content in the game comes from the Twitter accounts of the celebrities. We show you a tweet and it’s up to you to guess which celebrity tweeted it. Having all of the content come from Twitter makes for a game with endless content.

OpenGL Performance

The major challenge in developing for the iPad has been not having access to the device. We developed these titles entirely within the simulator, so we have yet to confirm that the experience is exactly how we want it to be. We can be relatively confident, having developed and played them both on the iPhone, but it would not surprise us to find that there are things we will want to tweak and change about the games once we actually get to play them in the wild.

Developing in the simulator was particularly difficult for us because our apps are OpenGL-based (by way of cocos2d for iPhone). It turns out that the simulator uses a software renderer for OpenGL apps, which worked well for the 320×480 iPhone screen, but unfortunately not so well for 768×1024 apps. It causes a huge drop in performance and makes it very hard to judge how our apps will perform on the actual device. Needless to say, the resounding cry from our team during the course of developing these iPad apps was “I can’t wait to see this on the actual device”.

Addicus HD and PopTweets HD are available on the App Store.

After I had laid out my analysis about Brice Milliorn offering his iPhone Apps Portfolio for sale on eBay, I got contacted by the owner/seller himself. He offered to respond to any deeply probing questions I might have. Journalistic curiosity got the better of me and so I constructed the hardest questions that I could think of.

Here are his answers, verbatim and unedited.

1. You claim to produce 86% of your income from the USA, yet none of your apps appear in the top 100 in any category there. What is your explanation for this?

There are 100,000 apps on the app store and my apps pop in & out of the top 100 from time to time. Also obviously a Top 100 is only a 0.001 percent of the total app store product mix, considering there are 100k apps out there now.  So just because you don’t show up in the Top 100, doesn’t mean you don’t sell a lot of apps.  And furthermore, it is good that my apps are being recognized internationally as well.

2. If your business is still growing (and would grow more with “proper marketing”) how do you explain the steep decline in average royalties for the past 30 days compared to the 60 or 90 days range?

Lack of marketing, lack of updates, lack of attention, and o’yes 100,000 apps on the app store!

3. You say “a person who can market them will have much better results”. How can you predict that if everybody knows that after an initial sales spike there is only a long tail to farm on?

Marketing 101, see below.

4. What’s your factual foundation to claim that “the numbers may be better” as a sales argument?

Marketing 101, and I know this because the spike in sales that you saw (see charts on link list at bottom) was because of the little marketing that I did have time to do. Also a lot of these apps can have focus marketing, meaning they deal with certain areas of the US, so marketing can be focused on that area or that segment of people (i.e. College Students).

5. How did you yourself arrive at the number $100,000?

• Well I like what I am doing, don’t have much time but still like it, for me to give it up, a big number would need to be paid, 100k is that big number.
• However when valuing the business, I think it is a small price to pay. When you value real estate you look out 5-6 years. If you take my sales and look out only 2-3 years, this business will pay for it self easily.
• I also arrived at this number by looking at the two previous cases that I know of (see below for 2 example cases in question #10) of iPhone developers selling their business and after talking to them about their situation.  These apps were sold between 5k and 10k each, I am selling 87 apps for 100k, that is $1,149 each.

6. Currently it is unlikely that you will find a buyer. Small guys don’t have the money. Big guys don’t see an audience. What’s your plan B? Would you also be willing to only sell shares of your company to interested investors? Like $10,000 to get 10% of your monthly royalties would be around 36% annual interest.

I wouldn’t say I won’t find a buyer? I have had over 100+ emails inquiring about it further and there are 70+ watchers on ebay right now. My website has had over 3000 hits in just 3 days, the ebay auction has over 3000 page views as well. I have no plan B. Like I said above, I like what I do and to get me to sell it would have to be a BIG number. Not willing to sell shares of company. 100k, take it or leave it.

7. Or how about only asking for a certain percentage in cash and getting paid a percentage from royalties over a certain period?

Again, not willing to do this, 100k take it or leave it, I enjoy what I do.

8. There is a guy named Joe Madox who is seemingly interested. When defending your offer it sounds like he has already made up his mind to try to come up with the sum. Or is a friend of yours?

This guy has asked a lot of questions, more than anyone. He owns a publicly traded company. He was thinking about paying me in shares of his company. I declined, cash only.

9. You are saying you’re selling “your business”. Does this include the legal entity plus bank accounts belonging to it? What’s this “collateral” you speak of?

Selling the assets of the company, meaning the 87 apps, not the name of the LLC or the LLC itself, little confusing I realize.  The collateral is all the source files, the website files, images, everything the user needs to run these apps and update these apps and completely relinquish these apps from me!  No bank account b/c not getting the LLC, just getting the apps themselves.

10. Based on what legal foundation do you think you can sell your business at all? Sure you can sell a corporation, but how does Apple deal with such a sale?

I am selling my programs, not Apple, not my LLC. There have been previous developers who have sold their business fine, I contacted them to ask questions, got a response from them, said everything went smoothly. Here are those two examples…

Example 1:

http://cgi.ebay.co.uk/Top-Tens-iPhone-app-source-code-and-website_W0QQitemZ260457053112QQcmdZViewItemQQptZUK_Computing_Software_Software_SR?hash=item3ca4733bb8&_trksid=p3286.c0.m14#ht_946wt_1167

Example 2:

http://blog.secondgearsoftware.com/2009/10/bitbq-acquires-fitnesstrack-emergency.html

11. How big is the business risk of your news providers cutting your sports-related apps off?

Well I have fended them off so far but there are a lot of hoops to get around with these apps, a new person starting these types will take weeks and weeks of trial and error with Apple before it ever gets approved.  There are also other news providers I could always use I am sure.

12. In Summary I must say that you are doing a very bad job at presenting your business as something worth purchasing. Anybody who has the money to spend on your company also has the financial sense to want to see a good business case. You fail to present it. We all don’t know what will be in 3 years. Apple may still dominate the Smartphone market. Or it may not. And also coming out of the crisis it has become extremely hard for anybody to get a loan for 100k for a business.

I think we all know, the only company to better the iPhone, is Apple. And the economy is/was bad but there is always someone with more money than they need looking for a golden opportunity.

13. Therefore I suggest that you need help in 1) compiling the numbers in a more transparent fashion, 2) maybe even going so far as to providing the apps.db from MyAppSales for download (It does not contain login data, which is on your keychain), or a ZIP of your past financial reports. 3) formulating a plan B as outlined above.

I am NOT going to give out the individual numbers but I will break them down more. The reason I will not give out the individual numbers is because my best selling ones will then be duplicated.

These numbers are again from AppViz as of 11/07/09.

• Rule book Apps 8,712
• Sports Related Apps 12,479
• Friday Night Lights, ANTZ, & iSpy 4,533

Any further questions can be direct to me at jbmjbm22@me.com.

Also further info can be found at the following redirected sites:

JBMJBM, LLC iPhone App Website

http://www.jbrice.com/iphone

JBMJBM, LLC Sell Page (with CHARTS)

http://www.jbrice.com/sell

JBMJBM, LLC Ebay Sell Page

http://www.jbrice.com/ebay

JBMJBM, LLC Press Release

http://www.jbrice.com/pressrelease

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?

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.