How To Start an App Development Company in 2022

The mobile application market is not recent: even before the App Store debut in 2008, the 2D snake game provided within Nokia phones was surprisingly addictive, especially given its simplicity. Fast-forward to 2022, when more than 5 million apps of all kinds and purposes are available on the App Store and Google Play, anyone who owns a gadget cannot imagine their daily lives without applications — and that is over 6 billion people.

The numbers speak for themselves: mobile app development seems like a very profitable niche to enter. And indeed, it is, but only if approached right. High demand leads to higher competition, and building a complex app that utilizes advanced features or heavily relies on graphics requires a lot of time, money, and resources. Whether you already have coding or IT project management experience, or just looking for a new business model to invest in, this guide will provide a step-by-step overview on starting a development company.

Why invest in mobile apps?

Good-quality apps that acquire a loyal customer base have a high potential for monetization, particularly through in-app purchases. In 2021, global consumer mobile app spending reached $133 billion, with predicted rapid growth in 2022. Additionally, app screen time grew by up to 80%, according to research performed for 2019-2021 in ten selected sample markets. This goes to show that applications should definitely be considered as an investment for someone interested in the development business.

There are two paths an app development company could follow. The first option is to build applications turn-key, as a contractor. In this case, you could be approached by business owners that want to establish a mobile presence by offering an app for their current and potential customers. Or, alternatively, your brand could become an instrument for someone with funds but no experience looking to break into the mobile app market.

The second option is to create a stand-alone application and retain ownership of it. Once the app is launched, you would hold marketing campaigns to attract more users and introduce monetization strategies to see a flow of revenue, eventually making the project solvent. To achieve this, the released app needs to offer real value and stand out against its competitors, so substantial research of the mobile market and a strong developer team would be required.

Both of these options have the potential of making your development business profitable, given the right approach to security, performance, and marketing. In the first one, your rights to an app remain only work-for-hire, and you likely won’t receive any money after the development fee is settled. The second one requires ongoing maintenance, which can make up to 20% of the initial cost but allows you to cash in on a reliable source of continuous income.

What external factors affect the app industry?

The trends within the industry: new languages or technologies supported by Apple and Google, different devices being released and legacy ones being discontinued, extremely successful projects to look up to, and internal guidelines established by the stores — have a crucial influence over the development direction. However, you should always keep an out for external factors as well, starting from emerging trends in user experience and design graphics, the rise of 5G, and the introduction of foldable or wearable devices, to name a few.

What are the key costs in the app industry?

Your planned app development budget should account for the following costs:

• Resources for market research and competitor overview,
• Software or hardware purchases: computers, development kits, latest updates, licenses, developer account fees, etc.
• Wages or one-time payments for developers, UX/UI designers, copywriters, content makers, etc.,
• Backend hosting service fees,
• Pre-launch marketing.

After the app is released, there will still be expenses:

• App store commissions and royalties: for example, both App Store and Google Play take a 30% commission for each in-app purchase,
• A renewal of the annual placement fee for App Store developer account,
• App maintenance and updates,
• Post-launch marketing,
• Interface and feature improvements for long-term user retention.

How to start an app development company

Step 1. Come up with an idea

In case you are approached by a trademarked business that wants to start offering a mobile app for their customers, coming up with a concept should be easy enough. Schedule product orientation meetings with the client to pinpoint the areas where the app could offer an enhanced service. For example, you could enable appointment or delivery management, online shopping, or tech support automation.

If you’ve decided to get into app development with your own startup, you will need to generate an idea for further research. You can review the market trends to see what is currently in demand: for example, game, e-commerce, and lifestyle apps were increasingly popular in 2021. The concept behind the app does not have to be unique in itself: it’s the customer experience that has to offer something different from the competitors.

Step 2. Deeply research your market

A deeper overview of the chosen app niche will allow you to make out your closest competitors and analyze their design, features, monetization strategies, and audience reception. Select one or two areas where your app would stand out among its category: will it be a moderate pricing plan, a superior interface, ease of use, or a particularly valuable functionality?

You should also try to answer the following questions during the research:

• What problem will your app essentially solve?
• What features will the app have?
• What can you learn from the performance of your closest competitors?
• Will the app require any integrations with third-party services?
• How would you grow and scale the concept in the future?

Step 3. Define your elevator pitch and target audience

As with any product, defining a target audience is critical as it will influence every subsequent stage, from marketing to design choices. What similarities do potential mobile app users have: are they based at the same location, what generation are they, how would you target them? Together with the list of features, interface ideas, and competitive advantage, you will be able to make out an elevator pitch for attracting investments later on.

Step 4. Choose between native, hybrid, and web apps

The three app development methods: native, hybrid, and web — require different programming knowledge skills and lead to varying performance, costs, and time-to-market expectations. Native applications represent the traditional approach: these are apps created specifically for a chosen OS, most commonly, iOS or Android. To build Apple apps, you would need to know Swift or Objective C, while Android requires Java or Kotlin.

Native apps provide the best possible performance, a native interface feel, higher data security, and a complete feature selection. For advanced applications that use 3D graphics, rely on complex functionalities, or require top-notch implementation, native development is the most suitable choice. However, for the app to be present on both Android and iOS, two separate development cycles will be required, which means double the time, cost, and maintenance.

Web applications are mobile-responsive websites that can be accessed via standard browsers on mobile devices. They are built with HTML, CSS, and JavaScript. They would work for any OSes as they do not require the user to download anything. For applications based on existing websites or business ideas with a simple structure, this approach could work well. Limitations on hardware feature access make it an unfavorable choice for complex apps.

Hybrid apps represent the best of both worlds: their interface is usually created with the same programming languages used for web apps, but the back-end configuration is implemented with the help of cross-platform frameworks and open-source programs. This means the resulting app would share an 80%-identical codebase for iOS and Android while still being able to access and utilize their native features. Hybrid applications call upon an embedded web browser to achieve the look and feel of a native app.

Step 5. Figure out a development approach

Once you have decided on the most fitting approach for your mobile app concept, you will know what programming experience to look for in a specialist. Keep in mind that you would need them to create both the back-end and front-end parts of the app, so either find someone who is skilled in both coding and design or consider assembling a software development team.

Get an offshore freelancer

Freelance coders are relatively easy to find, and depending on their location, prices may vary in the range from $20 (Asia) to $150+ (North America) per hour. An offshore developer won’t be available for face-to-face meetings, but with the pandemic still at large, most of us are already working from home and are used to online communication by now. Make sure the time differences are not too drastic, create a detailed timeline with smaller tasks leading up to the final app assembly, and be prepared to provide constant guidance and supervision.

Hire a developer on a permanent basis

If you have a preferred development approach due to, say, previous personal experience, and want all subsequent apps to be built with the same instruments, you can look into hiring a software programmer for a long-term partnership. This will allow you to progress faster with time as they will learn and adapt to your vision and might even be able to reuse some of the code for standard app features in future business projects.

Look for a dev team or a partner

Complex applications with a long list of desired features and extensive design specifications, like game apps, would take too long to be complete by the means of a single person. They would likely require a team of programmers, designers, project managers, and QA specialists. As a similar alternative, you can look into finding a partner in charge of a dev team and focus on the business and marketing side of things yourself.

Step 6. Create a prototype and collect feedback

Fine-tuning and perfecting the app can take several months, and unless you are checking in with your target audience as early in the development timeline as possible, you might be in for an unpleasant surprise. Focus on developing a prototype first — a preliminary visual representation of the app’s UI and UX that does not yet rely on a codebase. You can turn to app builders to bring your wireframes to life and stage surveys or simulation tests to see whether the logic, flow, and design of the app are convenient and seamless.

Step 7. Find an investment

With a business plan, a pitch, and a prototype with positive feedback on hand, you can start looking for an investment to set the development in motion. You can either sponsor the app yourself, take a loan at the bank, turn to crowdfunding services to raise the necessary money with the help of the public, or find a potential investor. If you do decide to work with someone else, be prepared to make changes to the app in order to accommodate their vision.

Step 8. Know your monetization options

To return the investments as soon as possible, consider starting with these common mobile app monetization strategies:

• Advertising in the form of banners, videos, or native ads. Classic banner ads can fall subject to banner blindness and overall annoy some of the users if they are too frequent or obscure the content. Native adverts blend in with the surrounding interface elements, resulting in higher conversion rates.

• In-app purchases allow users to skip ads or unlock extra features without leaving the app to make the transaction. They are often used within freemium applications that only offer a limited amount of features for free.

• Subscriptions give users access to the app’s content and features for a limited amount of time, and then they have to be renewed again. This model works great for content-dependent applications for meditation, music, articles, or anything of that sort.

• Paid apps require a one-time fee in order to install them. You would have to work extra hard on the app’s store listing and presentation in order to convince users to make a payment even before they have a chance to test out the app.

• • Merchandising could also bring in revenue if you decide to use the app as a selling platform for your own goods or make partnerships with distributors as a marketplace does.
  • Affiliate marketing lets you place special trackable links to products on the advertiser’s website and make an affiliate commission every time someone follows them and makes a purchase, orders a service, or installs the promoted software.

• Referral marketing can help you attract new users by rewarding your current customer base for promoting the app through their social accounts or on any other supported platforms. With a wider audience, you have more potential to cash in on the other strategies above.

Step 9. Build your app marketing strategy and generate a pre-launch buzz

Even before the app is ready for launch, you should brush up on your marketing strategy. A new application has very slim chances of getting to the top of the charts in official app stores with no ratings and reviews. The first few users will need to come from a different source, and that can be done by advertising the app prior to its release. You can create a social media page to document the creation journey, promote a landing page with a sign-up list for the download link, and highlight the app’s value for its release to be anticipated.

The chart above is research by Google that shows all the most popular methods of mobile app discovery. Essentially, raising awareness about an app is similar to marketing any other product: do PR work and TV ads, find business partners among industry influencers or local bloggers, share video tutorials and viral content on YouTube. Keep up your social media efforts and look into paid advertising to further grow your audience. Think of a reward for every user that leaves an official app store review to encourage engagement since word of mouth remains the top option for generating user interest.

Step 10. Plan for app store optimization

App stores have powerful search algorithms that can help you attract users at almost no expense at all, only with the required placement fees. The way your app is presented carries a lot of weight and can ruin a user’s first impression even before they try out the interface and features. You will need to work on the name, icon, description, and screenshots used for the listing. The keywords you put down, along with the chosen app category, need to be precise enough to show up in relevant search queries, yet broad enough to attract a larger audience.

Step 11. Know your resources

For the development and testing stages to go smoothly, you need complete transparency as to what is happening every day, every week, and every month. It all starts with making the business vision for the app crystal clear for your designers and developers, answering any questions they might have, and frequently checking in with their work to stay on the same page. Make sure you have enough hardware and software equipment, as well as licensed or free access to the necessary code sample, toolkits, and libraries.

Step 12. Ensure security measures

Data security is a pressing issue for the IT industry, and your mobile app needs to handle personal user data with extra care to comply with the store’s guidelines and avoid breaches. Consider adding two-factor login authentication using codes or biometric data, look into protecting the stored and transmitted data, and perform several penetration tests before the release to ensure the app is safe.

Step 13. Be ready for continuous improvement

Once the app is released, it will require supportive maintenance, as well as regular updates to accommodate new devices, models, and features. To keep your loyal customers and keep attracting new ones, you will need to carefully monitor feedback and apply it to improve the user experience and design. Continue running internal performance tests to optimize the app’s memory usage, processing speed, and data security.

Conclusion

With the amount of planning and detail required to start an app, anyone looking to establish a development business should come prepared. Even the best idea can get lost in the sea of competitors without strong product positioning, marketing, and constant adjustment to the public’s reception. Taking this immense workload alone can be challenging and extremely time-consuming, so one final word of advice would be to assemble a reliable team of professionals that would apply their expertise to the relevant stages of the app journey.

The mobile app market, without doubt, will continue to grow and evolve in the coming years, and it is not too late to join the race — on the contrary, we can learn from the ups and downs of the existing players, be inspired by their success, and strive to create something just as great with the end-user in mind. Once you’ve made it to the launch of your first app, keep researching new trends and educating yourself on the changes in the industry to continue delivering high-quality applications.