How to Determine The Price For Your Business/Service:
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How To Price Your App Development Services
One of the most challenging aspects to becoming a freelance app developer is determining how much to charge for your app development services.
When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.
Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.
On the other hand, when businesses over-price, this tends to be just as damaging to the business.
When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.
Here are some factors to consider when pricing your product:
Understand your customer
It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:
- Customer demographic: Age, gender, location, etc.
- Buying habits of your customer: What they buy + when they buy
- Level of price sensitivity with your customer
All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.
Understand your costs
When pricing your app development services, it's critical that you first identify all of your costs and consequently mark up your app development services so you can factor in a profit.
The actual cost of your app development services may include things like:
- The actual cost to make the product (ie. raw materials, supplies, manufacturer).
- Shipping + overhead fees
- Operating costs to run your business
You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.
Create revenue goals
When determining the price of your app development services, you'll want to create goals for revenue + how much profit you want your freelance app developer to make.
This process is simpler than you may think:
- Think about your breakeven cost (by completing the above step).
- Create a revenue goal based on your break-even cost
- Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
- Divide your revenue goal by the number of items you plan to sell
This figure will help determine your estimated price per product in order to meet your revenue goals.
Evaluate your competition
The last piece in determining how to price your app development services is by simply looking at your competition.
The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your app development services fits best in the marketplace.
All of these factors play an equal part in pricing your app development services, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.
Learn more about starting a freelance app developer:
Where to start?
-> Other freelance app developer success stories
-> Examples of established freelance app developer
-> Marketing ideas for a freelance app developer
-> Freelance app developer slogans
-> Freelance app developer names
More Tips On Pricing Your App Development Services
Lauren Costanza, founder of Bluminary provides us with a detailed spreadsheet of all of her costs associated with running her business:
I knew this would be a self-funded adventure, and I set aside $3,000. During the first three months, I had a detailed spreadsheet where I tracked where the money was going and what was going toward products versus researching and developing new products.
The spreadsheets involved columns and rows of numbers to craft a budget and gain an understanding of how much would need to be invested at each stage of the process - from gathering supplies to building a website, and shipping materials.
Thanks for reading. We wish you success in your business endeavors.
Examples of a successful freelance app developer
9. Wolfpack Digital ($3.6M/year)
Georgina Lupu Florian (from Cluj-Napoca, Romania) started Wolfpack Digital almost 9 years ago.
Hi everyone! I am Gina and I am the founder and CEO of Wolfpack Digital. The name of the company stems from my surname “Lupu”, which means “Wolf” in Romanian. We are an award-winning app development agency from Romania with an in-house team of 50 people. We design and build web and mobile apps start-to-end for startups and scaleups from around the world, while advising them with their business and product strategy. This has given me the opportunity to personally work with more than 40 entrepreneurs so far and to learn more about their business, which is super exciting!
This year Wolfpack Digital has exceeded the 1.5M USD yearly revenue threshold, yet what we are most excited about is the great atmosphere in our team and our amazing office space, coupled with the fact that we get more and more opportunities to work on meaningful apps with inspiring founders.
10. Krit ($1.09M/year)
Andrew Askins (from ) started Krit over 9 years ago.
Hi, I’m Andrew 👋I like to joke that I’m a jack of all trades and master of pun…
- An attorney take her legal tech startup from $0 to $1M in Annual Run Rate.
- A 71-year-old financial consultant build his first tech company and close customers like Yale, Brown, NYU, and Dartmouth.
- A doctor in Texas launch the first HIPAA compliant text messaging service.
- A photo booth startup build tools that are used by Amazon, Uber, Red Bull, NBC, the NFL and more.
11. Appsitude ($600K/year)
Cam Upson (from Vancouver, British Columbia, Canada) started Appsitude almost 9 years ago.
Hey! Well to start my name is Cameron Upson, and I am a 22-year-old entrepreneur. I recently acquired an app development company called Appsitude that a friend of mine started. I am not the original founder but I think of myself as one as I had to completely restart the company from the ground up and get it moving again.
It sat stagnant for a year or so when the former CEO moved on to another project as app development wasn't his calling in life. I have really been there since the beginning of everything and plan on being there all the way through until we are one of the biggest app development companies in the world. We tend to do quite a lot of B2B but we also really enjoy doing B2C as the app ideas can always get to the next level! We are currently doing around $30,000 to $50,000 a month and have big plans to continue our growth, watch out world.
12. Pioneer Mobile Applications ($360K/year)
Phil Scarfi (from New York, USA) started Pioneer Mobile Applications about 7 years ago.
Hello! My name is Phil Scarfi and I’m the founder of Pioneer Mobile Applications.
Pioneer works with a wide variety of clients ranging from startups ($10k-$50k budgets) to larger enterprise organizations ($100k+ budgets). Over the past year and a half, Pioneer has nearly tripled the amount of clients and inbound leads we have gotten, we’ll discuss how we did that a little later!
13. LowCode Agency ($120K/year)
Jesus Vargas (from Cancun) started LowCode Agency almost 4 years ago.
Hello, my name is Jesus Vargas, and I am the founder of LowCode Agency. We are a unique app building agency using no/low code tools to develop apps faster and at a fraction of the price of “traditional” apps.
Even though the road has been long, since our rebrand to LowCode Agency in March 2020, we have been growing double digits every month, and we are on track to do $150,000 in sales in our first year.44
14. Apps:Lab ($72K/year)
Marvin Collins Hosea (from Nairobi, Nairobi Province, Kenya) started Apps:Lab almost 7 years ago.
My name is Marvin Hosea, I have been developing software for more than five years now and I am the founder and lead at Apps: Lab KE. We are a team of expert software developers, data analysts, and designers specializing in problem-solving using technology and data for businesses and communities.
We are good at what we do and that is software development as stated by our slogan Heart of Tech
15. Bloomy Lab ($480K/year)
Aleksandr Lanin (from Kyiv, Ukraine) started Bloomy Lab over 4 years ago.
Hi, my name is Alex and I'm the founder of Bloomy Lab. Our company focuses on health and fitness, productivity and life quality improvement. We mostly develop our own products, by now the most popular of them are Restly, 2 Minute Habits, Jiju, Poof, and City Property. Some of our apps even became Product of the day on Product Hunt. Our team is not so big: 2 UI/UX designers, 1 motion designer, 5 developers, 2 product managers and me as both a strategist and a product owner. Oh, we've also found a UA manager not long ago. Despite that, we've created 20 apps in half a year and nothing's gonna stop us!
We've launched our products without any ads (working on it now), that’s why we've only reached 40,000 downloads. Our apps were totally free and without in-app purchases, as our main goal was idea verification. By now we only get around $1,000 per month as money-making wasn't our main focus earlier. I hope we'll update that info really soon though.
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