Resellers: how to set your prices to ensure healthy margins?

When you create and publish apps for customers, the goal is to leverage your expertise by generating regular income. To do this, you can charge: a service fee for creating the app, a subscription fee for maintenance and back-office access for the customer, and additional fees for adding one or more extensions at the customer's request. These three types of revenue can be added together.
 

• App creation fees

When you create an app for a customer, you mobilize your know-how and resources. By charging a service fee for the app's creation, you're recognizing the work that went into the final rendering. With GoodBarber, you can create apps with a high level of personalization and exceptional design. Moreover, since you can publish apps on 3 platforms (Web, Android, iOS), it's possible to imagine a tiered fee based on the distribution methods chosen by your customer. Creation fees are a way of rewarding the work involved in creating the app and the time spent using the platform.
 

• A subscription

An app requires technical and human resources to be maintained. You can therefore charge recurring fees for updates (at least once a year for native applications), customer support and the technical infrastructure provided. In fact, with GoodBarber, you can give your customer access to the app's administration interface (white label).
 

• Additional fees

Even if your customers are initially satisfied with their app, they may ask for changes or improvements over time. GoodBarber gives you access to over 500 features. You'll surely have the opportunity to sell a multitude of additional features to the apps you've already created, and thus increase your average shopping cart.

This is our general advice. In addition, don't forget to carry out market research to find out more or less precisely how much money customers are willing to invest in an app.
Also, if you're aware of the existence of competing companies in your area, don't hesitate to consult their websites to find out their prices and position yourself in relation to your competitors. These few reflexes will enable you to hit the mark and offer competitive prices, to try and get ahead in the mobile app market.

For any person or company wishing to start creating and selling apps to customers, the thorny question of pricing will arise.

We'd like to remind you of one thing: if your prices are too low, you're working hard and spending a lot of energy for little or nothing. Furthermore, you're unable to hire if the need arises, and your revenues are flat. As a result, you find it hard to make a profit from your business.

On the other hand, if you charge rates that ensure healthy margins, you can hire one or two people to work on app projects. This gives you more time and energy to prospect for customers. New business opportunities present themselves more easily. The result is a virtuous circle of sales growth.

On the one hand, it's necessary to carry out a market study and find out what the competition is charging, but it's also essential to carry out an in-depth analysis of your costs. Here's the trick: first you need to know your costs, then you can adapt your pricing to generate margins. And remember, you shouldn't be ashamed of making margins!

What are the costs? We can generally agree that the main costs you'll face are as follows:
First, your GoodBarber subscription, which can be monthly or yearly. Next, your salary + your employees' wages (if you have any). Finally, your advertising costs.

An important question to ask yourself: how much money do you have left after you've paid for your GoodBarber subscription, employees for work done and advertising? That's a good starting point. It's estimated that a 66% profit margin is required to establish a viable business.

Let's consider a service company, offering a service to a customer. For example, the creation of a website.

1/ Rate charged by the company for creating and putting the website online: $1,000
2/ Total costs supported by the company: $700
3/ Gross revenue generated: 1000 - 300 = $300
4/ Margin (in %): 300/1000 = 0.3. equal to 30%.

=> Goal: achieve a 66% margin. Otherwise, business is too tough and you won't be able to keep your head above water.

Question: How much do I need to charge for a 66% margin?
To answer this question, you need to know your costs.

Margin = Gross revenue / Tariff
Gross revenue = Tariff - Cost Margin = (Tariff - Costs) / Tariff
Margin = 0.66
Costs = 1000
Tariff = Costs / 0.34

So, for a company with total costs of $700, the rate to generate a 66% margin is: 700 / 0.34 = $2059.

If you're in the business of selling mobile applications, you can charge a service fee for app creation, a subscription fee and additional fees for adding specific extensions at the customer's request. To help you set your prices, you need to carry out a little market research to find out how much people are willing to invest in an app. You also need to know what your competitors are charging.

On the other hand, before you set your prices, you need to know what your costs are, so that your prices can generate healthy margins. It is estimated that, to be viable, a company needs to achieve a margin rate of 66%.

With all these elements, you can start creating apps for third parties with peace of mind ;)

Not a reseller yet? Create a test version here: https://www.goodbarber.com/create/reseller/