Beware of the Mobile App Subscription Trap

Top mobile app developers in New York, Philly, and Toronto

Recently our company has seen an uptick in requests for takeover projects. In the past these takeover projects were largely a result of customers unhappy with their prior mobile app development company.

However, we’re starting to see a different takeover customer – mobile app subscription platforms. They target small-medium size businesses and especially not-for-profits. These are less tech savvy the businesses without technology expertise. The general theme is they get sold on essentially templated apps for a small monthly fee.

Subscriptions app services vs Custom Mobile Apps

On the surface it may seem to be an easy decision – a platform company develops an app that solves a specific problem in a specific industry or vertical market. Instead of recreating the app for many customers the company develops one app and then “skins” it for each customer. Skinning could involve matching the app to the customer’s branding guidelines and inserting logos. But all customers share the same app code.

Sounds like a great idea. Instead of spending tens, or in some cases hundreds, of thousands of dollars for creating a custom app it seems that it’s far less expensive to pay $1,000-$5,000 a month in perpetuity.

The subscription app companies make very good sales pitches and use analogies related to SaaS software like Salesforce.com.

Subscription apps are not the same as SaaS platforms

There is a significant difference in comparing a custom piece of software to a SaaS platform. Apps have many components, including visual design and branding, custom workflows, and specific functionality for a specific purpose. Unlike in a SaaS platform you can’t just “export the app” into an Excel file and move to a different SaaS platform.

Rather, the subscription app services seek to lock-in customers and, in some cases, hold them hostage to their platforms. This is because they know the cost of switching is very significant.

Qualitative and Quantitative Risks of Mobile App Subscriptions

Consider the cost risk. Say you choose to spend $1,000 a month for pre-built app and forgo a custom app for your business. You pay $1,000 a month for 24 months, spending only $24,000. You have a significant amount of people using the app. Let’s say it’s 10,000 monthly active users (MAUs). Then one day you decide that you need more functionality. Or you’re unhappy with service the subscription app is providing (bugs, missing features, outdated user interface that you can’t control, etc). Or worse, you received a notice that the company is terminating the service.

You now have 10,000 users that rely on your app every month. They log-in to the app with their user accounts on a regular basis. And now all this has to go away. The total loss is not $24,000. The total loss is AT LEAST 10x-20x. Here are the expenses you will incur:

  • Time to identify a vendor to develop a custom app that you own and control
  • Time to develop the app and any backend platform – HOPEFULLY all this can be done before the demise of the subscription platform.
  • Time and resources to educate the users about the “new” app.
  • Cost of getting 10,000 users to switch to a new app (consider how hard it was to get them to download and use the app in the first place).
  • The “cost” of loss of goodwill with users who rely on the service the app provides.

Costs of Mobile App Development

Developing custom mobile apps is expensive – to do it right. App development requires thought-out user interface and user experience design, logical workflow, ease of use, and most important – it must make the user’s life better. It must address a pain and solve it in a very significant way.

When and if you decide to launch an app should be dependent on your commitment and the commitment of the management of your company to see through not only app development but getting people to use it. Marketing the app internally or externally (depending on the nature of the app) is critical.

Realize that people, not the beta testers, will be relying on the app you’re proposing to develop. And if the app solves a significant problem for the users then your brand reputation will be inextricably linked to the app.