4 ms·

How I went from idea to profit in under 24 hours

44 points by jwwest 15y ago

uurayan 15y ago
Cool story but the word profit is not the right word to use in this case. You generated revenue which is much much easier to do than turning a profit.
duiker101 15y ago
They idea is nice but, i am afraid that as most of this articles the title is a little misleading... you had a sale but not yet delivered a product, that is what the customer paid for. So you still have to work and even with all the limits you pose this might take 3/4 hours... and supposing you work at an hourly rate of 20$/h witch i think(but i'm not sure) it's quite low you might "spend" 60/80 $ of your time to develop it. this gives you a profit of 10/30 $ depending on how fast you are. Anyway this is a nice project and i really hope you or someone else will prove my calculations wrong! Good luck ;)
pilom 15y ago
Whether or not you are profitable depends on the cost of the labor you put into each app. Can you actually be profitable if you spend 2 hours per app that you would have billed to a big client at $100/hour?
- jwwest 15y ago
  A lot of this is an experiment. You're right, I can potentially bill a client $100+ an hour as an iOS developer but there's other costs that a lot of people ignore including time spent finding a client and time spent courting them. The income isn't optimized (yet) but it's a start.
gravitronic 15y ago
Proper accounting is to recognize the revenue and costs of a sale in the same period. So you don't get to claim any profit until you complete the work you were paid to do. How do you plan on finishing the apps fast enough to consider this a win? To me this is the opposite of a good side project. You want your projects to generate passive income, not income that requires a non-trivial amount of work to recognize. If you can write apps, you should write apps yourself and generate ad revenue or sale revenue. You should definitely reconsider this idea before you have oversold yourself to the point of never being able to meet your responsibilities.
- chimeracoder 15y ago
  > Proper accounting is to recognize the revenue and costs of a sale in the same period. > So you don't get to claim any profit until you complete the work you were paid to do. Correct. For anyone who's rusty on their financial accounting and interested: Assets - Liabilities ≡ Stockholder Equity This is the fundamental identity in financial accounting, and most financial statements are really just different ways of breaking this identity down. Usually it's written as A ≡ L + SE, but I find A - L ≡ SE to be easier to explain. If you receive a cash pre-payment, you record an increase in the assets, but you also record an increase in 'unearned revenues' - a liability account. Your profit is, essentially, the difference in stockholder equity from one period to the next, so you've had no profit or loss so far (as far as the books are concerned, you're right back where you started). You also record all costs associated with the revenue in the same period as the revenue payment. This is separate from the 'unearned revenue' liability account. That prevents people from boosting their bottom line in a given period by getting a lot of pre-payments, without recording all of the costs that will eventually be incurred by following through on the service itself. (And the prepayment creates an obligation to follow through, which is a liability). Once you perform the task, you've earned the revenue, so the unearned revenue gets transferred to an equity account. Then you've earned a profit, which is the difference between your cash received (equal to now-earned revenue) and the costs associated with performing the job. So if you've already incurred the costs but have not yet followed through on the service itself, you're actually making a loss on paper so far, because you've earned $0 in revenue, even if you have the cash on hand. (This is highly oversimplified, just in case there are any accountants on HN, but I figure any people who missed the chance to take Financial Accounting 101 may appreciate understanding how some of this works. Even if you hire someone else to do the finances of your startup for you, it really helps to have an idea of why two actions that have the same 'real' outcome can have very different effects on your financial health on paper!)
  - orenmazor 15y ago
    unless the 'work' in this case was to trick somebody into sending him money. in which case, its definitely profit now :) (that said, good post. not enough people think about A=L+SE when they do business)
twalling 15y ago
I bet I could go from idea to revenue in under 1 hour.
- sequoia 15y ago
  I am interested in hearing this story. Please do so, make a post, and submit to hackernews.
tptacek 15y ago
This is a strange definition of "profit", as it counts customer revenue before they've signed off on the deliverable --- or even before work has commenced. It seems to imply that the author's time has no value.
SatvikBeri 15y ago
Well done! Now you can keep earning revenue, figure out what customers value, find more profitable projects, etc. Working on products that nobody wants is the kiss of death for many projects-by actually finding customers, you've greatly reduced that risk.
daemon13 15y ago
I've noticed that you are LLC. Therefore, gravitronic and chimeracoder are absolutely correct in their remarks re accounting methodology (glad to see other GAAP versed folks here) - unless you do cash based accounting, which is highly unlikely. I would recommend that you check with your accountant how this works. However, putting aside accounting stuff, I do not understand what you are trying to achieve? What are your use cases? There are apps for prototyping (Balsamiq), there are DIY browser based web apps for getting one's app in the AppStore (AppMkr, etc)[with some ads, ya, but that's prototype, correct?]. You production process is not automated and does not scale. So, what's the point?
- mortuus 15y ago
  It could scale if he sub-contracted work to local college students looking for mobile dev experience.
  - jwwest 15y ago
    I've given this some thought, subcontracting isn't something I'm super familiar with but it's definitely worth looking into. Things are way too early to tell yet.
saraid216 15y ago
I am highly disappointed that the domain name failed to be relevant.
wtvanhest 15y ago
I'm surprised no one else wrote this but why not increase your price to $199? That is still dirt cheap for anyone who wants to get an app made. You'll do half the work for the same no eyes.
- jwwest 15y ago
  That might be in the cards. I'm trying to make the inflection point between dirt cheap and impulse purchase and $99 seems to catch a lot of attention. Like I mentioned, a lot of this is trial and error, but we all have to start somewhere.
deleted 15y ago
[deleted]
jefe78 15y ago
I really like your idea. However, you didn't provide us with a link to signup if we're interested. On that note, how does the app release work. Do you leave the client up to their own devices to submit the app? Do you provide them with all the assets upon completion(tar of code, etc)?
- jwwest 15y ago
  Depends on what the customer wants to do. When you're dealing with mobile apps, it's tricky to do distribution (especially with Apple) so if they want to put it on the app store, I'm more than happy to help them upload it or they can give me credentials to upload myself. However, that's only IF they want to upload it. These are very unpolished after all. Every customer gets an archive of all assets once development is complete.
deleted 15y ago
[deleted]
patio11 15y ago
You could have revenue in a matter of seconds by offering to sell $100 gift certificates to Amazon for $50 (why hello, many daily deals sites) but that would probably not be a sound business decision. Can I strongly, strongly, strongly suggest that you rethink the pricing and value proposition here? You're chasing away good clients because anyone who has ever done mobile or programming thinks that custom development offered for $99 implies not-great-things about your programming savvy or likelihood of following through on this deal. The "wantrapreneurs" (hate that word) you appear to be targeting will disproportionately have wildly inaccurate expectations of what you're selling for $99, because you appear to be promising them the fantasy of having their business come from idea to actual fruition at the cost of $99. I am having difficulty finding strong enough language to communicate the unwiseness of this business model vis-a-vis accurate worries like "If you’re not careful, you may end up spending an exorbitant amount of hours on a project, driving your hourly rate into the basement." All the words I'm reaching for seem hostile and yet they do not nearly capture the scope of how bad of a decision this is.
- dot 15y ago
  I really want to agree with you, but I think he found a profitable little niche. The type of apps (actually concepts) he's building for $99 will end up being very cookie cutter and should take a good developer less than an hour (and sometimes 15 minutes). I think this could scale well too if you find decent, dependable developers that want to make a quick buck here and there...
  - inmygarage 15y ago
    This could end up as great lead generation for a mobile development shop. Once the customer sees what $99 buys, it's likely that he or she will want changes and probably some design work. If you can pull together a group of designers and developers and provide the hosting and make the ever-so-painful submission process painless, you are basically creating an app-as-a-service business where the $99 prototype is the loss leader that gets you your customer base.
    - 15y ago
samstave 15y ago
I think this is an awesome idea. - while I agree with patio11, that there is risk - I think the author recognized this risk clearly in the post. What would be interesting, as an experiment, would be to see if there is a way to build a larger app from a bunch of $99 app legos. Break your app down to a range of small blocks that will all link together. Buy out each block as you go and have money. Maybe there are larger blocks available. Say - proof of UX concept for 99, core functions for 500, 99 additional change/feature, etc...
umenline 15y ago
How did you publish your landing page ? how did you spreed the word on your service ?

44 points by jwwest 15y ago

Cool story but the word profit is not the right word to use in this case. You generated revenue which is much much easier to do than turning a profit.

duiker101 15y ago

They idea is nice but, i am afraid that as most of this articles the title is a little misleading... you had a sale but not yet delivered a product, that is what the customer paid for. So you still have to work and even with all the limits you pose this might take 3/4 hours... and supposing you work at an hourly rate of 20$/h witch i think(but i'm not sure) it's quite low you might "spend" 60/80 $ of your time to develop it. this gives you a profit of 10/30 $ depending on how fast you are. Anyway this is a nice project and i really hope you or someone else will prove my calculations wrong! Good luck ;)

pilom 15y ago

Whether or not you are profitable depends on the cost of the labor you put into each app. Can you actually be profitable if you spend 2 hours per app that you would have billed to a big client at $100/hour?

jwwest 15y ago
A lot of this is an experiment. You're right, I can potentially bill a client $100+ an hour as an iOS developer but there's other costs that a lot of people ignore including time spent finding a client and time spent courting them. The income isn't optimized (yet) but it's a start.

gravitronic 15y ago

Proper accounting is to recognize the revenue and costs of a sale in the same period. So you don't get to claim any profit until you complete the work you were paid to do. How do you plan on finishing the apps fast enough to consider this a win? To me this is the opposite of a good side project. You want your projects to generate passive income, not income that requires a non-trivial amount of work to recognize. If you can write apps, you should write apps yourself and generate ad revenue or sale revenue. You should definitely reconsider this idea before you have oversold yourself to the point of never being able to meet your responsibilities.

chimeracoder 15y ago
> Proper accounting is to recognize the revenue and costs of a sale in the same period. > So you don't get to claim any profit until you complete the work you were paid to do. Correct. For anyone who's rusty on their financial accounting and interested: Assets - Liabilities ≡ Stockholder Equity This is the fundamental identity in financial accounting, and most financial statements are really just different ways of breaking this identity down. Usually it's written as A ≡ L + SE, but I find A - L ≡ SE to be easier to explain. If you receive a cash pre-payment, you record an increase in the assets, but you also record an increase in 'unearned revenues' - a liability account. Your profit is, essentially, the difference in stockholder equity from one period to the next, so you've had no profit or loss so far (as far as the books are concerned, you're right back where you started). You also record all costs associated with the revenue in the same period as the revenue payment. This is separate from the 'unearned revenue' liability account. That prevents people from boosting their bottom line in a given period by getting a lot of pre-payments, without recording all of the costs that will eventually be incurred by following through on the service itself. (And the prepayment creates an obligation to follow through, which is a liability). Once you perform the task, you've earned the revenue, so the unearned revenue gets transferred to an equity account. Then you've earned a profit, which is the difference between your cash received (equal to now-earned revenue) and the costs associated with performing the job. So if you've already incurred the costs but have not yet followed through on the service itself, you're actually making a loss on paper so far, because you've earned $0 in revenue, even if you have the cash on hand. (This is highly oversimplified, just in case there are any accountants on HN, but I figure any people who missed the chance to take Financial Accounting 101 may appreciate understanding how some of this works. Even if you hire someone else to do the finances of your startup for you, it really helps to have an idea of why two actions that have the same 'real' outcome can have very different effects on your financial health on paper!)
- orenmazor 15y ago
  unless the 'work' in this case was to trick somebody into sending him money. in which case, its definitely profit now :) (that said, good post. not enough people think about A=L+SE when they do business)

twalling 15y ago

I bet I could go from idea to revenue in under 1 hour.

sequoia 15y ago
I am interested in hearing this story. Please do so, make a post, and submit to hackernews.

tptacek 15y ago

This is a strange definition of "profit", as it counts customer revenue before they've signed off on the deliverable --- or even before work has commenced. It seems to imply that the author's time has no value.

SatvikBeri 15y ago

Well done! Now you can keep earning revenue, figure out what customers value, find more profitable projects, etc. Working on products that nobody wants is the kiss of death for many projects-by actually finding customers, you've greatly reduced that risk.

daemon13 15y ago

I've noticed that you are LLC. Therefore, gravitronic and chimeracoder are absolutely correct in their remarks re accounting methodology (glad to see other GAAP versed folks here) - unless you do cash based accounting, which is highly unlikely. I would recommend that you check with your accountant how this works. However, putting aside accounting stuff, I do not understand what you are trying to achieve? What are your use cases? There are apps for prototyping (Balsamiq), there are DIY browser based web apps for getting one's app in the AppStore (AppMkr, etc)[with some ads, ya, but that's prototype, correct?]. You production process is not automated and does not scale. So, what's the point?

mortuus 15y ago
It could scale if he sub-contracted work to local college students looking for mobile dev experience.
- jwwest 15y ago
  I've given this some thought, subcontracting isn't something I'm super familiar with but it's definitely worth looking into. Things are way too early to tell yet.

saraid216 15y ago

I am highly disappointed that the domain name failed to be relevant.

wtvanhest 15y ago

I'm surprised no one else wrote this but why not increase your price to $199? That is still dirt cheap for anyone who wants to get an app made. You'll do half the work for the same no eyes.

jwwest 15y ago
That might be in the cards. I'm trying to make the inflection point between dirt cheap and impulse purchase and $99 seems to catch a lot of attention. Like I mentioned, a lot of this is trial and error, but we all have to start somewhere.

deleted 15y ago

[deleted]

jefe78 15y ago

I really like your idea. However, you didn't provide us with a link to signup if we're interested. On that note, how does the app release work. Do you leave the client up to their own devices to submit the app? Do you provide them with all the assets upon completion(tar of code, etc)?

jwwest 15y ago
Depends on what the customer wants to do. When you're dealing with mobile apps, it's tricky to do distribution (especially with Apple) so if they want to put it on the app store, I'm more than happy to help them upload it or they can give me credentials to upload myself. However, that's only IF they want to upload it. These are very unpolished after all. Every customer gets an archive of all assets once development is complete.

deleted 15y ago

[deleted]

patio11 15y ago

You could have revenue in a matter of seconds by offering to sell $100 gift certificates to Amazon for $50 (why hello, many daily deals sites) but that would probably not be a sound business decision. Can I strongly, strongly, strongly suggest that you rethink the pricing and value proposition here? You're chasing away good clients because anyone who has ever done mobile or programming thinks that custom development offered for $99 implies not-great-things about your programming savvy or likelihood of following through on this deal. The "wantrapreneurs" (hate that word) you appear to be targeting will disproportionately have wildly inaccurate expectations of what you're selling for $99, because you appear to be promising them the fantasy of having their business come from idea to actual fruition at the cost of $99. I am having difficulty finding strong enough language to communicate the unwiseness of this business model vis-a-vis accurate worries like "If you’re not careful, you may end up spending an exorbitant amount of hours on a project, driving your hourly rate into the basement." All the words I'm reaching for seem hostile and yet they do not nearly capture the scope of how bad of a decision this is.

dot 15y ago
I really want to agree with you, but I think he found a profitable little niche. The type of apps (actually concepts) he's building for $99 will end up being very cookie cutter and should take a good developer less than an hour (and sometimes 15 minutes). I think this could scale well too if you find decent, dependable developers that want to make a quick buck here and there...
- inmygarage 15y ago
  This could end up as great lead generation for a mobile development shop. Once the customer sees what $99 buys, it's likely that he or she will want changes and probably some design work. If you can pull together a group of designers and developers and provide the hosting and make the ever-so-painful submission process painless, you are basically creating an app-as-a-service business where the $99 prototype is the loss leader that gets you your customer base.
  - 15y ago

samstave 15y ago

I think this is an awesome idea. - while I agree with patio11, that there is risk - I think the author recognized this risk clearly in the post. What would be interesting, as an experiment, would be to see if there is a way to build a larger app from a bunch of $99 app legos. Break your app down to a range of small blocks that will all link together. Buy out each block as you go and have money. Maybe there are larger blocks available. Say - proof of UX concept for 99, core functions for 500, 99 additional change/feature, etc...

umenline 15y ago

How did you publish your landing page ? how did you spreed the word on your service ?