Sunday, February 5, 2012

Design to Product on Android - Costs (3 / 17)

One of the big factors in business is to keep the costs down.  Here is a ranting of sorts on how stuff costs too much, but more importantly, what are some costs involved with making an Android App, in no particular order.

Rent (apartment/house/office)
Going to need a physical place to make the product, either for yourself, or for your team of people.

Utilities - Gas
It is always nice to have a comfy place to work, and paying a gas bill is conducive for temperature control.  If you're living at your place of work, and you're the software guy, you might be able to skimp on this cost by living in your room; if it is anything like mine, your copious amounts computers provide enough heat to replace the gas bill.

Utilities - Electric
Without this, you're not going anywhere in this business.

Generally a good idea to be able to eat stuff.  Though cutting back on going out to eat and consuming frivolous luxury foods can really add up and should be put in check if you want to keep costs down if you're working for yourself.  Buy a water filter and don't waste money on bottled water or soda/pop.  Rice, beans, anything that keeps a while, easy to make, and can buy in bulk, is a good idea to get used to.

Most software people usually don't go outside much, but in the freak accident of circumstance, it can happen... and it does cost money usually.

Phones, gizmos, and gadgets
An Android phone or tablet or both is highly recommended if you're serious about making apps.  You'll probably want some other trinkets to entertain you as well, like some sweet binary clock or something.

License fees
Yep, these are going to happen.  Google takes $25 up front for your developer license.  If you want to port to iOS one day, they take $100 a year.  Various software tools have license fees.  Fortunately, for Android, using Eclipse and the Android SDK is free, but if you use any sort of supporting program, like Photoshop, 3ds MAX, various sounds programs, all of those are very expensive.  Weigh this cost with the related contracting cost of outsourcing those needs.

Distribution fees
The Android market place takes a cut of your sale price if you decide to release an app as a paid app.  Based on how much money you make, the rate fluctuates, but you may as well chalk this up to a 30% reduction of income to the "payment processing" that is associated with the marketplace.

People need to do work to make a product.  If you yourself are not personally creating some aspect of a product, it needs to be outsourced somewhere, and even if you could provide an aspect of a product, the question is should you use *your time* by providing whatever that is.  For example, as a developer, I can and do make some graphics, but for every hour "lost" to making graphics, is an hour away from programming.  For every hour programming, I lose to marketing -- unfortunately humans have that bad habit of existing in linear time, forcing us to do one thing, then the next, and time is what drives costs up.  Carefully weigh your time versus costs involved with outsourcing.  At the end of the day, paying someone else to do something for you will probably be your largest cost, and can fluctuate wildly.

Don't even bother with the idea of hiring someone else as a staff member unless you have a lot of money at your disposal.  Contract anything and everything out on a per-job basis to keep costs down as much as possible.

Anything that can't be done "in house" basically has to be contracted out.  Some initial quotes from contracting houses for graphics work ranged from $2,000 ~ $50,000 for the same set of art requirements.  We're talking about really basic things too, about a dozen static backgrounds, some animated characters, some promo art.  Shop around for quotes as you can see the range has a large distribution, but regardless, you will be paying the costs for this, no matter what it costs.

Fees, fees, and more fees.  If you make an LLC, incorporate, whatever, the federal government and the state will likely want a piece of your company or at the very least, a hefty portion of your income no matter what your legal status is.  Lawyers and all that good stuff could be put in this category as well.

My advice to you, if you're in the United States anyways, is simply don't get sick or get hurt.  You basically can't afford to have anything bad happen to you.  In other words, don't quit your day job if you have medical benefits.  At the same time, don't even bother thinking about hiring employees because, depending on your state, YOU may have to cough up cash for medical coverage of employees... the insurance of those people... costs keep stacking up going this route.

In the US, if you hire people, your business might be subject to being forced to pay certain insurance costs -- like unemployment, workers compensation, etc... these costs can sneak up on you if you're not prepared.

Other things
Website fees, hosting fees, marketing and advertising costs -- depending on what you want to do to maximize your presence, these costs could be all over the place, but probably should be considered if you're factoring costs.

Hah, made two sections for other stuff.  Seriously though, you will want to add in some buffer zone above your initial costs allocated to "just in case", things always seem to take longer than expected, or more expensive than initially discovered; either way, YOU will have to cough up the cash to make it happen; nothing worse than paying for 75% of something and running out of cash making you eat all those costs with no hope of recovering any of said costs by failing to deliver the product at all!

This isn't an itemized list, but should give you a decent idea of the general costs that could be involved with a business associated with making Android Apps.  I can wager this isn't a 100% complete list either, as small expenditures like to just show up when they are least expected.

Proper planning for costs will increase the chance you have in creating and finishing a product by giving you an idea of how much money and resources you will need to go from start to finish.

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