Developers: When and Why to Sell Apps Wholesale

This week, an interesting new startup called Appbackr launched, creating the first wholesale market for iOS (iPhone, iPad, iPod Touch) applications. The idea is that developers can submit apps to Appbackr instead of the iTunes App Store at wholesale prices.

So why would developers want to do this?

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Although it’s too soon to tell if Appbackr will really take off, the concept is intriguing – and it does, in fact, fill a niche in the mobile app ecosystem.

With Appbackr’s business model, developers offer a certain number of units for sale to buyers in the company’s marketplace. Those buyers then, in turn, sell the apps they buy from Appbackr on iTunes. Because the buyers have a vested interest in seeing the apps succeed – that’s how they make their money back, after all – they will likely promote the app through various channels, handling marketing, public relations, blogger outreach and more. Basically, the backers will do anything and everything to boost the app’s popularity, because when the app is downloaded from iTunes, the backer (or “backr” in the company lingo) gets to keep the difference between the wholesale and retail price.

For developers, selling apps at wholesale rates does mean selling apps for less and not earning revenue when the app is later sold on iTunes. However, the developer is not giving up permanent rights to the sale of the app – only the rights to sell the set number of units (up to 40,000) offered on Appbackr’s market.

When and Why to Consider Appbackr

So when should a developer consider doing using Appbackr instead of selling in iTunes directly? There are a few scenarios where it could prove useful:

1. You don’t understand how to market your app or public relations.
2. You do understand PR, but don’t have time. (Or would rather use your time working on development instead).
3. You don’t have enough money for PR.
4. You need to earn back development costs on an app because you’re looking to fund a new app idea or continue progress on your current app.
5. You’ve had previous success with a particular Appbackr buyer and want to do it again.

More Info on Using Appbackr’s Service

Developers are able to set a minimum sales threshold and can specify how many units are being made available for sale in the wholesale market. After all the Appbackr units are sold, the revenue from any future iTunes sales returns to the developer (the normal 70/30 split) and the relationship with the Appbackr buyer ends.

In order to list an app on Appbackr, developers must already be registered with iTunes and, notes the company via its FAQ, developers are further verified by a “paid verification service.”

To kick off the marketplace’s launch, Appbackr is providing incentives that make it even more appealing. There are currently two sales contests underway, one which awards an extra $500 to apps that reach $1000 in sales by November 15th and another which gives away free iPads to the top 5 apps (based on dollars) sold on iTunes.

If you’re a mobile developer, let us know what you think about Appbackr. Would you consider using it? Why or why not?

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