Sales Strategy

As an App company, the two most important markets are the Apple and Android stores, where the android market is made up of a numerous amount of retailors, such as Amazon and Google Play, both with separate licensing costs, whereas the Apple store is solely under Apple licensing. Google Play is the main Android app supplier, thus the biggest competitor to Apples App store. To work out the split of our potential download sales in both markets and therefore planning where most of our revenue will be collated from, research was undertaken to find the sales figures per month and per annum of similar games over both Apple and Android stores. Information that was found online included: Comparing the cash pouring into Apples App Store versus its app marketplace competitor Google Play isnt much of a contest. A November study from app analytics company App Annie shows that the App Stores monthly revenues are 300 percent greater than Google Plays. - http://www.wired.com/business/2012/12/ios-vs-android/ - Sarah Mitroff This source initially shows that the Apple market revenue is significantly larger than that of the main Android App store; Google play. The following graph and quote was taken from the Guardian newspaper website:

In relative value, iOS's app revenues (including in-app sales) as recorded by App Annie have gone from 100% in January to 113% now; for Google Play, indexed against iOS, it has gone from 7% to 28%. That's slow progress for iOS and huge progress for Android, but there's still a gulf between the two that speaks of a wide variance in usage with iOS users much more likely to buy apps, and Android users less likely to. There's probably a much wider variance among Android users, where those with high-end devices might pay as much as, if not more than, the average iOS user. Compared with the index in January, iOS downloads have actually fallen from 100% to 90% while Google Play downloads have grown from 63% to 80%, having begun to take off in July - http://www.guardian.co.uk/technology/appsblog/2012/dec/04/ios-android-revenues-downloadscountry

This key piece of information, including a visit to the suggested App Annie [1] website (data graphs shown below and in appendix), which is dedicated to procuring monthly and yearly download sales records of apps downloaded on both Google Play and Apples App store across an abundant selection of countries, proved to us that the vigorous growth of the Androids Google Play monthly download figures is one that cannot be overlooked by Apple, thus a split of 60% expected sales from Apples App store and 40% expected from Google Play was decided upon. App Annie Index Report, Download and Revenue Graphs:

To find the expected number of download sales per annum/month, visits to sites such as; http://xyo.net [2], which acquires the total number of sales of different apps and the number of sales in the past month across both markets, was useful in helping us to forecast the approximate number of units that is assumed will be sold across the 3 year plan. Potential sales prospect for Racing Wings:

Sales Forecast
With all of the information thus collated, these tables and graphs were produced to show our predicted sales of Racing Wings and the cost of these to our business:

Primary Costs
Units Sold Price Unit Cost Gross Profit Year 1 40000 0.69 217 27,383 Year 2 80000 0.69 217 54,983 Year 3 60000 0.69 217 41,183

Secondary Costs
Apple App Units Apple Sales Apple License Apple Sales Charge (30%) Android App Units Android Sales Android License Advertising Salary Net Profit Investment Culmulative Net Profit (inc. Invesment) 24000 16,560.00 62 0.3 16000 11,040.00 62 20,000 5 2,286.00 48000 33,120.00 62 0.3 32000 22,080.00 62 0 5 44,918.00 36000 24,840.00 62 0.3 24000 16,560.00 62 0 5 33,602.00

100,000 0 0 102,286.00 147,204.00 180,806.00

Units Sold This projection is assumed using the research data obtained from similar games on the website: www.xyo.net Units Sold The decrease from Year 2 to Year 3 shows the normal decline in interest in old games, this effect can be counteracted by a second version of the game or by discounts in cost. Price: 0.69 This was the chosen cost per download; this is primarily for the large American market where this converts into approximately $1. Unit Cost: 217 This equals the $349 cost of the yearly usage of the Corona SDK Platform. Apple License: 217 This equals the yearly cost of $99 for Apple App licensing. Android License Due to the numerous distributors of Android Apps, there are varying costs of licensing which range from $0-$99, thus the largest amount has been taken and converted into GBP to show the least amount of possible profit. Net Profit The small amount of assumed profit procured in Year 1: 2,286, is due to the large advertising costs used only for the first year.

Breakdown of Unit Sales: Year 1

9000 8000 7000 6000 5000 4000 3000 2000 1000 0 July October August September November April May January June December February March No. of Units Sold

Series1

Month

F This graph shows the breakdown of assumed download sales for the first year of distribution. As you can see, the first couple months have very little sales, this is due to the lack of awareness of the general public, to combat this we will place adverts on both the tubes and the Royal Aeronautical Societys careers website. Sales then gradually increase in proportion to interest to a total of 40,000 downloads for the year, producing an average of 3,334 downloads per month.

Model Aircraft Sales Forecast

Primary Costs
Units Unit Cost Base Cost Gross Margin Year 1 500 60 25 17,500 Year 2 1000 60 25 35,000 Year 3 650 60 25 22,750

Secondary Costs
Profit Split (40%) Units Sold per Month (approx.) Postage Total per Month (UK-US) Net Profit 7,000.0 14,000.0 9,100.0 42 83 54 107 208 137 5,720.80 11,500.40 7,456.00

At the end of each month, we collate the orders and send the delivery destinations and totalled split profits to Tiger Hobbies UK, who in turn will ship them on our behalf. Postage Total per Month (UK-US) The figures for shipping to the US are used as they typically provide the biggest market in the app world, thus most orders will come from there.

Postage costs have been taken from the our businesses 40% cut, not from the gross profit (which includes Tiger Hobbies UK share) Shipping price approximations have been sourced from the Business Section of the Royal Mail Website: http://www.royalmailtechnical.com/calculator/calculator.cfm - Prices may vary. To reduce costs, resourcing a supplier of the Hobby Master products within the US would cut postage costs dramatically.

Appendix:
[1] App Annie Index Report:

http://s3.amazonaws.com/files.appannie.com/blog/pdf/App+Annie+Index+Nov+2012+Report.p df

App Annie CSR Racing (Drag Race game, similar in context to that of Racing Wings) download trends:

[2] www.xyo.net