You have an idea for the next hottest app, but don’t want to sell your left hand to finance it. Depending on the type of app you want to build, there are ways to go about monetizing without irritating your users with ubiquitous advertising or hidden charges. Some apps are driven to make a profit, making it easy to figure out how to cash in. Other apps are just for fun or add utility, and therefore require a little more effort to seamlessly integrate financing opportunities. Here are some ideas to help you figure out what will work best for you.
Pay for Download
This is clearly the most straightforward way to make money on your app. Simply charge users to download your app. The beauty here is if you have users, you will be making some money the second they start using it. The downside is that mobile users are used to finding apps for free, and therefore seek out free apps. If your direct competitor offers a similar service and their app is free, guess which app your potential user is going for? Do take note however that if you do go the paid app route, Apple and Google take 30% of all revenue for paid apps or in-app purchases.
While advertisements aren’t necessarily a favorite method of monetization, it is still a common strategy that can be combined with other initiatives to increase cash flow from apps. In March 2014, it was found that click-through rates on iOS mobile ads increased fivefold over last year and for Android, click through rates increased 3x over. This is good news for advertisers and even better news for mobile app developers, who can prove now more than ever that including a mobile ad is mutually beneficial to both the developer and the advertiser. Native ads make this even more helpful, where the ad follows the function of the UX, naturally integrating the ad with the app experience. Critics of this method argue that only the most popular, top apps make much money on advertising, however including ads along with other means of monetizing could be a good hybrid solution.
If charging for the app right away isn’t the solution you’re looking for, freemium provides a solid alternative choice. By allowing users to download the app for free, they are able to get to know the services you provide without the upfront investment. From there, having some of the core functionality unlocked introduces the user to the main purpose of the app while encouraging brand recognition. However locking premium features entices the user to take advantage of further options if they choose to. For example, many gaming apps use the freemium model, enhancing the users’ experience with small upgrades throughout the game like extra lives or new levels. Another example is Spotify, an internet radio service on the freemium model. While any song can be listened to when using the app on desktop, the mobile app can only play music on shuffle mode for the free version. A premium upgrade is required for access to any song, any time on mobile. The premium upgrade also removes all audio advertising from the listening experience.
Paid Apps with Paid Features
Another way to combine freemium and paid apps This is a hybrid of the freemium and one-time paid app model, charging the user for both the app download and additional premium features. This monetization method is not without criticism, with arguments that if the user must pay to download the app, the app should therefore be considered paid in full. However if done cleverly, this model can, and does, work well. One example is Flightradar24, a flight tracking app available for $3.99. Once downloaded, users can purchase upgraded features like information on arrivals and departures and custom alerts, with these features ranging in price from $1.99 – $4.99. While this seems expensive, this is in reality a great way for users to experience the benefits of the app, while not having to pay closer to $10.00 for features they may or may not use.
Developers have insight into user behavior. User behavior is solid gold for marketing teams, providing yet another way that developers can make money with their app. Excellent examples are lifestyle apps such as fitness counters or check in apps, giving real data on how people spend their time. Understanding where they go, what they do, and how they prefer to live their lives gives advertisers valuable information on what kind of products the public would like – and even how to best market it.
To make an app profitable, developers need to understand their audience and how they can provide enough value and earn enough revenue. How will you monetize your mobile app?