Published on May 25th, 2019
Mobile apps are our new addiction. People spend hours using their smartphones and tablets, chatting with friends, scrolling news feeds, and playing games. Sometimes, these activities are based on browsers. But more often they go through applications. Just imagine: millions of users access millions of apps several times each day and form a unique ecosystem with amazing opportunities for marketers.
Right, you definitely can earn with applications. On the one hand, businesses often create their own applications to deliver a brand new product. Even free apps like a famous game Candy Crush Saga or a highly-popular dating service Tinder deliver revenue up to $50+ million per month. On the other hand, traditional companies design applications to open a new channel of interaction with customers. Think about Amazon or Microsoft. Finally, there are teams that can advertise their products/services via third-party apps.
This guide will be about the most effective options of monetization. Mainly, we want to focus on strategies for the first and second categories of entrepreneurs – those who develop applications as primary products and those who consider them as additional channels of interaction. With more than 200 billion downloads and almost $100 billion in revenue, the worldwide app market can be a perfect source of profits. Let’s learn how to get them!
First and foremost, think about planning. To reach success, a business should have elaborate strategies with a clear understanding of goals. To start with, ask your team three simple questions:
- What’s the main proposition of your application?
- What are the key strengths and weaknesses of your competitors?
- How you plan to acquire and retain users?
Long story short, you should understand why and how clients will access your product instead of numerous other alternatives. Try to define the uniqueness before the launch. Thus, it will be easier to integrate monetization models because you will see stable growth with quality user feedback. As well, don’t forget about planning budgets and schedules.
Top-Rated Monetization Strategies
This stage provides for choosing one or several schemes that will help you to make money via native apps. In a nutshell, strategies include in-app advertising that usually comes with free products, in-app purchases that often refer to a freemium delivery model, subscriptions with features for users who are ready to pay, and just premium applications with paid downloads.
Let’s look at all these ideas and evaluate them. Additionally, we will mention a few extra minor options.
1. In-App Advertising
If you study mobile development, take time to learn about ads. This scheme is one of the simplest strategies and it’s pretty familiar for various developers and customers. Put simply, you only have to cooperate with an advertiser and insert the desired message into your app. When a user clicks this ad, the program redirects him or her to an affiliate site. You then will get a reward either for clicks, actions or sales.
There Are Different Types Of Offers:
- Native ads that are relevant for the users. For example, information about hotels that appears when a client searches for a flight.
- Banners or simple text/video blocks that appear at a specific moment, e.g. in pauses. Smart banners also automatically adjust to screen size and orientation.
- Videos that also appear on the main screen at any specified moment. Video ads were the most popular trend in 2018.
Often, developers integrate ads with extra rewards. For instance, a user can watch an advertisement consciously to get in-app bonuses like virtual coins. This approach helps to boost user experience and reduce discontent.
2. In-App Purchases / Freemium Model
One of the most popular options combines free-to-use applications with extra paid features. Means, a user downloads your application without any upfront costs, try it, forms its own opinion, and also have an opportunity to buy certain in-app goods.
The Examples Are As Follows:
- Ads removal.
- Exclusive functionality features.
- Extra storage space.
- In-game currencies.
- Various consumables.
Remember that in-app purchases work effectively only when clients realize real values of delivered features. Ensure that you offer valuable stuff and your users will not look for free alternatives. As well, be sure to add only relevant types.
Surely, purchases also can be added into paid versions of apps but this approach is pretty rare. Developers tend to choose either freemium or premium models.
3. Subscription Model
Formally, subscriptions are a variation of in-app purchases because users also can get a product for free and then switch to a paid plan that comes with a certain monthly fee.
This particular type is realized in Spotify and Tinder, for example. As a rule, free subscriptions come with all the core features but paid upgrades deliver more useful and convenient stuff. Say, Spotify offers unlimited skips and offline listening while Tinder delivers more likes and boosts.
Subscriptions are good when users can «try before buy». If a customer realizes that he/she likes the app and wants to upgrade its functionality, you can easily deliver a paid subscription.
4. Premium Model
Here, the title says it all. Premium applications come with an initial cost that a user has to pay before downloading. On the one hand, this approach comes with guaranteed profits directly related to installs. On the other hand, people are unlikely to pay for a product they can’t try beforehand.
Hence, Businessmen Have Two Options Here:
- Create a «lite» version. A lot of authors develop also second versions of their paid apps. These siblings are free but they also feature fewer functions.
- Promote the application. Companies also can invest in promo campaigns and deliver applications to experts that can engage other users with trusted reviews.
5. Sponsorship And Donations
Finally, there are two less famous options for app developers. The sponsorship model is familiar for YouTube content creators where a user gets some products or services for free from a company that wants to be promoted. Basically, this model is similar to in-app advertising but on the more personalized and engaging level. Let’s say, a fitness application may cooperate with a manufacturer of fitness gadgets to promote these products.
Well, here’s another example from YouTube ideas. Viewers can donate to their favorite channels any amount they want. Sometimes, authors offer official donations with extra features such as earlier access to content. Also, users can send money on a voluntary basis at any moment they want. App devs also can add this option via built-in interfaces or third-party payment processors like PayPal.
Follow-Up Hints For Higher Profits
The problem with cool apps is that they often remain unseen for the majority of users. To avoid this, be sure to evaluate and promote your product. Measure KPIs (e.g. downloads, number of purchases, time spent in the app, etc.), analyze results, and try different marketing models. For instance, you can use SMM with professional content management to acquire new users from social networks or focus on paid ads.
Also, feel free to experiment with monetization models. Say, the already mentioned Tinder developers started with purchases but then switched to the subscription model that works better for this particular application. You can try other options, too. Never be afraid to change things and you will be successful. Good luck!