When starting the application development process, one of the primary questions to as is: how to monetize an app? We’ve heard this question from our customers dozens of times and we still don’t have an ultimate answer. The reason is simple: it depends.
There are many factors that affect the choice of app monetization strategy. But one thing is clear: you shouldn’t start app development until you understand how your software will generate income.
Launching your own application is a huge step, that requires much efforts and a considerable budget as well.
Any investments are worthless unless you have found out how to make money with your product. The sooner you decide to start with app monetization, the sooner your revenue will multiply.
In this article, we have gathered the most efficient monetization strategies we got to work with. Let’s discuss the best ways to make a fortune with one simple mobile app.
We will also provide you with actionable tips on which model to choose for a particular business.
But, before we start our journey, let’s find out why mobile app development is so profitable:
Accelerated industry growth
According to forecasts, in 2020 mobile app revenue will be double that of 2016. Applications will generate nearly $190 million to theirs creators via app stores sales and in-app advertising! This statistics is quite optimistic and promises great opportunities for your own business breakthrough.
Use time is your value
A study says that in 2019, users are likely to spend around 3 hours per day using mobile apps! This means that you can catch the attention of billions of mobile users with your app, too. And, there is a chance to turn this attention into money.
One app – two achievements
There are 2 primary reasons that entrepreneurs build mobile apps. They want either to spread the information about their business among mobile users or to earn money with a mobile app. What if we say that there is always a chance to kill two birds with one stone? You as a business owner can multiply your profit by promoting your business with a mobile app and monetize it effectively at the same time.
Although the choice of mobile app monetization model may look challenging, this article will make things clear.
Now that you are inspired by real facts and reasons to monetize a mobile solution, let’s proceed with app monetization tips.
8 ways to monetize mobile app and grow your profits rapidly
In this section, we will provide you with a brief but informative introduction to 8 tried and true ways to monetize apps.
1. Perks of using advertisement
I personally don’t like in-app advertising. Neither do other mobile users. And it is important to balance between your app usefulness and the number of ads you show to your users. If they are attacked by ads every few seconds, their irritation can make them forget why they like your app. And you certainly don’t want them to quit.
To employ a proper strategy, you have to understand the difference between 5 types of mobile ads:
A full-screen ad is placed at pause points, for example, when a user moves between menus, screens or options. It should not interrupt the experience, instead, it occurs while the user waits for the app’s response. Here, timing and frequency matter, so do not overwhelm your user with these ads.
Popup ads work in a different way. They interrupt the user experience by displaying a popup containing some sort of offer, notification or other ads. A popup can appear any moment and this randomness is rather irritative. Before implementing this type of ads, keep in mind that users are not fond of it.
These type of ads is a tiny banner that is placed on the top or bottom of your app. It’s hard to say whether they are effective or not, as in many cases, users don’t even notice them. At the same time, banner ads are less aggressive, which positively affects app usage.
Native ads are one of the best options available. They are organically integrated into the app’s interface, and thus do not distract or interfere with the experience. Native ad development requires more time and a special approach, but provides you with the expected results.
This method allows the creation of whole lists with ads and offers. You create a list with offers and ads from your partners and add it to your mobile app. The position on the listing matters, so some of your partners may be ready to pay you more to be featured higher.
If you have an up-and-running app with thousands of downloads from app stores, this monetization method will work for you. This advertising model works best in the following cases:
Users visit your application frequently.
Sessions usually last for a long time.
Your offer free apps with valuable content powered.
If users appreciate what you offer for free, they won’t be irritated by advertising. Just on the contrary, they understand that watching an ad is their way to thank you for good job.
If thousands of active users are still a dream for you, don’t give up. There are other monetization methods you can employ on early stages.
2. Charging for installation
Have you already thought about this method? It is time to get your revenue from each download, if:
The app’s value is obvious before downloading, as no one wants to buy a cat in a bag.
The user has a real need to use your solution;
Your app is unique in its niche and the user is unable to find a similar service for free.
This way of monetizing your app serves health and wellness companies, fitness trainers, and medical services providers particularly well. Also, motivational and time-management apps often make money this way.
There are 3 things to keep in mind when opting for this approach:
The fee should be reasonable: high prices will make your potential users seek cheaper (or free) alternatives, so look at your app with the users’ eyes and define an affordable fee.
You have to allocate a budget for a promotional campaign to generate more interest around your application.
The App Store and Play Market won’t help you sell your app as the competition is too high. Think of unique features that are not offered by free competitor apps, this can be your advantage.
The best way to implement this approach is to target a specific market and promote your app on a business website. This process is complex and includes business analysis, website development, SEO, powerful marketing campaign building, mobile app development, etc.
Charge users for app installation in the following cases:
Your product is unique.
Your product is much better than existing free offers.
You are ready to invest in website development and social networking to promote this product.
You want to connect your revenue to user numbers.
3. What is freemium and why you should use it
How do free apps make money? This is one of the most frequently asked questions in the software development world. To answer this question, you should become acquainted with freemium app monetization models.
If you do not plan to charge users for each app download, and you want to make a profit without ads, this is a great option for you. How does this model work?
Users download your app for free.
They get access to basic functionality for a certain period.
If they want to use premium features or maintain access to available functionality, a fee is required.
This option has one considerable advantage: by employing it, you allow your potential users to try an app before having to pay for it. What pitfall should you be aware of? There is a very thin line between “too many” and “too few” features available. Depending on your app’s purpose, you should think carefully about what functionality you want to provide your users with for free.
Many popular online services use this model. Take a look at the Linkedin professional network or the Trello tool for project management. Both services are free and open to everyone. However, each of them offers a variety of advanced features thousands of users are ready to pay for.
Use freemium to monetize mobile apps if:
The basic functionality of your app appeals to users.
Advanced features provide a great level of UX or some desirable opportunities.
4. Subscription-based type of app monetization strategies
Freemium model implies payment for advanced features. The subscription model is about payment for advanced content. So if you strive to build a brilliant content strategy, and if you are always ready to provide users with high-quality content, this model will bring you financial benefits. It does not matter what type of content you offer.
The point is to provide access to a limited volume of content for free and require a subscription fee for unlimited access.
The subscription-based model is profitable for news and entertainment apps. In addition, it is common for content stocks to use it actively.
Think of YouTube. It gives you access to billions of videos for free. But if you want to access licenced content, you have to upgrade your subscription plan.
When to use a subscription-based model to monetize apps? Employ it for business growth in the following cases:
You run a content-driven type of business.
You are able to provide users with really valuable content.
Users keep coming back to you and use your app frequently.
5. In-app purchases
Another way to monetize free apps is to require a fee for each in-app purchase. What does it look like?
If you run a marketplace app, charge a percentage of the product price.
If you need to monetize a mobile game, allow players to pay for extra lives, special in-app equipment or other items that will improve the gamer experience.
What is the best part about this method? Once the user has invested in a better in-app experience, they tend to spend more time using it. For example, if gamers buy several extra lives, they will play longer and more often. Thus, a fee for each purchase can be combined with any other monetization type that requires long sessions.
There is no better option to monetize your product than with in-app purchases if:
Your app is connected to retail or gaming industries.
Users want to improve their experience and are ready to pay for that.
6. In-app currency as a way to monetize your app
This method is similar to the in-app purchases method. To use it for your business, upgrade your app with a special feature: in-app currency. Allow users pay for extra features with this currency, create special packages with different prices and set your own exchange rate. The important thing is to set well-defined rules on how to earn and use this currency. After the user becomes involved in the process and earns or exchanges in-app money, they are more likely to stay with you for longer.
Use the in-app currency method if:
You try to monetize a gaming or gambling app.
You are ready to improve your app functionality and develop a more complex solution.
7. SMS and email marketing helping to increase your revenue
Now, it is time to find out how to monetize apps using marketing approaches. These methods should be combined with other ones in order to produce the expected results.
If you wonder what monetization model requires a massive user base to generate significant revenues, pay extra attention to this chapter.
SMS marketing is about collecting your users’ personal phone numbers and sending them updates, offers, coupons, and more to increase their engagement and interest in your app. A survey shows that more than 82% of smartphones owners open and read each SMS they receive. This is a great opportunity to promote your product or advertize some services and earn more.
The same concept lies as the basis of email marketing. If you have an user email database, it is time to use it properly. Send your users exclusive offers, provide them with answers to questions they are looking for, and improve your reputation. Always stay in touch with your users to take your app to a higher level.
Use marketing methods for application monetization, if:
Your app allows the collection of contact information like phone numbers or emails.
You work with a marketing professional who can develop an efficient campaign.
You are ready to devote your own time to create unique offers for users who shared their contact information with you.
8. Crowdfunding and sponsorship
Last but not least, extend your vision and stop thinking of your app’s users as the only source of revenue.
Have you ever heard of Kickstarter? This is a large crowdfunding platform that allows small businesses and startups to collect money for unique product launches. There are myriads of projects there, and each interested user can send money to whoever has gained their attention. Crowdfunding is a relatively young but promising model. Its main advantage is that you can start getting money for your product even before it is ready.
Sponsorship is more complicated than crowdfunding. A powerful sponsor or partner can not only provide you with financial support but is also able to promote your product. In turn, you should offer a percentage of the product revenue, free advertising, sponsor-named feature or other special opportunities.
You should use the crowdfunding and sponsorship method, if:
You have a cutting-edge, well-planned idea.
You have a clear product vision and a detailed business plan.
You can offer something in reward for each investment.
What is the easiest and most common way to monetize a mobile app? It depends completely on your app’s specifics.
To select the right method, remember the following things:
The best way to select the most profitable monetization model is to try all of them.
Each model has its own pros and cons.
Your first attempt may fail but don’t hesitate to simply try another method.
To get the best results, you should combine a couple of ways to monetize an app.
If you worry about the potential pitfalls, contact us and we will provide you with a more detailed overview and help you grow your company’s funds.