- Posted by Roman Bozhenko
- On June 28, 2018
- 0 Comments
- app, app monetization, application, Octodev, project, users
Developing a robust mobile app takes a lot of resources. It’s lengthy and requires input from a team of professionals. As with any business model, the primary question is – how do the investors and product owners benefit from the project? In this article we are going to discuss app monetization and take a look at the most popular ways to make a profit from the application.
The subscription model suggests that the users pay a monthly fee for access to the application. It provides a substantial source of income but it also forces the developers to provide a steady stream of fresh content. Otherwise the users will not see a reason to pay for the subscription.
Subscription works well for the following types of applications:
- Content based apps. It could be the digital press, music or videos. This category includes The New York Times and Spotify.
- Projects that people use in their work or other everyday activities. The successful examples are Evernote and Todoist – task planners that you may use to keep track of their activities.
There are also some areas where this particular model is not recommended like the following:
- Shopping and e-commerce – if people use the application to spend money, it probably won’t be fair to charge them more every month and it may cause a serious backlash for the business.
- Gaming – while it used to be extremely popular for PC MMOs in the past, nowadays most projects use micro transactions instead. Asking for a monthly fee imposes a strict obligation on the developers to provide massive updates on a regular basis and maintain perfectly balanced engaging gameplay. Mobile gaming is regarded more as a casual field.
- Simple apps with a very limited set of functions – they usually can’t offer enough value to make people spend their hard earned money, even if it’s just several dollars.
The ‘freemium’ strategy suggests that the user gets access to a limited set of features or content without having to pay for it but has to make an investment if he/she wants to get the complete experience. This is like a free demo version that demonstrates the project and then suggests the user to buy the full version. You can see it in the famous Angry Birds arcade.
The advantages of this particular solution include the following:
- It’s easy to get people onboard and grow the user base since people don’t need to commit at the very beginning;
- People who decide to buy the full package are more likely to be loyal;
- The model is rather flexible and can be applied to applications in various areas.
As for the disadvantages, it may be rather tricky to maintain a balance between engaging free content and the value people get for their money, but if you manage to find the right proportions, you can count on impressive revenue.
The model in scope allows people to spend money in the application. It could be the sale of physical goods (or services) which usually implies that the marketplace takes a certain percentage as the commission fee or the so called ‘microtransactions’ – sale of virtual goods that have no real world manifestation.
The solution is paired nicely with introducing an internal currency that can be earned by the user in one way or another. This usually gives a taste of the features to the user but requires the person at the same time to invest quite a lot of time to get a substantial benefit.
While it is mostly used in games like Castaway Cove and Idle miner, you can also find it in other applications, like Italki and similar projects that help people study foreign languages.
The pros of this particular solution include the following:
- People who spend money in the application tend to be rather loyal to the application. The amounts they spend also tend to increase;
- Allows the introduction of affiliate and partnership programs;
- High flexibility – the system can be adjusted to fit various areas.
Please keep in mind that the app stores will generally take a certain percentage of the in-app purchases’ worth as their fee. You will also need to inform the users upfront that the application uses this monetization technique.
It’s simple – the user buys the app from the store. While this seems to be the most obvious ways, it is pretty hard to go this way nowadays because the rivalry is just too harsh. You need to provide a distinctive advantage to the people to persuade them to pay for your product when there is a free version for nearly everything readily available. And the outstanding quality of the project is not always a solution – sometimes users don’t need it anything on top of the basic features.
An example you can look at is the Calendars 5 app for iOS.
The advantages of this particular model include the following:
- The product owner earns revenue upfront with every download;
- Allows the developers to focus on the needs of a target audience and introduce new solutions.
It may be harder to attract new users for the paid applications than the other models but it’s rewarding if you can find a niche.
The most popular way of making money from free applications is displaying ads. Nearly every free implements it – from Shazam to CCleaner. There a lot of readymade components that allow to incorporate these means in the project, but some users may find it irritating. Thus it’s crucial to be careful with this type of advertisement.
The developers gather a large amount of data on users and create an attractive medium to deliver the advertisement. This is the most popular solution for app monetization for a variety of reasons:
- Fast and unobstructed growth of the user base;
- Precisely targeted advertisement can deliver outstanding results (that is if you can collect and process the necessary amount of information on the users);
- May actually add to user experience if you manage to maintain the balance between ads and content.
It’s not particularly innovative but still a very popular way to generate revenue and a very efficient one if used properly.
Let your partners offer certain gifts (like merchandise) for completing in-app tasks or challenges. One of the prominent examples of this way is the Runkeeper – an application that is used primarily to track and record the stats of the running sessions. It holds promotions that motivate people to run a certain distance over a period of time or maintain jogging habits in exchange for T-shirts.
The pros of the incentivized advertising include the following:
- It’s perceived positively by the users because it’s really relevant and engaging. Unlike the traditional ads it doesn’t look like an attempt to shove some piece of information down the user’s throat;
- Sponsorship is relatively new to the mobile scene and thus there is plenty of room for innovation;
- The users actually benefit from the promos as well as sponsors and developers. A win-win situation!
Sell the package to other companies
You’ve already built an app – someone else has not and now you can benefit from it! It works the following way: your client purchases the package, does the re-branding and launches it as his own project.
Now you may ask why would you want another enterprise to take its market share with your tools? There could be a variety of reasons:
- The market in question is extremely hard to access from outside – the most prominent example is China;
- You don’t have enough resources to expand as a b2c enterprise – or simply don’t find it profitable enough;
- The companies are your strategic partners and can provide the much needed support in other fields.
This way requires certain strategic thought but can also be a reliable source of income if you can develop a licensing pattern.
Now that you’ve collected enough information on the users, you might find people who are willing to buy it. You have to be extremely careful with it for legal and ethical reasons because you are not allowed to sell personal data. But you can sell depersonalized arrays – and there is huge demand for it in the field of data science. Large enterprises will pay for real world information on customer behavior or buying habbits.
Monetizing your application is tricky but absolutely necessary. There is a wide variety of models that have different advantages and some are more fitting for a particular project than the others. The means that serve to produce revenue should be implemented by skilled developers, and the project itself should be polished in order to attract a loyal user base.
If you need expert help in developing an application that can later be monetized, the Octodev team will be happy to assist you. Please contact us today for details!