With one in three people in the world holding a smartphone in their hands, apps have the potential to create income for developers of all sizes. Apps that provide a unique experience or offer valuable services can be extremely lucrative. The more popular they become, the more money they can generate. If you are interested in app monetization, read more to find out how to turn your app into a profitable business.
Free vs. Paid
Paid apps are a way for developers to get revenue straight away. It can feel like the most straightforward way for a developer to get a return on their time investment. However, payment is a huge psychological barrier for consumers and having to pay before downloading will put many users off. It can also lead to dissatisfaction with the app once they purchase it and discover that the app does not do what they had expected.
The paid app approach works best for games and apps that perform specific purposes. For instance, a user may be happy to pay $2.99 for a simple game that will entertain them for a few months. However, when you scale this up to $29.99—even for a great game with continuous development—it feels too steep. Even the incredibly popular Minecraft only costs $6.99 to download. This is evidence that overcoming the initial barrier of payment is paramount.
Therefore, many successful app companies start by releasing a free version of their app. The advantage of offering free apps is that you can get exposure to potential customers without asking them to pay right away. Users can try out the free version of the app and decide whether they want it enough to pay for it. When they finally decide to make the purchase, they are already aware of the features of the app and are more likely to pay for the full version.
How About Freemium?
The best of both worlds in this case is the freemium model. It allows users to access the basic features of an app for free and unlock more advanced features for a fee. This model allows you to get users hooked on the free features of the app and then gradually convert them into paying customers. This method is effective because you significantly lower the barrier to entry but still have the potential to achieve the final income goal. What’s more, you get a huge database of captive users to sell to.
Subscriptions vs. In-App Purchases
Once users start falling in love with your app, you can invite them to upgrade. This can be in the form of a one-time fee for a premium version or a recurring subscription fee. You can also let them pick and choose the features or upgrades that they want and buy them individually as in-app purchases. However, it is best to pick just one approach as too many choices will confuse your users and they will simply lose interest rather than make a purchase.
This decision depends entirely on how your app is designed. If you have a news reading app such as Medium, then the best model would be to offer subscriptions with premium access to certain articles or columns. On the other hand, if your app is a complex game that involves additional levels and different weapon upgrades, then you should opt for in-app purchases that unlock these instead. Whichever the case, upgrading should be convenient and easy.
The Alternative: Advertising
A smart way to avoid the whole issue of getting users to pay for your app is to rely solely on advertising. This is a great way to monetize an app as you can choose which ads to display and the prices to charge for them. Your users will also not have to do anything special or pay out-of-pocket to start generating revenue for you. It is a win-win situation for everyone. That said, app monetization through advertising can be tricky and should be approached with a sound strategy.
First, there are many different types of ads that can be integrated into a mobile app. Common forms of ads include banner ads, interstitial ads, or video ads. Banner ads are relatively unintrusive and are placed around your content. Interstitial ads occupy the whole screen; they interrupt your users but guarantee that your ads are prominent and seen. Video ads (usually) run for a short time while other content such as a new game level or another video is loading.
Finding the right ad format for your app will take time. You will need to consider your app function as well as user demographics and behavior. A good approach is to test different options and measure user response to determine which one works best. Figure out how to incentivize users to view your ads with in-app rewards or discounts. When deploying your ads, aim to make them as native as possible so as not to interfere with your user experience or diminish the quality of your product.
There are many options when it comes to making money from your mobile app. The most important elements are good app design and a strong monetization strategy. With clever planning and some trial and error, you will be on your way to creating a successful and profitable income stream.