There are more than 1 million apps in the App Store, and most of them are free. What does that mean for your app’s monetization plan? Launching a paid app can be a risky business, it means that you are quite sure about your apps usability, features, functions and your users’ buying behavior. Moreover, you are quite sure that your users will pay for your app instead of using so many free alternatives.
We all have witnessed that a free app garners more installs, but when it comes to monetization, you have to be smart enough to make use of all those installs. In many ways, monetization models for free apps are far superior to paid apps. Consider the example of Flappy Bird, by the time its developer took it down from the App Store, it was generating more than $50,000 on a daily basis from in-app advertisement.
In this article, we will try to discuss a couple of monetization model which can drive app revenue. It will be up to you to choose the best model that suits your app.
As we tried to explain with the example of Flappy Bird earlier, in-app advertising can yield an unbelievable amount of money. However, it depends upon that your app went viral and downloaded and installed by millions of users.
With each passing day, we are experiencing more mobile ads with free apps. In-app ads allow you to monetize without asking for money directly from users. With in-app advertising, a developer eradicate the cost-barrier to purchasing your app and allow free downloads. Once again, the objective is to build a large and strong user base and gather relevant information about those users to sell to other products/brands and app publishers. In reply, they will pay you to place targeted ads in your app. As your app is free, it will gain (and possible retain) more new users.
If organized and performed correctly, displaying in-app ads is an excellent choice, because they don’t distract users from your app’s experience. This is used in a highly-targeted, customized way to attract users to relevant offers. However, it can turn sour, if it creates a privacy concern. This model demands care and attention to make sure that it doesn’t overrun your native app value and dissuade otherwise engaged users.
This model might be right for you if:
- There are no organic opportunities for in-app purchases in your app
- You regularly collect preference data about users
- Ads won’t take away users from your app’s experience (or take up too much screen space)
- You want to be part of a lucrative and growing ad industry
Just like an in-app advertising app, fermium app is also offered for free. However, it barred users from certain “advanced” or “premium” features, and users have to pay to unlock those features. In simple words, users have access to your app’s basic features, but in order to get hold of the complete features and functions of your app, they have to buy it. The main objective of this model is to engage users with an app’s user experience so that they can see the value of your app and then eventually they buy the full version of the app.
There are a lot of gaming apps that follow this business model. Apps like Angry Birds to the Stick Cricket, freemium apps allow people to easily play and become fans without hesitating at the initial price. Once app users have conquered a few levels or want to up their status, they’re enticed enough to pay for the full-fledged version for more hours of fun.
It is a good practice to be clear about what your app’s paid version will offer to the users once they buy it. Otherwise it may result in disappointed users with a lot of negative reviews which will eventually dissuade new users.
This model might be right for you if:
- You’re a gaming app
- You have levels or advanced features already in your app
- You have long session lengths and highly-engaged users
- Can provide a great free app experience (and don’t just save the good stuff for paying users)
Another exciting monetization model which adds a lot of value to your app. The objective of this model is to turn your app into a potential shop where users can buy things to improve their experience with your app. It is like a mobile store for virtual goods which can only be used inside the app. For example, in the popular gaming app Rival Knights, you can make in-app purchases to boost your horses, armors, lances, helms, and more.
This monetization model helps you make easy profits with the lowest amount of risk, plus, buying virtual goods can lead to deeper levels of engagement (growing monetization strategy).
Try to enhance your users experience by offering them a lot of entertaining things to purchase and making the checkout process easier and simpler. Moreover, ensure that you have advertised in-app purchases properly to avoid disappointments.
This model might be good for you if:
- You’re a retail or services app
- You provide goods with clearly-defined value
- You have a clear opportunity to introduce goods into your app (such as Keep, an app that allows you to “keep,” or add items of interest to your various boards, and recently integrated a shopping cart feature)
- You don’t mind that App Stores usually take a cut of the revenue for virtual goods (but not physical goods or services) purchased inside your app
Finding the model that fits your app is all about assessing your mobile goals and determining which will please users and improve the business outcome. Have you used other monetization models that have worked well for your apps? Let us know in the comments.
I am a smartphone app developer, working in an development company. My main interest is in mobile phone app development, but I also love to read & write about other technologies too. I like to share my knowledge, expertise, and experiences with different tech-communities on the web via social media platforms and tech blogs.
- App Monetization Digest – Apple App Store Centralization, IAP For Sustainable Monetization (avocarrot.com)
- Angry Birds Fight! battles its way onto the App Stores (phonesreview.co.uk)
- Angry Birds race onto Sonic Dash in an Epic endless runner takeover (imore.com)
- The mashup of Angry Birds Epic and Sonic Dash comes to Windows Phone (lumiaconversations.microsoft.com)
- Beyond the mobile game: games-as-a-service (fiercewireless.com)