Once you’ve decided to create a mobile application you’ll want it to be profitable. Let’s assume you already have really good and useful app, a brilliantly designed game or a useful tool for a niche audience. Your next step is to figure out how this app will generate income.
Most developers are failing when it comes to monetizing applications. Figures are discouraging: 64% Android and 50% of iOS developers make less than $500/month from their apps, and 24% of them earn just zero. As little as 2% of developers, the crème de la crème, receive half of the total revenue from mobile applications.
How to make a company to the most profitable 2% of mobile app developers?
- Choose the right monetization model, taking into account your target audience (TA) and application features.
- Consider your monetization plan in advance, ideally at the stage of a concept.
- Embed it into the application organically.
- Test it, analyze data and make changes. Take patience, this could be challenging.
Choosing the monetization model that serves best for you is not easy. The task requires patience, training and knowledge. The better you understand your TA and current trends, along with the nuances of the different models and their options, the greater chances of success you have. Investigation of your TA is essential. If you make an app for education purposes and your TA is students it is not reasonable to expect $20 monthly payments, is it?
Before placing a price tag, consider the quality of your app. What characteristics will make users buy it: a brilliant design, convenient options or some unique content? There are thousands and thousands of free apps at the market so you should be really outstanding. Most people have no intention to pay for an application that has no unique value and undeniable benefits. Market experts predict that by 2017 94% of all app downloads will be free. According to numbers, profits from paid applications falling year after year. It seems that the paid model will work for a very limited group of applications. The biggest advantage of paid applications is predicted and rapid income (of course, in case of a purchase). Paid app model is best suited for:
- Popular games (for example, desktop or mobile versions of console games like Minecraft).
- Games with an innovative concept, high quality art and content (Clash of Kings, The Room).
- B2B applications for selected niches that provide users with useful services or functionality (iA Writer).
Advertising makes the application free of charge to users in exchange for displaying banner ads, video ads, or an interstitials while using the application. This model is popular because of its simplicity: 49% of developers are using advertising model in their applications. Since the app can collect a wealth of user data the ads could be well targeted and effective. Best is native advertising, which is integrated into app design and content harmoniously and does not violate its usability.
Advertising is best suited for:
- The microapplications or games, for which the advertising is the only way of monetization (Flashlight, Daily Horoscope).
- Applications with wide target audience (Shazam).
Freemium model is based on the free application that offers premium features or bonuses. Users have an access to a basic set of functions or base game levels for free, but have to pay for the full functionality. Freemium along with advertising are the most popular monetization models. They are intuitively understandable and acceptable for a wide audience.
Freemium is best suited for:
- Variety of games (Plants vs. Zombies 2).
- Social networks with premium accounts (OkCupid).
- Service apps (Dropbox, GuitarTuna).
Subscription is similar to freemium model, but buyer pays for the premium content, not functions. Paid users form loyal and engaged audience that actively uses the application during a certain period of time. The application must constantly provide users with services or content to meet their expectations and transactions.
Subscription is best suited for:
- Application services (Netflix).
- Media apps (magazines, newspapers, online resources with content like NYTimes).
Mixed (unique) model
Some applications successfully combine multiple monetization models, such as advertising or freemium + subscription. You can find the perfect combination for your specific application using different marketing strategies. If you wish to use many monetization models in a single application it is important not to overdo it. Many apps show ads only in free versions but not in premium ones taking into account user experience. The choice of monetization model also depends on mobile platform. It goes well with advertising model for Android and iOS apps make money best from paid versions. To prevent users from viewing annoying ads, we suggest to disable it for a fixed price. Some people are willing to pay, while others don’t.To summarize: Know and analyze your target audience. Consider your model of earning in advance. Provide useful content and functionality. Create and maintain a high quality UI design. Request fair price.