How to earn money on mobile application? Mobile app monetization, marketing strategies and business plans
It is a common belief that developing mobile app is an easy and harmless way to make money, especially for mobile programmers. If you share this point of view, it will be extra surprising to you that in Q3 2014 the majority of app businesses were not sustainable at current revenue levels. 50% of iOS developers and 64% of Android developers were below the ‘app poverty line” of $500 per app per month. (source)
Here comes the challenge – how to monetize your mobile app? First of all, you should think about your business plan way before launching an app. In order to estimate the value of your project these questions will be helpful:
- How my app differs from the others? Is it an innovative, brand-new idea which you would call as a breakthrough or rather an upgrade/mix of existing apps?
- Why does your project is so unique/useful? For what exact features will your customers willingly pay? How much?
- Check out your competitors. How are they earning money? Which utilities do they offer for free? Where does your project outperform others?
- Who are you aiming at?
- What is development and maintenance cost?
Have you answered this questions? Do you still want to launch an app? If so, here are
6 business models to monetize your app:
- Free with in-app ads
- Paid apps
- Freemium (free with buyable premium)
- Paywalls (subscriptions)
- In-app purchases
- Sponsorship (Incentivized Advertising)
Free with in-app ads
The most popular and widely-recognizable strategy to earn money. You give your product for free hoping to get as many customers as you can. If your app is popular enough, you are capable of collecting data. Having this, you can expect advertisers to pay you to place targeted ads in your app. The flaw of this strategy is that ads tend to be annoying and some users are “allergic” to the them.
Traditional way of earning money – “pay for the product”. There are some apps that cost symbolic 0.99$, but even such small amount of money will probably drive away a great deal of potential customers. (90% of paid apps are downloaded less than 500 times per day). If you decided to use this strategy, make sure that your app is cutting-edge, exceptional and reliable. You should prepare flawless description, fancy, attractive images and five-star reviews in order to convince potential customer that your app is worth paying. It may be brave to launch your first app like this – I find it more appealing for developers with recognizable previous apps who earned trust. Also, you have to remember that Apple takes approximately 30% cut from your income.
Example: Grand Theft Auto: San Andreas from Rockstar Games, Inc.
Free + Premium = Freemium. You give a free-for-download app with a possibility to buy premium account. In other words, you give a sample of your project for free and try to encourage customers to pay in exchange for additional utilities which were blocked (or showed for a try) in the free version. Angry Birds is a great example of that: you can download it for free, but most of the levels are gated until you buy them. Consider this as a mix of “Free with in-app ads” with “Paid apps”. A great way to get paid for your app without scarring potential users off.
Example: Angry Birds
By Wikipedia:” A paywall is a system that prevents Internet users from accessing webpage content without a paid subscription”. You can think of it as something similar to freemium – but here you expect to get paid subscription (weekly, monthly or yearly). You should focus on delivering useful content/features that can expire. Limit of views in watching app, limit of news in news app etc. A great example is GPS navigation app NaviExpert: you can have a free trial for 7 days, then you have to buy a premium account for a month or a year. In exchange they constantly update your maps – seems fair to me.
Example: NaviExpert, Netflix
Your mobile app business plan is to sell physical or virtual goods. These can be extra lives or virtual-currency in a game or some accessories related to your product. This strategy gives you an opportunity to engage your customers more. Make it feel natural and don’t expect each user to use it – only the most devoted ones will. Take a look at online games – almost all offer additional characters/money in their markets. Make sure it doesn’t ruin a balance or you will quickly get rid of users!
Example: Clash of Clans (buyable elixirs, workers etc).
Sponsorship (Incentivized Advertising)
It’s the newest mobile app business plan from the listed ones. With sponsorships, you partner with advertisers who provide your users with rewards when they complete certain actions within your app. The advertiser is sure that his ad will be watched and you will be sure that these ads won’t drive your users away (they are optional, easy to skip). A popular instance is watching an ad in a game for an extra coin/life. If this strategy suits you, you have to remember that Apple has been cracking down on incentivizing downloads and social sharing. Be careful with that or you may harm your app instead of promoting it.
At the end, study a chart published by Developer Economics .
While advertising is the most popular, subscriptions brings the biggest revenues. Enough to say, more popular is not always better. Create the trends, don’t necessarily follow them.