The Ultimate Guide to Mobile App Monetization

September 22, 2020

The emerging competition and latest technology introduction recommend having an eCommerce app for the business. Most of the companies turn their vision into a reality by developing a mobile app but is it enough?

If your e-commerce app is not making money, then it is an absolute waste of money, because every investment needs to prove its worth.

However, the biggest obstacle in converting an app into money is the lack of knowledge and guidance. So, consider reading this blog to know “How to make money with an app.”

How to Make Money With an App?

Mobile App monetization involves two strategies-Direct Monetization and Indirect Monetization.

Direct monetization is a simple and most popular one. Many companies adopt it, whereas indirect monetization is a bit complex.

1) Direct Monetization:

In this monetization strategy, money is generated directly from an app. If someone downloads your business app from the Apple App Store or Google Play Store, then the money is generated from the app. When a customer uses your business app to buy something, then the sale is generated from your app.

2) Indirect Monetization:

This monetization strategy is complex but famous for software products. You can make money by developing an app, but the actual money amount is not bound to the app. In this you are making money either app is used or not.

Top 6 App Monetization Models and Strategies:

There are six popular strategies to generate money with an app.

A) Paid Downloads:

This model is the quite obvious and simplest one to generate money with an app. You can charge a fee to download the app, but the charges should lie in the range that users are in use to pay.

Though the paid-download model is a straightforward app monetization model, the drawback is fewer downloads. Many people prefer free apps instead of a paid app. However, paid-users will be highly interested and will try to get the optimal result. If users are using the app often, then you could benefit more from them with other app monetization models.

B) In-App Purchases:

The in-app purchases monetization can be used for paid as well as free apps for physical and virtual products.

For instance, most of the gaming app uses this in-app purchase model for virtual coins or experience upgrades. Players spend money to purchase weapon, vehicles, map, lifelines etc.

Pokemon Go, one of the popular games among kids, has generated more than $3 billion in revenue after being a free app.

Pokemon Go is an excellent example of a free mobile app that makes money from in-app purchases. The game sells “PokeCoins” which is a virtual currency to pay for upgrades within the app and improves the gaming experience.

But this method is not just limited to gaming apps, and many e-commerce websites can build an app in the same model to increase mobile sales. Suppose if a customer purchases something like shoes, books, t-shirts etc. which you are selling online from your app, then it falls in this model only.

C) Subscriptions:

This model is used to generate recurring revenue with an app. You can customize the subscription package of your e-commerce app on Google Play Store and Apple App Store. In this model, a user needs to sign up for the subscription, and he’ll be charged on a recurring basis until he doesn’t cancel it manually.

Most of the subscription apps are on a monthly basis, but you can customize it to annual or quarterly billing cycles as well.

The subscription model can be used for a wide range of industries. For example, if you have built a fitness app, then you can set up a monthly subscription to access workouts, videos, and training. In fact, this model is fit for small businesses like local dry cleaner to offer pick-up and delivery cleaning services.

D) Freemium Model:

This monetization model lies in between subscription and in-app purchases. The word freemium is a combination of two words-Free + premium = freemium. This implements that you need to offer your app for free to use this freemium monetization strategy. The next step is offering a different version of your app, that is free & premium.

In this model, the app offers a free version having basic features, and the upgraded one is the paid version to deliver supreme experience.

For example, a music app offers unlimited songs to users, but it is full of advertisement and download is not free. To enjoy advertisement free and free song downloading, the user needs to take a subscription. Another way to allure users is by providing a free trial of the paid version. This offer increases subscription chances and enhances user-experience.

E) Advertisements:

Advertisement is another way to generate money through your app. In this method, you sell space available in your app for advertisements. Now you might be recalling the ads you have seen in websites or apps. App advertising can be of different types and sizes like banner ads, video ads, pop-ups, native ads, interstitial ads etc. There are different revenue models available in this strategy:

  • Cost-per-install (CPI)
  • Cost-per-click (CPC)
  • Cost-per-action (CPA)
  • Cost-per-mile (CPM)
  • Cost-per-view (CPV)

The payment depends on the type of advertisement and other factors.

F) Product Extensions:

This strategy falls under indirect monetization and is absolutely a great way to generate revenue for your business, service or product, but as we have already shared, money won’t be generated directly to actions within the app.

For example:

QuickBooks is an online accounting software with more than 7+ million customers worldwide. This paid platform administers more than 50% of the accounting software market share. Anyone who buys this software gets free access to iOS and Android mobile app. This app does not generate revenue directly but having this software provides a native mobile experience which adds value to the product.

In fact, having a product extension also helps in differentiation you from the competition.

Wrap Up:

Though app monetization remains one of the tough tasks for developers and business owners, but it is one of the important purposes behind the development of an app. The primary step involved in the monetization process is to understand the available ways for it and figuring out which one will suit best for your business.

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