So you have a great idea for a mobile app and you have decided to hire a developer to build it. But, what do you plan to get out of this development?
A mobile app can offer your company a number of benefits, such as raising awareness, gathering user information, and making you more money. It is up-to you what purpose you want your app to serve. But, before you begin with the development of your mobile app, you must figure out how it will pay you back.
If you are planning to earn money from you mobile app, you must chose a monetization model for your app. Mobile app development companies may use one of these five models to monetize their apps.
Apps that use the free model do not cost anything to download and have no hidden fees. Users do not have to worry about unlocking hidden features with their credit cards as everything is readily available in these types of apps.
Instagram uses the free model and is one of the most popular apps in the world. The image and video-sharing platform has more than 1 billion users and makes money by letting companies advertise in-app.
The free model is also a great way to build an audience and raise awareness because many users see any price tag as an excuse to avoid downloading your app. You are in a win-win situation if it is totally free.
Users will be more willing to give it a chance and you can still make money by selling in-app advertisements just like Instagram.
Businesses that use the freemium model do not charge users to download, either. However, this will only get users access to a free, basic version of the app while the premium version can be bought offering better features and services.
The dating app Tinder uses the freemium model. Like many dating apps, users swipe on profiles and only match and message with mutual likes. The premium version unlocks the ability to let users see who has already liked their profile without having to swipe through the endless deck of profiles.
By making money from advertisements on the basic version and from the payments of users who upgrade to premium, this model provides companies with multiple money-making streams.
Subscription apps require a monthly or yearly fee to use the app.
Apps like Netflix and New York Times uses it as the company’s primary source of income. Users get a number of free articles to read to try out the NYT before they have to subscribe to access content.
It provides a constant stream of revenue, but users will expect high quality content to be churned out often or else they might rethink their subscription.
The paid model requires users to pay a one-time fee to download the app.
SkyView is a stargazing app that is $1.99 to download. It helps its users find stars and constellations along with other celestial bodies. Just the name SkyView lets people know what they will be able to do with the app. This is important because sometimes it can be hard to convince people to purchase an app if they don’t know what it does.
Your company will get a guaranteed amount of money per download, but strong marketing is necessary to persuade users that it is worth it.
Paymium apps have an up-front cost to download the app, but they also have premium features that can be accessed once users pay extra for them.
Many game apps like Stardew Valley use the paymium model. This farming role-playing game surprisingly sits at #2 in the Google Play store. It starts at $7.99 and allows users to make additional purchases in-game to enhance their experience.
While it provides guaranteed revenue for each download, users need to value both the basic features and the upgrades in the app for it to be a success.
Each monetization model offers different benefits.
While free apps may result in a lot of downloads, paid apps guarantee revenue for each of them instead of relying solely on ads.
Freemium and paymium models make money every time a user decides to upgrade.
Finally, if users think your content is worth it, the subscription model can create a consistent stream of revenue.
Mobile app development companies can help you select the right model and maximize your monetization success. If require any consultation for monetizing your mobile app, contact us today. We are looking forward to hearing from you!