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How to Monetize an App

Ravindra
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Having your own app available within the app stores with thousands or maybe many users, is that the dream of most developers. Well and regularly used apps offer their owners the likelihood to earn an honest income. during this article, a general overview of the various available monetization models and their considerable positive and negative aspects are expounded.

App Monetization Models

When brooding about monetizing their apps, developers can choose between a broad sort of possibilities. There are three questions, the developers need to ask themselves:

  • What is the aim of the app and the way does it solve its tasks?
  • What is unique about the app and to what extent are users willing to “pay” with money or engage with an ad?
  • What are the competing apps in your field doing to monetize their assets?

You should confine mind to balance your effort in acquiring new users compared to earning revenue. Some apps are often monetized directly after the user installed them, while other monetization models work more adequately when the user is given time to interact with an app, before the developer can use its potential. The developer can choose how his/her timetable and whether or not the likelihood to decrease revenue initially so as to accumulate new users may be a good plan of action. Developers should choose and integrate their monetization method before launching their app within the app stores. This way, the app are often both a useful gizmo for the user and a business for the developer. In most cases, the likelihood to combine different monetization methods to maximise the revenue seems as advisable.

Paid Apps

This is probably the foremost straightforward monetization model. It simply states that your app isn't free, if an individual wants to use it, he/she has got to purchase it from an app store. Hence, the developer makes a profit right when the app is installed.

For paid apps, it's extremely crucial to possess an appealing app store page along side a singular name, interesting screenshots and a well written description, remarking significant benefits. If you’re interested in-app store optimization (ASO), read our comprehensive article. The advantage of this monetization model is that developers earn money with every download, and users are more likely to interact properly with the app since they already spent a number of their money for it. Furthermore, paid apps possess the likelihood for a cleaner interface because no in-app advertising is required . due to the high competition within app stores, paid apps need to be more innovative and fulfil their purpose flawlessly, serving the user’s anticipations. The negative side of the paid app monetization model is that the incontrovertible fact that the app stores are already crowded with (good) apps for nearly any purpose. In most cases, there's also a free app, which does a selected job almost like its paid counterpart, but with a special monetization model. Over the last years, paid app monetization models are a shrinking a part of the app store revenue.

The decreasing revenue of paid apps from 2011 to 2017 © statista/steamseo

Ad Revenue

This monetization model allows developers to supply their app within the app stores for free of charge . The goal for the developer is to realize an honest user-base and gather user information and knowledge about the users’ interactions within the app. The collected data is sorted and sold to advertisers specialized in targeted ad placements. an honest example for the ad revenue monetization model is that the social media platform Facebook. Facebook’s users don't pay on to use the platform, but their data is employed to sell highly targeted advertisements.

App developers can choose between a broad sort of ad formats. There are different options for the publisher (developer of the app) to urge paid when implementing advertisements on his/her app. for instance , a publisher are often paid if a user sees a banner while using the app, but there also are cost models where the advertiser only pays the publisher after a particular action was taken by the user. If you would like to understand more about the various cost models, be happy to read our article.

The negative side of the ad revenue monetization model is that the incontrovertible fact that it's not very innovative in its form and therefore the publisher runs the danger of annoying his users with ads, who will then stop using the app as a result. App developers even have to believe which ad format to settle on , because the space on the screen is restricted and oversized ads might be recognized as disturbing by the user.

Some developers also prefer to implement an option for the user to form the app ad free. this is often another version of the app: ad-free and with a tag . Another possibility would be for the payment of the “ad free fee” to be inside the app. Some publishers integrate an option where users pays directly in i.e. Euros or Dollars, while other publishers decide let users buy the ad removal with an integrated in-app currency. you'll learn more about in-app currencies later during this article.

Freemium

Freemium may be a cross of the words free and premium. With this monetization model, the user can download and check out an app for free of charge , but some parts of the app are separated with a paywall, meaning the user has got to spend money so as to urge the complete version of the merchandise . This monetization model works great with mobile games, where, for instance , the primary levels are free, enabling the user to urge to understand the sport and its mechanics. At some point, to continue playing or to unlock more levels he/she has got to pay. The more the users engage with the sport within the beginning and therefore the more fun it's , the upper are the probabilities that they're going to become paying customers.

This monetization strategy allows you to tease users with a “light version” of your app and hook them in order that they buy additional features. Freemium developers can showcase their apps and obtain an outsized engaged user base. The difficult part is to seek out the right spot between insufficient free functions (the user doesn't engage properly) on the one hand, and too many free functions (the user sees no point in paying for extra content) on the opposite hand.

In-App Purchases

In-app purchases are exactly what they sound like. To summarize, this monetization model refers to selling virtual goods inside your app which is, in most cases, free. Apple separates in-app purchases into 4 categories:

  1. Consumable
  2. Consumables are bought by the users any time they need them and can't be downloaded twice for free of charge . These consumables might be game currencies, game hints, extra health or lives during a game, extra experience or a package of exports to a replacement file format.

  3. Non-Consumable
  4. These are extras connected to your account. you purchase it and you'll use it forever. additionally , the non-consumable stays together with your account if you modify your device or reinstall the app after an opportunity . this might be the upgrade to a professional edition of an app, the removal of ads, full game unlock, unlimited hints, extra characters, extra accessories, bonus game levels, city guide maps, etc.

    The positive side of this monetization method is that if you've got programmed an honest app that users wish to engage with, you'll generate revenue during an extended period of your time . Additionally, this type of monetization is sort of harmless , because only engaged users are paying for it and there are not any additional marketing costs. it's important to notice that users, which have already made an in-app purchase, are more likely to possess a better retention.

    The negative side of the in-app purchase is that the app store usually takes a cut of the generated revenue. In some cases, in-app purchases have a nasty reputation, especially within the gaming sector.

  5. Non-Renewing Subscriptions
  6. This could be extra content, which the user can get access to for a hard and fast period of your time . Users can renew their subscription when the preset period is over. a really exemplar is that the subscription for a streaming app.

  7. Auto-Renweing Subscriptions
  8. This subscription model also buys content for a selected time-frame , but will renew itself automatically at the top of every billing cycle. For the subscription to finish , the user will need to terminate it. Some good examples for this method may be a newspaper subscription or the subscription for a streaming platform like Netflix or Hulu.

    The beneficial side of a monetization model supported subscriptions is that subscribed users are generally more loyal and can return frequently. additionally , it generates a continuing revenue flow throughout the year. The downside of this model is that it's not suitable for all verticals and categories.

Rewarded Advertising

App developers also can prefer to reward their users for interacting with a billboard . this might be an additional life for a game or some boosts or hints during a game, or maybe discounts during a shopping app. Advertisers look out for publishers with an honest amount of traffic and pay them i.e. for installs, subscriptions or views of a video clip. The publishers display the ads to their user bases and reward them for interacting. you'll get a more detailed overview of incentivized and non-incentivized advertising here.

On the positive side, rewarded advertising offers the user a true value while the publisher also generates revenue at an equivalent time. However, not all rewarded advertising methods are suitable for each app. for instance , if there's an offerwall during a mobile game, the users don't want to exit the sport just to earn the in-app currency. For games, rewarded videos or interstitials seem to be the foremost fitting model.

Conclusion

The trend seems to travel within the direction of blended models of app monetization. Thus, the mixture of two or more monetization models seems to be useful, although it'll not fit all kinds of app. you would possibly on the one hand integrate a banner advertising SDK and also make it freemium. However, some monetization model combinations don't work well. for instance , if a user already made a subscription and pays a monthly fee to consume content, he/she will likely be unhappy with interstitial or video ad interruptions.

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