Enthusiasm, dedication and energy probably got you the first iteration of your mobile app. However, now that your app is working, mobile app monetization strategies deserve some of your extra attention, because how you monetize your app will make an enormous difference in its popularity. Here are the top five strategies for making money with your app now.
1. Free Download, Ad-Supported
Virtually all social media sites use this model. Facebook and Twitter have been the biggest winners, with millions (even billions) of users around the world. Pinterest and many others have followed, with varying degrees of success. You’ll need to grow your user base very quickly, or you won’t attract enough advertising dollars to support the service.
The Up Side
- Free app. Everybody loves that, and you get the user’s goodwill from the very start.
- People are eager to share and get their friends in on a free service that they enjoy using.
- Understanding your users through use data or ad clicks on mobile is another very valuable line of business.
The Down Side
- People often demonstrate a lower investment in free apps. Your customer base may experience a great deal of turnover.
- Users tend to get annoyed when ads are too intrusive or prevent them from performing functions within the app.
2. Freemium – Free Download with Premium Levels and Gated Features
The idea is to hook people on free service, then sell them premium upgrades. A very popular example is Box, the cloud storage app. It offers a free download and some free storage for everyone at what they call the “Personal” level. If you want more storage and other features, Box offers various levels of premium memberships at different price points. This goes to show that once people start needing your app, they’ll be ready to pay for more.
The Up Side
- Offering it free gets people using it, and when they get used to it they won’t want to live without it.
- There’s no limit to the upper end of offerings or enterprise-level features that will monetize the app in the long run.
- Once they pay for it, people become more committed to getting the most out of the app.
The Down Side
- If the free level is not useful enough for your customer base, people will never want to pay for more.
- If the free level is too good, they will see no reason to pay for other features.
3. Paywalls
This is a variation on the freemium model because some parts of your app are free and others are not. In this case, it’s not the features but the content that users will pay to access. Most traditional newspapers, like the New York Times, have an app with a paywall. They often offer a specified number of articles for free before selling access to more stories.
The Up Side
- Subscribers tend to be more enthusiastic app supporters and brand advocates.
- The more people spend time on your app, they more they will want to buy.
- Recurring payments that auto-renew are the most reliable way to monetize mobile apps.
The Down Side
- Deciding what to make free and what to put behind the paywall can be an ongoing problem.
- Only media companies with news, entertainment and lifestyle content have been successful with this model overall.
4. In-App Purchases
This is the one that parents tend to complain about the most. Skylanders Giants was one of the apps that pioneered buying little items for the game’s monsters with virtual currency. When their virtual currency runs out, players replenish it using real currency. In some cases, children have rung up thousands of dollars for in-app purchases before their parents noticed. Nevertheless, in-app purchases are among the most popular app monetization models today.
The Up Side
- Unlimited revenue with no incremental costs.
- Users really enjoy purchasing things within their favorite apps on a recurring basis.
- This works well with affiliate programs and partnerships that bring in referral revenue.
The Down Side
- There have been calls for more warnings for parents when games have in-app purchases, which can reduce the number of downloads.
- Government regulations are being considered to limit consumer liability.
5. Fee to Download
People have become used to free apps, and even $0.99 can be a hard sell on the app store. However, many apps charge $5.99 or more. These are often productivity apps for businesses with very rich features, but among the best selling apps is a game that charges $6.99 per download: Minecraft by Mojang (recently bought by Microsoft). To charge for a download, you’ll need to convince buyers of your app’s value.
The Up Side
- People perceive it as a high-quality app from the beginning.
- The absence of advertising makes it easier to design the perfect interface.
- You can earn and post real revenue with every download. App developers and app marketers earn revenue upfront with every new download.
The Down Side
- Competition is still fierce for space in the app store. Free and freemium apps are winning.
- Whichever app marketplace you use will want a percentage of your sales.
- It’s more difficult to build up a big user base quickly.
Hybrids and New Models
Are you ready to start earning money with your app? Now that you’ve compared this list to the strengths of your app, it’s time to work out a long-term strategy. Naturally, many people choose to use some hybrid combination of the models, like in-app purchases with advertising. You may even design a new pricing model that blows them all away. Turn your creative powers to app monetization, and make your app into a rainmaker.
