5 Ways To Monetize Your Mobile App
Apps aren’t cheap and they aren’t easy to build. Any company that wants to build an app likely wants to generate some revenue from their app. There are multiple monetization strategies that are popular these days and picking the right one can be a difficult decision. Mobile apps can be very lucrative if an ideal monetization strategy is implemented. According to the statistics, about 90% of mobile applications are free to download and most smartphone users will never browse the paid section of the App Store. Most businesses that want to build a successful and lucrative app ask the question:
How do I monetize my app?
In this article, we will take a quick look into 5 strategies that are commonly used today and why they are implemented.
Many companies choose to monetize their apps with advertising while keeping the app free on the app store. The 0 dollar lowers the barrier to entry and convinces potential users to download the app. The majority of apps in the Google Play store and App Store are free to use and the competition between apps are at an all time high. User experience should always be a concern when implementing ads in an app. An app riddled with ads can easily destroy the user experience and lead to a loss in conversions.
The ads you display are usually third-party ads and you generate revenue from clicks, views, and conversions. The most common types of ads are presented below:
- Banner. Banner ads are usually shown at the top or bottom of the screen. They are the most common type of ad used by developers. Banner ads generally create a negative user experience, since the ads take up screen real estate and are a continuous nuisance. They can also sometimes interfere with the app and prevent users from accessing features. Some apps allow users to purchase a premium version the app where ads are no longer displayed.
- Interstitial ads. Interstitial ads can cover the entirety of a mobile screen. They are typically used as a part of an app’s navigation, usually popping up between view transitions. It’s advised to not over use interstitial ads, these can interrupt the flow of your application.
- Video ads. Video ads fill up the whole screen and play a video for a period of time, usually 15 to 30 seconds. They are commonly used on gaming apps. The principle of video ads are usually to give the user a reward for playing the video. Video ads tend to generate higher revenue.
- Native ads. Native ad appear to be part of the application. Native ads can be marked by ‘hosted by’, ‘featured by’ or ’sponsored by’. Native ads don’t disturb user experience and they can be simple to implement. They are the most common form of advertisement found on major apps such as Instagram and Snapchat.
2. Paid Apps
Since a majority of apps are free, users typically ignore the paid section and only frequent the free section of the app store. A successful paid app needs to be unique and a truly exceptional product that can compete with thousands of free products. The price also needs to be a reasonable price that does not turn away users while covering the app’s expenses. Paid apps are definitely the most difficult monetization tactic. As part of the premium experience, they don’t usually have other ads and monetization strategies. As a bonus, the app store will handle all the monteziation for the app. Brands that have recognition and a loyal customer base will have a successful paid app due to their niche. A popular tactic is to provide a free trial for paid apps to convince users to keep the app. Paid apps are definitely the most difficult monetization tactic and takes careful planning to execute successfully.
3. In-App Purchases
In app purchases can be used for both paid and free apps. In app purchases arethe most popular monetization strategy and accounts for the majority of the revenue generated by apps on the app store. In app purchases are especially popular in mobile games and dating apps like Tinder. The principle of the In-App purchase model is to offer additional features that the user can purchase to enhance their experience but is not vital to the app. In app purchases can be optional costumes for characters and extra lives in a game or extra swipes on Tinder. In app features are usually harder to implement and result in longer development times but are worth the investment if executed properly.
4. Freemium model
Apps that implement the freemium model usually have two or more versions of the same mobile application. The most common variation of the freemium model is a free and paid for version. The free version of the product will support the basic features of the application while the premium version will have additional features not available on the free version. The word “Freemium” is the combination of the word ‘free’ and ‘premium’. The principle of the model is to convince users to purchase the premium version of the app by providing a good but still “lacking” user experience. The freemium model allows users to test the app before deciding to purchase the full version. If a user likes the free model they are more inclined to purchase the premium version, it’s simple as that. Freemium models are pretty popular and a good source of revenue.
The subscription model is effective for apps that deliver content or service on consistent basis. Subscription apps such as Spotify usually use an “x” number of days trial period to entice users into subscribing. The subscription model needs to always generate new content and prove to users that the subscription is worth the investment. Subscription models are a big investment for most users and it is difficult to build a solid subscription model. The subscription model is an amazing monetization model due to the consistency and is slowly appearing everywhere on the app store.
Choosing a monetization strategy is never easy and the right answer always depends on the app’s situation. Picking the right monetization strategy usually takes careful market and user research. Sometimes, an app can have more than one monetization strategy and be a great success. Apps also need to be very well done, a poorly executed app won’t succeed no matter what monetization strategy is chosen. Free apps are becoming the new norm which makes it more important than ever for apps to stand out with an excellent look and experience. We hope we have helped you come closer to picking the correct monetization strategy for your app.