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Do you have an idea for a mobile app? Or maybe you’ve already started creating one! That’s great! Remember, however, that even the best product will not succeed without a good sales strategy. There are many ways to monetize mobile apps – so it’s worth choosing one that will be consistent with the specifics of your industry, target audience and the functionalities offered.
Learn 9 ideas for monetizing a mobile app and use them to build a successful business model.
How much can you earn from a mobile app?
What kind of profits can mobile app developers count on? To answer this question, let’s look at the forecasts provided by Statista 2022:
- Total revenue in the mobile app market in 2022 will reach $420.7 billion globally.
- By 2026, the app market will reach $542.8 billion.
- The number of app downloads in 2022 will be about 223 billion.
It is worth taking a slightly closer look at the gaming segment. According to Statista 2022, the projected revenue from such applications in 2022 is $103.5 billion. Compared to the previous year, this is an increase of about 5.4%, and up 51.5% from 2019.
There is no doubt, then, that the mobile application market has enormous potential, and this trend will probably not go away in the years to come. However, it also means huge competition and a number of new products that compete for users’ attention and wallets every year. That’s why it’s a good idea to think about the business model from the beginning and make it supported by the design and functionality of the app.
So let’s look at some popular ways to monetize mobile apps.
This is one of the most popular ways to monetize apps. It involves the user paying a monthly subscription to get the use of an app. Payment is made when downloading the product from the AppStore or Google Play.
This model will be a good solution especially for applications that are regularly updated with new content bases, such as movies, music, books or games.
The advantage of the subscription model is that it generates regular and steady revenue, making business predictable and stable. It also allows for the introduction of customer segmentation and offering different ranges of functionality and pricing, which makes it possible to target audiences with varying wallet sizes.
The difficulty with this model, however, may be convincing users to buy ongoing access – especially since a competitor may emerge at any time to offer similar functionality for free or cheaper. The key, then, is to design the value and functionality in such a way that recipients are willing to pay for it each month. It’s also worth introducing a free trial period so that users have a chance to test the app and see if it’s worth paying for a subscription. In this model, it is also important not to forget to actively build audience engagement and loyalty.
This model involves making small payments inside the app in exchange for unlocking additional features. It works well for games where players gain access to additional levels, buy virtual currencies or bonuses. It is also a good solution for educational apps that offer single content, such as reports, videos, articles or research papers.
The advantage of this model is that it is easier to convince someone to make a single payment than to pay a fixed monthly fee. On the other hand, it becomes much more difficult to maintain customer liquidity and loyalty. It is also necessary to ensure a smooth and fast payment system and to take measures to sustain engagement – ultimately, it is the only thing that can make a user decide to pay extra.
3. Shopping commissions
This model involves charging a commission on transactions made inside the app. It works well for marketplace-type apps, where buying and selling between users takes place. Of course, in this case the revenue will depend on the popularity of the service, the number of active users and the frequency and value of the transactions themselves. So in order to make significant profits, it is necessary to gather a large and active community.
This model requires ensuring particularly high transaction security, preparing rules and regulations, implementing data protection and a buyer protection program.
4. Payment on delivery
Another model involves introducing payment for downloading an application. It differs from subscriptions in that the fee is a one-time payment rather than monthly.
The advantage of this model is that getting a one-time payment from a user can be easier than persuading them to pay monthly. Under such circumstances, however, it is much more difficult to build a stable business model. The amount of profits here depends on the influx of new users, the number of which is ultimately limited. So it is worth combining this model with other solutions, such as micropayments.
The freemium plan implies that some of the functionality available in the app is free. However, the user can gain additional benefits for a fee, such as turning off the display of ads or unlocking additional features. Such a solution helps convince people who would not immediately decide to buy a subscription to the app. Thanks to the high number of downloads, the app gains in the popularity rankings, which allows it to reach a wide audience and gradually build their engagement.
The challenge in this model is to have a good balance of functionality in the free and paid versions. If the free offering is too rich, it will be difficult to convince users to go for the premium version.
This model is often used with free apps or combined with freemium. Display is a way to monetize apps that users are usually not willing to pay for. Ads are aired by ad network providers, such as Google AdMob, which connect advertisers with apps. The ad creatives can be of various formats: displaying during use, appearing once in a while, being pop-ups, full-screen ads, video, etc. The network additionally collects data about users and matches ads to their profile and interests.
To generate even more revenue, some apps reward users who watch ads to the end, such as with extra points or bonuses to use in the app. However, too many ads can be annoying and discourage viewers from using them – it’s worth keeping in mind.
Mobile app affiliation involves taking a commission on sales generated from ads displayed to the user. The ads are broadcast by affiliate network providers, such as the aforementioned Google AdMob. Settlement is done in an auction model. This means that the greater the number of advertisers would like to appear in a given app, the higher the CPM (Cost Per Mille – cost per 1,000 impressions) rate.
Selling app-related products is a somewhat less typical but interesting way to monetize. The growing popularity of apps can create demand for branded T-shirts, sports or electronic accessories. Today, such gadgets can be easily made thanks to the Amazon Merch platform, which manufactures and ships them.
However, such a model will work mainly for the most popular applications that are becoming a presence in pop culture. Unfortunately, it will not be a good choice for beginners, whose audience is not yet strongly emotionally attached to the product.
The last idea is to find a sponsor. Cooperation with a big brand can become a source of stable income and improve the app’s reputation. Sponsorship can consist of a fee in exchange for cross-selling the partner’s products, promoting its offerings inside the app, or including elements of its branding.
Unfortunately, it will certainly take a lot of work to make the idea interesting to potential sponsors, who receive dozens of similar proposals every week. So you first have to prove that the app has the potential to grow and on its own get a lot of active users, which can be difficult with a lack of funds for promotion.
Do you already have a specific idea for an application, or are you just looking for one? Get in touch with us. We are a software house that deals not only with application development, but also with checking the potential of your idea, creating an MVP and a strategy for its launch and successful monetization. We will help you develop the right idea and turn it into a ready-made, monetizable product.