One of the important questions that emanate is ‘how to make money from mobile apps’ post mobile app development and deployment. Crafting an app and making money with the app is an excellent way for business owners to improve their efficiency. They are also an ideal platform if you believe your idea will be the next big hit, identical to Instagram or Snapchat.
Whatever your intention for developing an app, I’m sure you have something in common with other potential publicists. Individuals and businesses want to make a profit by creating an app. However, planning your app revenue strategy before proceeding with app development is vital. Without establishing your app monetization designs, you risk wastage of resources.
It begins with an efficient monetization strategy in mobile application development and other businesses. Not sure where to start? Interestingly, you’ve turned up at the correct location. As mobile application industry experts, we have the knowledge and experience to point you in the right direction.
Through this guide, we will discuss the best app monetization strategies and provide examples. However, in general, apps earn money in the following ways:
- Purchases made within apps
- Advertising within apps
- Sponsorships
- Affiliate connections
Unless you’re selling a product, service, or subscription, you’ll most likely make money with your app through advertisements or affiliate programs. You can make money even if your app is free and you don’t charge users to download it.
Monetization Strategy: Which is Best for Your Business?
For selling consumable products through an app, you must think like a mobile user. The below stats shows that customers clearly enjoy using apps, so the opportunity exists.
79% of smartphone users did online shopping in the last six months. This figure rises year after year.
The key is determining how to select the ideal app that will pique user interest and eventually lead to downloads. However, you must understand that downloads do not always translate directly to dollars.
Developing an app is expensive, and there will be concealed development costs along the way. So, before you pour all of your money into your new app idea, make sure it will generate a profit.
Here’s what you need to know.
1. Advertising
Advertising is among the most popular and influential ways to earn money from an application. When discussing this trend in in-app revenue, you promote services or products for third-party clients on your application and receive payment in exchange.
Several factors influence how much a company pays for advertising –
- Per impression
- Per installation
- Per click
Types Of Advertisements
- Interstitial Ads– The ads appear on the app when users open and close the app. These are full-screen pop-ups that appear for a specific moment in an app
- Banner Ads– These are the ads that occupy a spot on the top, bottom, or side of the app
- In-app video ads– These are short video of 10-30 seconds that automatically plays where there is a pause
- Native ads– these are the ads that blend naturally into mobile ads that don’t interrupt users
2. Subscriptions
- Wondering how an app makes money? One of the most practical app monetizations approaches monetizing apps without ads by using a subscription strategy.
- How does this work? App publicists can offer you free content in their app for some time duration and then charge a certain amount as a subscription charge that allows you to access full content without any boundations
- It is the popular and common technique adopted by the majority of free app publicists-offer a free trial for a span of time and then charge a subscription fee for those who want to access the full content. It is used by audio, video streaming, online news, and cloud services.
- For better integration, Apple pays extra attention to making significant changes in how the subscription model works. At present, Apple will maintain its current 70/30 revenue split for the first year of subscription.
- After a year, the 85/15 revenue share will be implemented automatically. This format is developed to encourage app publishers to sell their apps for a recurring fee instead of a one-time cost.
3. Selling Merchandise
- You must be curious about how to make money from the app? Selling Merchandise is another innovative approach in free apps.
- For selling physical goods such as shoes, bags, and clothes, Many eCommerce businesses create free versions to sell directly to the app or through email marketing.
- Amazon started a service, ‘Merch by Amazon,’ to motivate app publishers to use this strategy; it allows publicists to craft artwork and upload it on their platform to promote their products.
- It is a win-win strategy for both the app users and the owners. To make things easier, Amazon takes care of the payments and delivery items
- Consider the pros and cons that will help to make things easier and simpler decision making in opting for the selling merchandise option
4. In-App Purchases
- How do free apps generate revenue? Free app use is one of the best monetization strategies, like in-app purchases are made within the free mobile apps. It is typically used to access special features and content, like additional features, restrictive levels, or powerups.
- In-app purchases are distributed for accessing the advanced features to allow much empowered and swifter user interaction.
- The in-app purchases model enables sellers to sell various items directly from the app. The best gaming apps enhance their user experience by providing user in-app purchases like Angry birds, Pubg, or temple run.
- Furthermore, this model is used by game publishers because of digital money. The purchases play a crucial role in app downlands. Hence it is an interesting model for converting the app users into paying users.
5. Sponsorship
- Sponsorship is a less popular monetization method, but it can be an interesting approach.
- In other words, if the app publisher starts building the appropriate niche app for a targeted audience and emits it on behalf of another company, sponsorship in your mobile applications can be a powerful app monetization technique.
- App publishers, like website publishers, must consider sponsorship whose intended audience is the same as the one addressed by the app.
- Before designing the app, create a list of organizations and brands that could benefit from the collaboration.
- Take a peek at the benefits and shortcomings to help determine whether to use this app monetization framework for your free app idea.
6. Referral Marketing
- Referral marketing is the practice of promoting a third-party product or service in order to maximize revenue aspects.
- App publishers can advertise or sell affiliate products or services on the basis of clicks or installs.
- Through online referral marketing, you can track consumer behavior and they also use pop-up ads to promote someone else’s app or to advertise products for this purpose.
- Publishers use various types of referral marketing models in their development. Several organizations view ROI ( Return of Investment) to optimize results and enhance results
- There are Generally two types of referral programs: non-incentive and incentive. The incentive referral is highly common and includes rewards like discounts, prizes, services, or shopping vouchers but for a stipulated time.
7. Collecting and Selling Data
- Apps, as you know, collect a lot of user data, whether that’s user behavior or another app usage. Many investigators from different domains are interested in these user behavioral data.
- This means app publishers can make a lot of money by selling their users’ behavior data to these investigators. The data typically includes users’ email addresses, social media accounts, and individual interests.
- This model can be used in two ways. You can track what users are doing and sell the data to outside researchers and organizations, or you could use the basic information for your reasons.
- Organizations want to pay for displaying advertisements to the most targeted audiences. So, if you can retrieve enough relevant data, you can turn a profit. The same strategy can be applied to iOS apps. If you have queries about how to earn profit creating Android apps, please see the image below for more information on monetization techniques.
8. Freemium Upsell
- Freemium apps are available free of cost for downloading purpose, but it contains premium or paid features that are accessed through in-app purchases
- Furthermore, in this kind of freemium model app, users can download the app without paying any charge, and if they like its content, they can get full access to its functionality by committing a purchase. This tactic makes it possible to gain many new users since premium features are optional.
- As per the mobile app development organization, freemium upsell offers customers to download apps but consists of paying additional charges for premium services.
- In addition, custom OS development services offer an array of possibilities to craft a free app, and business owners utilize these opportunities for generating revenue and alluring customers
- Moreover, this Freemium Upsell strategy is exceptionally common for education, health, and sports applications, and allows users to get premium features at a particular cost.
9. Physical Purchases & Transaction Fees
- Many eCommerce businesses and startups have started using free applications to sell their products or goods like bottles, clothes, toys, etc., through designed apps on the app store.
- Let’s take an example of a free application, Angry Birds, that raised the profit from branded products. Rovio sold about 1 million branded backpacks, t-shirts, and stickers through this free gaming app.
- One of the most favorable methods for monetizing apps is through transaction fees.
- For making money through mobile apps on the app store, it is the best method, especially possible with those apps where digital transactions regularly occur
- You earn a lot of revenue by simply charging a small fee for every transaction on your app. By this method, you can make revenue from mobile apps without investing much money
- For e.g., if your mobile app provides an option for third parties to sell their goods on your app and those purchases occur online, then you can charge some transaction fees.
10. Crowdfunding
- Crowdfunding, a comparatively new monetization method for free apps, while comparing with others.
- In this method, startups and businesses discuss their idea on portals such as Kickstarter, Patreon, Crowd Supply, Fundable, Indiegogo, and Chuffed in order to raise funds for the promotion and development of the app.
- Non-gaming mobile apps are highly preferred in crowdfunding, as per Mobile Growth Stack reports.
- As of May 2017, approximately 138 non-gaming apps were known to have raised funds ranging from $10,000 to $100,000, compared to 29 mobile games with a similar fundraising goal.
Also Read: App Development Cost – How To Organize Your Budget?
Wrapping Up!
Finally, we hope that now you have a clear idea about how apps make money? You can make money with your app through numerous monetization models, but choosing a particular method is crucial. Every monetization method has its pros and cons of the app. However, analyzing and trying out tactics and what competitors are doing is good as a beginning point.
On the basis of the above writeup and as per our understanding of “how to earn money with an app,” it’s clear that in-app advertisements are the easiest and most convenient monetization model. Besides that, strategies like selling Merchandise, physical purchases, in-app purchases, freemium, crowdfunding, and subscription models are suitable for certain kinds of applications that offer certain functionalities.
