While most apps are fun, few are just a game to their founders.
It takes far too much time, money and effort to build an app, for there to be any vagueness surrounding how it will generate income. Building an app is a business, and as such, it needs to generate a strong return for it’s investors.
It is quite possible to have a very successful app, with thousands of die hard fans, that still doesn’t make any money. While some well backed startups can afford to go for scale, before figuring out how best to monetize, most don’t have that luxury. Having a clear vision about how you are going to monetize your idea is vital. Investors are unlikely to back any idea that doesn’t have a clear monetization model.
Here are a few suggestions, on the most popular monetization models used today. Which one would be best for your app and your business goals?
How best to monetize your idea depends a lot on what kind of app you have. We’ve outlined some of the most popular methods.
- Advertiser-Supported. These apps are free, but users often have to navigate through or listen to advertisements. Some ad-supported apps also include an option to pay to remove the ads. Pandora is a great example of this; its premium version allows users to have an ad-free listening experience.
- Freemium. These apps are free, but allow users to purchase additional features via an in-app purchase. In-app purchases are the most popular and most revenue-generating of all monetization methods. This 2013 TechCrunch article found that in-app purchases made up 76% of all Apple Store revenue. Freemium apps also allow users a chance to determine if your product has value to them. Candy Crush Saga is a very popular example of this model in action.
- Subscription. The subscription model can be implemented a few different ways. You can offer users exclusive access to your content via a set-time, auto-renewing subscription. A good example of this is the New Times Crossword app. Another subscription-based model offers users an ad-free experience for the cost of a renewable fee, as mentioned above.
- Fixed price. Users buy fixed price apps straight out, with updates and additional features typically included in the original price. This is a great option for apps that provide utility, such as productivity or health monitoring apps or apps that have traditionally been offered as paid-for software.
- Fixed price plus. Some apps cost a fixed price at the outset and then offer additional features for a cost. If you use this type of monetization, be sure to communicate from the beginning that the app works in this way so your customers don’t feel blindsided.
Depending on the type of app you are promoting, you may be able to use a few of these methods together. For example, you can offer both an ad-supported free version and a no-ad fixed price version.
There are so many ways to monetize your app and we hope we’ve helped you identify some of the most effective ones.
Do you want to learn more about monetizing your idea and creating an MVP? If you want advice on how best to launch your idea, Band of Coders can work with you to define the best way forward. Tweet us or shoot me an email at email@example.com if you want to start a conversation.