Creating mobile apps is a real business which calls for earning money in order to keep going. However, today, there are humongous options available for monetizing your app, so how do you know which one to opt for?
Well, embarking on clever app monetization strategies calls for a thorough understanding of various revenue-generating options available, acquainting yourself with your target user base and competition and leveraging your awareness of the market to cater the most suitable paid user experience.
Broadly, there are four different types of pricing models that help in earning streams of revenue.
- Free apps with Advertisements
Launching your mobile app using one of these aforementioned pricing models will indubitably help you achieve greater revenue than any other model. Let’s have a look at each one of them in detail.
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According to a statistical report released by Distimo “This is the most popular as well as revenue generating app monetization model with in-app purchases accounting for 76% of the total revenue in the Apple’s App Store in the US markets.”
Freemium apps are absolutely free for download; however such apps come with limited features and functionalities. In order to access the premium features or added content, you need to make in-app purchases. This model is extremely popular with gaming apps where you can unlock special characters or powers by way of making in-app purchases. The app is available for free which eliminates the app pricing aspect as a barrier for people to download the app and later gives an opportunity to the developer to charge for features that extend the value of the app. this strategy is also used for subscribing for monthly updates.
A good example of a freemium app is the popular picture editing app named ‘PicsArt.’ The app comes with an array of outstanding photo editing features but, at the same time, some of its exclusive features such as backgrounds, stickers are locked. On the other hand, ‘Pandora Radio App’ offers premium content which is updated every month for a subscription fee. So, in both these apps, the users are provided with a basic version where they can use the app and decide if they wish to spend a little extra in order to enjoy additional value.
Freemium app pricing model is certainly a good option to extend a basic version of your app to your users, enjoy a good response with least resistance, and later allow them to buy exclusive features for a fixed price or a monthly subscription fee, once they are hooked to your app and find value in it.
2. Paid Apps
Paid apps require the users to pay in order to download an app. once purchased, all future updates, as well as additional functionalities, come for free.
The popularity of paid apps has tremendously gone down over the years owing to the sudden upsurge of free and freemium apps available on the app stores. But even then, paid apps remain to be a common monetization model for a lot of companies.
If you wish to launch a paid app, make sure it is persuasive enough to make the users pay for downloading it before actually trying it out. Also, it is noteworthy to understand that this is a one-time revenue generation source with no repeat revenue from the existing string of customers. To maintain a continuous revenue stream, you will need to look for new customers every time.
Most common category of apps that generally follows this monetization model is utility apps. Such apps offer core value to the users in the first download, followed by inconsequential design enhancements or slight additions. For instance, the app ‘Book Creator’, which offers a simple way of creating your very own iBooks.
This hybrid monetization model combines both freemium and paid apps, where the users are required to pay to download the app and then pay again to unlock additional features. A lot many believe it’s an unfair pricing model and thus, is not very popular. However, if played with properly with a clever value proposition, it can certainly work to generate ongoing revenue.
This pricing model is generally seen in navigation as well as music apps. But, in every case, your app needs to be compelling enough to make the users pay for it.
4. Free apps with Advertisements
While all the aforementioned monetization models require the users to pay in one way or the other, there is another model which is a free app with advertisements.
This is a popular strategy for monetizing your app where the users can download an app for free and use all its features without spending a dime. Such apps run non-disturbing advertisements for as long as the app is in use.
However, it is important to note that you can only make money through this method when you have an extensive customer base that uses your app on a regular basis.
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While there are a plethora of different ways to monetize your app, the best way to realize any kind of revenue growth is through recurring transactions from existing users as much as through new ones. If you go for a paid pricing model, try to launch your app with a rational pricing, as that is the time when you can cajole a lot of customers into buying it.