Can a business tool be converted into a financial asset?
Every application has two aspects: first, its owner and second, its user. While the first ones are only concerned about the business part, the second ones are concerned about its free features and the value it adds to their digital lifestyle.
Monetising an application must be considered as a priority in the development phase. In the era of significant mobile usage and the demand for information access on the go, the mobile application market has grown rapidly which has opened gates for several opportunities. The charts of Statista states that the increase in the global app revenue has been from $69.7B in 2015 to $88.3B in 2016. Also, the revenue from the
Below are the top 5 strategies
which explain the best ways to monetize your application.
1. In-app Purchase
In-app purchase enables the user to download the application for free, added with its basic features while the premium ones are paid.
This strategy gives the user two choices: either enjoy basic application experience or go for the premium features. The basic formula behind this strategy is: you let the users enjoy the basic free version of the application and attract them towards more premium & paid features. Users are more likely to spend their money on something they can trust with their experience. This model is generally adopted by gaming & productivity-oriented applications and is the primary revenue source.
The major concerns regarding in-app purchase feature are that
- The developer must decide carefully which features to offer for free and which ones as paid.
- Also, the Google Play Store and iOS App Store both demand a
2. In-app Ads
Digital marketing has now become one of the leading marketing strategies and if you are not enabling advertisements in your app then this is something you should consider. It is the best strategy to make the users pay if they don’t like to watch ads in between as they will opt for your ad-free app instead. However, either way, you make money. Note that, not many users will buy an ad-free app, especially in countries where digital payments are not popular.
There are multiple advertisement vendor companies who provide SDKs for each mobile platform. Using an SDK in the application makes the in-app advertisement implementation easy for the developer. Also, by registering at the self-serve SSP, the developer can interlink the application to multiple ad networks and it automates the process of getting ads. Implementing this strategy with the in-app purchase makes a win-win situation for the developer.
3. Subscription Services
The subscription service model is usually added to the applications which provide streaming services. The basic formula is that users can install & use the limited version of the application for free and then can apply for a free trial. Afterward, the user needs to pay monthly or yearly to get access to the full content of the downloaded app.
This feature generates much reliable revenue for the app developer. The only difference between the freemium model and subscription model is that the subscription model requires monthly payments while the freemium model requires sporadic payments. Therefore, the income flow is more spontaneous and the audience engagement is more enhanced.
By offering a discount on the long term plans, developers can encourage users to opt for long-term subscriptions.
This model is not a go-to strategy for gaming and e-commerce applications but for content-focused applications, it contributes to major revenue generation.
4. Freemium Model
Freemium pattern apps are available free of cost in the market. There are mainly two types of freemium features:
- The first one involves in-app purchases for the end-user which ultimately adds to the revenue of the app owner/developer.
- The second version of the freemium app deals with creating a free instance of the paid app while having limited features.
In this way, the end-user gets to know about the feel and use of the application. This encourages users to buy the paid app to access a better but fuller experience of the app they are loving.
A considerable factor in this monetization strategy is that our free app irrespective of the methods must be enjoyed by the end-user as a yummy starter, not as a main meal so that after enjoying the starter they crave for the main meal. Also, the user must feel like getting a huge advantage in getting paid services of the freemium apps. Example – Free Apple iCloud storage gives 5GB space but on paying $0.99 we get 50GB of storage space which is 10 times more than what we get for free.
5. Pay-per-download Model
Pay-Per-Download is the most tricky revenue-generating model. There are both free and paid apps available on every app store. For every paid application, there are many free apps available with a similar kind of functionality. Therefore, the app which uses this kind of model needs to be way ahead of their free counterparts, in terms of features, adaptability, and functionality. It should deliver an unmatched and fuller user experience to the end-user.
For example, there are many photo editing apps available on the app store but a few sell at comparatively higher prices like $3.99 or $4.99 or more. How they differentiate themselves from other free apps to the user is up to them. There must be some USP in them to be able to sell it at this price point. They must possess some unique features which cannot be found elsewhere in any free apps on the mobile version.
These strategies can generate a lot of revenue for experienced developers/entrepreneurs if used strategically. Larger organizations can use their well-built brand name, huge user base and their global presence in adapting to pay per download model for their app.