We all know that it costs money to make an app. Even if you build it yourself, it costs time, which correlates to lost productivity and income elsewhere. So, many app developers want to monetize their apps to make up for that lost revenue and even turn a profit. In fact, successfully monetizing your app could lead to huge potential revenue streams as long as you have a solid monetization strategy when you go to develop an app.
Unfortunately, when most people think of monetizing an app they think of making it a pay-to-download or “paid” app in the app store. While this is the simplest way to monetize, it is far from being the most effective. Instead, you may want to consider alternative ways to make your app work for you and put some money into your pocket. Check out these top ways to successfully monetize your mobile app and why making it paid isn’t the answer:
Why Paid Apps Aren’t The Answer
Although slapping a 99 cent or $1.99 price tag on your app may seem the easiest, it is far from being the most effective solution. A survey from Forbes found that less than 10 percent of apps make more than 90 percent of their revenue from installs. Of all paid apps, roughly 90 percent are downloaded less than 500 times per day, earning less than $1250 per day. While $1250 per day may seem like a lot, the low number of downloads hurts your profits in the long run by limiting your user base. As you’ll see, having a large and engaged user base can lead to much higher profits through other app monetization methods.
Ads
This one is the obvious answer. Ads are the most popular, and most widely used, way to monetize an app. Since things don’t become popular for no reason, it makes sense that placing ads in your app is potentially one of the most profitable ways of monetization. Think about your favorite apps and the types of ads that you see there. There are many different forms of in-app ads like interstitial ads (the ones you see in between rounds of a game for example), banner ads, video ads, and text ads.
To figure out which ads are best, you’ll need to look at eCPM numbers. This number shows the average profit you should expect for every 1000 times an ad is displayed. Interstitial ads have an eCPM of $1.86 on average, while video ads have a higher value at $3.08. Banner ads come in significantly lower at just $0.25. Recent reports state that by 2020, estimated in-app ad profits will reach $50 billion per year. Billion with a B. Use your app to get a chunk of that number with ads. But remember, keep your ads reasonable so you don’t scare away your user base. More users = more ad revenue.
Subscriptions
In more recent years, many apps have shifted away from a “pay once on install” model to a “pay per month” subscription model. This is a much more profitable way to charge users and translates to much higher revenue. Giving users a taste of the great features that your app has to offer while hiding features behind a subscription. This monetization strategy works best for apps that deliver value over a long period of time like content apps with constantly-updated content, software that stimulates human improvement like brain training games or digital exercise coaches, as well as unlocking unlimited access to all of an app’s features.
Think of the many subscriptions you have. Netflix, Hulu, Tinder, Spotify, NY Times, etc. all fall under the subscription model. This strategy also allows you to offer several levels, or tiers, of subscription that cost different amounts. This is a great way to work users up the ladder from free to premium while maintaining income throughout. One important thing to remember when using subscriptions in your app is to constantly have an incoming stream of new content, improvements, and new features to keep users engaged and paying for their subscription.
Freemium
Freemium is a strategy for monetizing your app that is similar to using subscriptions. However, it is very effective in gaming and productivity apps. In fact, its estimated that the average freemium app gamer spends $24.66 a month. That is much, much more than you could ever charge for a game.
The idea behind freemium apps is to allow users to freely use the app or game, but limit some features. For example, Dropbox allows users to store their files to a certain GB limit, and then requires them to pay before they can store more. At that point, most users are likely to pay to upgrade to premium after seeing the benefits of the app’s service.
In-App Purchases & In-App Currency
Another method that works great for game apps is the use of in-app purchases and in-app currencies. These generally work best with games that are totally free to play, which encourages users to spend more since the app was free to begin. Two main types of in-app purchases are consumable and non-consumable. Think power-ups, credits, or game currency when considering consumables. Non-consumables are something like paying to unlock a level that remains unlocked forever. These in-app purchases can translate to hundreds of dollars spent per player if used right and the game is engaging.
What If Monetization Doesn’t Work?
Sometimes, monetizing your app doesn’t work like you planned. Whether that means users are leaving or you aren’t hitting revenue goals, you need a pivot plan. Here are some strategies in case monetization doesn’t work:
- Free your app: If your app isn’t already free in the app store, make it free. This can help increase your user base and possibly save your monetization efforts.
- Change your strategy: Sometimes all you need to do is try monetizing from a different angle. If you’re using a subscription service, maybe switch your app to a freemium service. If you currently use in-app purchase, maybe try ads alone. Think outside the box and try something different that improves user experience.
- Worst case: If worst comes to worst and you’ve tried to salvage your app’s monetization, take it the way of Angry Birds and make it free through and through. Use the experience as a learning tool and create a new app, using the knowledge to successfully monetize it.
Reference Links:
http://www.businessofapps.com/10-ways-to-monetize-your-mobile-app/