With the mobile app market on the brink of being the next big thing, the majority of the application developers are trying their best to put forward new ideas so that they can leverage it. But how exactly do they make money from it? Now, more than ever, there are millions of creative ideas out there to monetize a mobile application.
Yes, you can include ads, but what if you want to provide your customers with a flawless and uninterrupted experience while making money. The answer is quite simple; you use one of the other ways.
If you are an avid mobile user, then you must be familiar with the annoying sensation that you come across as soon as a huge ad blocks your view or shows you unwanted banners on the screen. This is exactly what your customers will feel like, which is why it is best to give them a good experience without being in their face too much.
With the industry expected to grow by a whopping $407 billion by 2026, it is the best time to invest in monetizing an app.
Best Five Ideas For App Monetization
Other than including ads in an application, you can take too many different approaches to monetize it. Rather than sticking to one of them, you can always use a combination of two or more to make your product stand out from the rest.
Freemium or Paid Features
The freemium model is a hybrid between free and premium apps. In this way, you initially offer a free app with several features for the user, and then you offer them exclusive paid content if they transition from the free to the paid version.
This is a good approach, as you are first giving them the time to familiarize themselves with the app and then opt for a premium experience with an additional payment. You are essentially offering them a free service with no monthly or one-time charges, but you are also showing them that they can sign up for exclusive content for a small fee.
You must have come across apps, such as flo or myfitnesspal. Both of them have been around for quite some time, and you can find them in almost all smartphones. My Fitness Pal has been around for so long that it is the first choice for all fitness enthusiasts who like to count their calories.
Similarly, there are many period tracking apps, but none of them is as popular as flo is. Flo offers one whole month of free subscription for their paid model as well, which allows the user to check out if the paid version is worth their money or not.
Both of these apps have one thing that all others lack — their quality features. Whereas the two allow you to use their basic features with a simple download from the app store, they also offer several paid features.
This is one of the best ways to earn some money through the app. Once you develop a relationship of trust with the consumer, they are always ready to pay for a premium version of your services.
In case you want to opt for this strategy, make sure that you have a strong value proposition, user validation, impeccable reviews, and a strong clientele with next to none competitors who are offering the same thing for free.
Therefore, if you are looking to make some extra bucks with a mobile app, work on free and paid versions. Exclusivity always sells.
In-app Purchases
Users spend more than $380 billion worldwide on in-app purchases, which is why it is a great way to boost your app’s revenue. Most of the apps on Google Play store are free, which means that using such tactics is an excellent way to make some money without labeling the application as paid.
For mobile game applications, this is one of the best ways to monetize an app. You can do this in two different ways; consumables and non-consumables. Consumables refer to the in-app purchases that can be spent as cash inside the games, which is temporary. Non-consumables are purchased only once, such as unlocking a new character.
Call Of Duty mobile game is one of the most popular games of all time, with a revenue stream of $9.7 billion a year. Most of this is from the in app purchases offered on their app. They have several different weapons and skins up for grabs, which you can purchase with coins that you exchange for actual money.
However, in-app purchases are not limited to only mobile games. Social media apps, such as Reddit, use the in-app purchases model successfully as well. Reddit coins are virtual goods that you can use to award your exemplary posts or comments.
Reddit relies on brand loyalty for people to invest in their in-app purchasing.
Therefore, if you have a next-level app with the potential to build a strong consumer base, offering in-app purchases is your ticket to success.
Subscription-Based Model
Another trending model for paid apps is the subscription-based monetization model. It is based on monthly installments or monthly charges to access the data in an app. Most of us are familiar with this phenomenon, not by name, but by usage for sure. Examples are Netflix and Spotify. These two apps are streaming apps, and users have to pay every month for them.
Similarly, apps like Memrise and Babbel, popular language learning apps also fall in this category. The top newspapers like Zinio and The New York Times are also example of a subscription-based monetization model. These apps are like a balanced and secure revenue system. The developer earns every month, but these apps are much harder to maintain. Sometimes these apps act as a purchase barrier because it is a difficult task for a developer to tie his users for a long time. Therefore, he has to bring modifications to the application.
For this purpose, app owners sometimes propose additional offers, such as free trials for new buyers and new services for current buyers for a limited time. It is quite an intimidating task to hold on to the customers. This also varies with the quality of content by the developer and price consideration by the user.
M-Commerce
Another common and trending way for the monetization of apps is the M-commerce strategy. It is a plus point is that the app is itself free, but the commodities inside the app are payable. In other words, you have to serve your app as a platform for selling goods or services.
As doorstep-delivery is now the public demand so m-commerce has led to one of the best strategies for monetization of apps. Many giant sharks have made their business empires by this strategy, such as Amazon, Zara, Privalia, and many more.
According to stats, 79% of the total consumers use their phones for shopping, which is now increasing even more as people are adjusting to the world in the mid-pandemic. Every $1 out of $6 that is spent on e-commerce is already accounting for e-commerce, which will raise the m-commerce revenue to $3.56 trillion in 2021.
Affiliate or Referral Marketing
Affiliate or referral marketing monetizes the app in a way of promotion of third party’s products or services, with the revenue based on pricing models.
Affiliate marketing is one of the best monetization strategies in the world if you are willing to put up the effort. Affiliate networks, such as Amazon Affiliates pay as much as 10% commission on a few categories. This amount adds up to a huge number due to Amazon's insane popularity.
Canopy co is one of the biggest apps, which uses affiliate marketing as it’s main money-making model. It is a form of an online catalogue that leads to a specific website when you click on the product. It is available on iTunes and has thousands of downloads.
All you have to do is to advertise any amazon goods by placing their link in your software.
Now, whenever a consumer clicks on the link, you will receive a commission or a flat fee in the form of monetization and revenue. Affiliate marketing for apps works based on the following payment models:
- CPA AD Pricing Model: CPA (cost–per–action) ad pricing model also called PPA (pay-per-action) or PPP (pay-per-performance) ad pricing model, which means that the client pays for the number of clients, who performed a particular in-app action after clicking on your ad. Such as signing up for an email list.
- PPC AD Pricing Model: This model called PPC (pay-per-action) presumes that the advertiser pays for each user that lands on the advertiser's decided landing place by clicking on the link on your application.
- CPV AD Pricing Model: Cost-Per-View ad pricing model based on the number of views or impressions an ad receives. If a user watches the complete video of 30 seconds or less then it counts as a view.
- CPM AD Pricing Model: Cost-per-mile or cost-per-impression CPM ad pricing model based on numbers of impressions or views. The advertiser pays for every 1000 impressions.
- CPI AD Pricing Model: The cost per install ad pricing model also works on presuming phenomena. In this model, advertisers pay per download. Therefore, the publisher gets paid for every download on the app.
Conclusion
In the past few years, application monetization was dependent on paid ads, but with the rapid increase in mobile phone users in the past years, there are now millions of ways to make money through the app.
However, what might work for your one app might not work for the other. This is why it is best to try out a few options before you decide to go with one. You can introduce freemium packages or in-app purchases first and then see how that works for you.
If not, then you can try out your hand at affiliate marketing. Just know that there are endless possibilities out there for you!
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