Apps make it possible for businesses to gain better access to their consumers. They also create potential to generate more revenue and engage new users. Still, many businesses do not know the correct way to monetize their app.
Mobile app development companies can help your business create a high-quality app that you can monetize.
There are several ways a business can choose to generate revenue through an app. Many companies either choose to monetize their app directly or indirectly. By looking at who your customers are, and considering the size of your business, you can discover the most suitable monetization method for your business.
Apps provide your business with a more interactive platform to engage with your customers. Given this interactive component, customers are more likely to spend a longer amount of time viewing your content.
By 2020, apps are predicted to make approximately 188.9 billion in revenue, thus proving that consumers are willing to pay for the convenience of an app.
Worldwide mobile app revenues in 2015, 2016 and 2020 (in billion U.S. dollars)
The five app monetization models are the free model, freemium model, subscription model, paid model, and the paymium model.
The free app monetization model means that a business does not charge consumers for its app. All of the features of the app are free and consumers have full access to the app. This model attracts consumers who are not yet ready to commit to a paid option, but are interested and see no harm in downloading a free app.
To create a successful free app monetization model, you need to first build a solid consumer base before reaching out to advertisers.
The way businesses profit from this model is through targeted advertisements. Retail or food companies often use the free model to facilitate product sales. Many businesses also use the free model as a promotional tool, which will help them to build an audience.
Facebook, for example, uses this free monetization model successfully. Although it is free for users to purchase their app and use their platform, Facebook uses data to their advantage to create targeted ads on their app and website.
The free model has several advantages, as it allows you to collect users and user data quickly, and can effectively collect revenue through advertising. The disadvantages associated with this model include its lack of innovation, and the fact that users quickly get frustrated by ads.
The freemium monetization model combines the free model with premium upsell. Freemium apps offer free download of the most basic version of the app. Users can then pay for the premium version of the app if they want access to more advanced features and services.
This model causes a business to rely on its users to become hooked on their app or service, which will lead to their purchase of more advanced services. If your app is successful using the free model, it has the potential to be successful using the freemium model.
The freemium model relies on the “5 Percent Rule” to do business. This means that they rely on only 5 percent of users to pay for premium services to support the 95 percent of users who are not willing to pay.
Spotify has used the freemium model successfully, as most users do not pay for the premium subscription, but still have access to the basic, free subscription. There are certain features the free model is lacking, such as offline listening and ad-free listening, that encourage fans of the service to purchase the premium version.
This flexible model makes it easy for businesses to build up a large consumer base, and can eventually lead to a loyal user base by allowing people to give your service a try before they consider purchasing.
The subscription monetization model allows you to guarantee a return on your app investment. This model will provide your business with a steady stream of revenue since users pay a certain monthly or yearly fee to use your service.
Within this model, there is also the tiered subscription model, which offers users multiple options that include access to more or less services.
For example, Netflix has successfully integrated the subscription model into their business plan. More specifically, they use a tiered subscription model, as they offer a basic, standard, and premium plan.
Each plan allows for more advanced features accordingly. With the basic model, only one screen can be playing Netflix content at a time, followed by two screens and four screens with the more advanced models.
The subscription model allows users to gain access to services consistently without having to worry about unexpected, additional fees. They also generate a reliable stream of revenue for your business.
A paid app monetization model requires users to pay to download your app. After this one-time payment, users have full, unlimited access to your app and services.
Since this model only allowed for a one-time payment, businesses need to consider how this will impact their revenue. If their app is too expensive, users may never consider purchasing the app.
However, if the app is too cheap, your business may not turn a profit.
Many gaming apps use the paid monetization model. For example, Life, the board game, charges users $2.99 to download their board game app.
Paid apps require the user to know what the app does before they purchase it. People are very unlikely to pay for an app that they do not understand. Although paid apps do potentially allow for an immediate return on investment, there are risks associated with this model.
The paymium monetization model assumes that users are willing to pay to download the app, and pay for additional features in the future. The paymium model requires users to value the app enough to pay for its standard features and potentially its premium options.
Heads Up, the party game invented by Ellen DeGeneres, uses the paymium model. People have to not only pay 99 cents to download the game, but also receive a limited number of cards unless they choose to pay for additional cards and features.
Paymium apps may be hard to execute, but do provide a steady stream of content and entertainment for users.
Mobile apps have become another form of revenue for businesses. Apps make it possible for businesses to gain better access to their consumers. They also create potential to generate more revenue and engage new users on a more interactive platform.
There are several monetization models, including the free model, freemium model, subscription model, paid model, and the paymium model. Consult with a mobile app development company in Belarus to discuss the best options for your app.
When considering your options, keep in mind that choosing the best monetization model for your app can maximize your success.
Mobile apps are essential to most people’s everyday life. They provide a streamlined experience for people looking to access a service or product with a click of the finger. Make sure your mobile app is recognized for its potential and monetize your app effectively!