There are many good reasons to create or make a mobile app. Designing an app should mean you want to help others, design a useful tool or build a community. The possibilities for doing good when making an app are endless.
You can’t accomplish most of those things, though, unless if you have a good business model. In order to grow into something great and influential, you need a sustainable plan that will make you financially successful. After all, you should be rewarded for your hard work and generate revenue. It’s more than just making sure your company can do more than stay afloat; it’s also because you want to make money. There’s no shame in admitting that you’re profit-driven!
Why is monetization important?
Making money is an important part of an app’s business, so it needs a lot of thought. First of all, what is your app setting out to accomplish, and who is the likely target audience. You need to determine what it is about your app that sets it apart from other apps that might be similar. This will be a selling point.
Furthermore, advertising your own product is a critical part of setting yourself apart from the rest. But aside from that, you need a business model within your app, and there are several common methods.
Free with advertising
The most common way is to make your app free to download, but you sell advertising space to people while sending them data. Making an app free removes a paywall that allows a maximized potential for downloads.
However, advertising space can only go so far before being obtrusive, and when it gets in the way people will be annoyed to the point of not using your app.
Another way to generate revenue is to employ the paid app business model. In order to download it, consumers must pay. This is a great way to receive money upfront, and when people make the decision to buy something they are more likely to engage in it.
However, since there are millions of apps competing with yours (many of them free) this can significantly lower your number of downloads. Your app better be top-notch as well, because when people pay a price to have something they’re expecting high quality.
You can also use other ways that combine both models. With the “freemium” model, your app is free to download. Users can have access to a limited number of features, but in order to unlock the app’s full potential they must fork over some money.
This can be a super effective way to generate money from a mobile app because users can get hooked, and make a purchase after trying the app. However, a lot of people are content with free versions so you’ll have to make paying seem enticing somehow.
In-app purchases also fall within this vein. You let people download the app for free, then they can buy things through your app (virtual or physical) and you keep the profits. This method works well with retailers who want to move online, or for worlds within apps where people can expand their presence in games through in-app purchases.
You have to be careful with this method, though. It can be hard to make it profitable, and many angry parents are boycotting in-app purchase because they’re easy to make on accident, especially when children are given phones.
Other methods to monetize
You can require users to have subscriptions, with different tiers allowing users to have different levels of access to content. Sponsorship is another interesting recent trend, where you partner with advertisers and get your customers to do certain things the agencies want you to do.
There are many ways to monetize apps. Picking the right way can be stressful, but making this decision is an important one in order to make a truly successful mobile app.