Mobile apps are a business. An innovative worldwide business, sure, but with the end goal of, as in any other case, making money. So, what kinds of mobile monetization strategies can you use, how do these differ, and which ones are the most popular? You can read about this below.
More and more developers are using ads as the main way to monetize their apps. Selling paid apps and games is quite difficult, and only 2–4% of users make in-app purchases, so in app ads remain one of the best ways (if not the only way) to make money. Moreover, according to some forecasts, spendings on digital advertising will be as much as 97 billion dollars, and 60% of those will go into mobile.
An example of such a monetization strategy for apps would be social media showing native ads in its users' feeds, video ads in videos, etc.
Another popular way of app monetization is through in-app purchases. As a rule, it means that users first convert real-world money into some sort of an intermediate virtual currency — and then spend it to buy in-game or in-app items. Games use this approach more often.
An example of an app using this monetization model would be a game about tanks where you use real money to buy gold and then use gold to buy premium tanks and upgrades.
This monetization approach is more common for apps. The developer gives free access to the basic features, while the advanced ones are only available if you pay. Actually, this principle is inherited from computer programs called 'shareware', which is, basically, software shared with limited functionality that requires the users to pay for the full version.
An example of an app using this model would be a to-do list in which the to-do lists themselves are created without restrictions but you will need to pay $0.99 to cloud-sync them.
The most 'in' way of monetization; it is now actively promoted by both Apple and Google. Overall, it is similar to freemium, but the users are charged regularly; there are certain free features or content, and the additional elements are only available to subscribers.
An example of an app with such a model of monetization is an app with video series that you can watch for a monthly fee.
This monetization approach is slowly dying out but is still quite popular nevertheless, for both apps and games. You can get money for your app or game from the start — by just asking users to pay money to download it. This model works for both App Store and Google Play, and the stores will adjust the price for the user's currency automatically.
An example of a product with such a monetization model could be a recipe book for healthy eating or a game with unusual mechanics.
In the last 5 years, piracy cost mobile publishers more than 17 billion dollars. According to Tapcore, some apps lost as much as 76 million dollars; among these negative record holders is Subway Surfers with losses of up to 91 million dollars. This is not just because premium apps get stolen but also because free apps lose their ad income — pirates take the original game or app, change the ads in it with their own, and then upload these copies to third-party stores. Here are the top titles by losses due to piracy (it is worth noting that among these only 28 are games, the other 72 are apps):
Another trendy monetization approach is creating platforms or marketplaces that connect customers and providers of certain goods or services. The owner of the app then gets a certain percentage from every deal.
Examples of apps with such a model of monetization: taxi or cleaning services.
All the methods above can and should be combined with each other.
For instance, you can create a game with built-in purchases in which those who do not spend money can watch videos to get rewards.
It might even be a paid app with additional items or features sold on top.
The important thing here is to understand which of these combinations go well together. You should test different methods and always monitor all the metrics indicative of the "health" of this business where your app is what brings you money one way or another.
Creating an app that makes good money is incredibly difficult. At the same time, it is surprisingly easy to make a mistake in the process.
Here is a short list of what you will have to deal with:
In most of the approaches listed, we mentioned once and once again that if you want your app to make money, it has to create a great user experience and provide the necessary features in the right place at the right time, without errors or crashes.
However, it is also true that, from the users' point of view, the whole path to becoming your paying audience actually begins in the app store. Which means that this is where you need to start positioning your product — and doing it correctly: by explaining its value and features and showing how it can be beneficial to other people.
This is why ASO is the beginning of effective monetization. You need proper screenshots, well-written texts, good ratings and positive reviews. Without those, it is not just that the number of users will decrease: you will be losing money every step of the process.
If you have any questions about app monetization or you need to develop an effective strategy, Appbooster is ready to help.
Let's recap. The main mobile app monetization strategies are:
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