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The best ways to monetize your app
June 19, 2017

We look at the most popular and effective ways to turn your app into gold.

 

 

1. Pay upfront
This is first ever method of monetizing an app. It’s based on taking an upfront payment to download – however it’s one we would advise against unless consumers can be sure of the value of your app prior to download. Consumers are understandably wary of the risk of paying for something that they won’t like or won’t use. So only if you’re sure that your application is unique and exclusive should you consider this option because in that case the user will be willing to pay. You could also consider initially providing the app for free initially to get word out and then changing future downloads to paid once interest has been drummed up by the free downloaders (although this risks bad will when their friends have to pay).

2. Pay and pay again
In addition to payment for download, under this model the customer is able to buy certain “add ons” for the app by way of in-app purchase. It’s a way to increase opportunities for revenue but suffers from the same problems as the pay upfront model. However, if you’re going to charge for an app up front, there’s no harm in trying for more as well - and if a user has been willing to pay for the download, they may well be willing to pay for more.

3. Simply free
The chances of your app’s success are hugely increased if it’s free, so a large part of the applications available today do not require payment for download but are free. This approach is primarily effective for a business to build its user base or otherwise just get its branding out there. So this is a very indirect way of “monetizing” you app.

monetizing apps mobile ad strategy2 598x3004.  Free with advertising
This model allows a free download with imbedded advertising in the form of banners, pop ups, modules or other notifications. There are wide range of advertising middlemen whose APIs can be embedded to provide advertising. One thing to be careful of if taking this approach is to ensure the advertising isn’t too annoying or invasive. You can also add an option to remove of ads for a charge (by way of an in-app purchase).

By the way, paid with advertising is strongly advised against due to the potential to annoy customers who rightly assume that their paid app should be ad-free. Annoyed customers leave bad reviews!

5. Freemium
This is the probably the most profitable approach. As the name suggests, it combines a free download with the option for premium features, which are paid for. The strategy is as simple as getting you hooked for free and then imposing certain limitations that prevent you from using the app in any meaningful way. And to remove those limitations? You have to pay of course!  The two main types are:

* Time based: The simplest and oldest type of limitation; you get a free trial after which you need to pay.

* Functional: More effective and common, however, is limiting function – think Candy Crush; it gets so hard on those later levels and would be so much easier if you could just purchase some of those power ups.

 

Final thought - in-app purchases are key.
You have may have noticed that a recurring concept here is in-app purchases. Indeed, a 2016 Distmo study showed that 72% of all revenue gained through the AppStore comes from apps which feature in-app purchases (although not all of that comes from those apps' in-app purchases). Remarkably, however, Ditsmo found that only 4% of AppStore apps contained in-app purchases. Don't make that mistake in developing your app...

 

In-app purchases are key for revenue on the AppStore