By 2021, mobile app revenue is expected to reach over $130 billion. That’s about double the revenue from just a couple years ago.
To put it simply, the application industry is booming, and those numbers above don’t even account for all the desktop apps in the world.
There aren’t many industries with such explosive growth, yet low barriers to entry. When it comes to apps, anyone with a little creativity and savvy can have their own share of the success. It’s why development companies are popping up across the internet and no-code app builders have become a mainstream tool for entrepreneurs and founders.
Along the way to grabbing their own share of the app industry’s success, though, many of those same startups and developers run into a roadblock. They either can’t figure out how to properly monetize their app, or they choose the wrong method altogether.
The result? A lot of time and effort sent straight down the drain.
Before running into that same obstacle yourself, learn 5 of the most popular and potentially lucrative ways to monetize your app.
Offering a one-time purchase for an app is often the go-to, obvious choice. It’s simple and straightforward; you sell the app at a set price, and when a user downloads it, they pay that set price.
Charging a one-time fee has its pros and cons.
Benefits include things like:
Of course, with that comes a set of drawbacks, like:
With a paid-app, however, you can add in other monetization strategies; a user’s up-front payment doesn’t have to be their last.
In-app purchases can either be a standalone monetization method or an addition to another method of payment. For example, if you sell your app with a single payment, you can also add in-app purchases.
In-app purchases are commonly found in gaming apps — think about all the free games you can download that offer “boosts” or other extras at a small cost. Along with running ads, this is how many gaming apps bring in their revenue.
In-app purchases can be used in other categories, too. Another place you’ll find them are on job boards or freelancing websites, where the platform is free, but to send extra proposals, bids, etc, a user might be required to purchase more credits.
You can get creative with in-app purchases and apply the method to nearly any app. It’s a great standalone option, but works well in conjunction with other strategies, too.
Subscription-model apps are some of the most common on the market, especially when it comes to SaaS applications. Think project management apps, business tools, marketing software, social media management, and so much more. The types of subscription apps out there are endless, as this model can be applied to nearly anything.
When comparing this option to a single-purchase app, subscriptions give you the benefit of:
Subscription plans are great it your app provides an ongoing service or software because it gives reason for users to keep paying, month after month (or year after year).
If you’re building an app that provides a specific solution to a broad market, white labeling could be the best monetization method for you.
White labeling involves creating an application, and then selling it to other companies to use as their own. For example, you might create a real estate aggregator with features for both brokers and buyers. Instead of marketing your app to those brokers and buyers themselves, you could sell it to real estate companies who can put it up on their own website as their own tool.
Another example might be a flight aggregator. If you built an app that pulled flight prices in from 50 different websites, you could sell your aggregator to a flight booking company. That company would then turn around and use it as their own.
The beauty is, since a “white labeled” app doesn’t keep your name on it (you essentially sell it as a template for anyone to use and put their own name and branding on), you can sell it to multiple companies or businesses within a sector.
If you have a market-wide solution, where your app can solve a problem for any business within that market, white-labeling can allow you to continue selling your app, over and over again, at a relatively high price point. This type of monetization method is valuable for B2B models.
Another widely-used monetization strategy is the freemium purchase model.
With a freemium app, you let users download a basic version for free, and then charge for an upgrade.
This is one of the most common methods around, and you’ll frequently see it used with SaaS models in conjunction with subscriptions, although any type of app can make use of it.
The premise is incredibly basic (which makes it appealing to new developers or startups):
Freemium apps are everywhere — from the gaming category, to email marketing services, and even full-blown website builders.
Keep in mind, though, your freemium model needs to give users a reason to upgrade and stick around. If your free version is too basic, users won’t have a chance to actually get a sense of what your app can do for them. On the other hand, if you offer too many features for free, they’ll have no reason to upgrade.
With the freemium model, you need to find a healthy balance between offering too much and offering too little. That way, you can keep the right users on board long-term.
Before you do anything, make sure you know your market. To bring users on board in any form or fashion, you have to know who they are and what they want. You could have the best app in the world, but if you fail to connect with potential users, you’ll have a hard time gaining any traction at all.
Once you do have a good grip on who you want to reach with your app, consider things like:
By starting down that investigative path, you’ll easily be able to narrow down your monetization options. Whichever you choose, though, realize you’re not stuck to it forever. If you don’t see success with one method, try adding in another, or switching your tactics altogether.
Building and launching an app is never a “one and done” process. There are endless opportunities to test, trial, and improve. Use that same thought process when it comes to your monetization, too.
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