How to Make Money With an App?

Having an idea and turning that idea into something profitable are two very different things. Lots of people want to create an app, but the money-making aspect holds them back. Will you ever see a return on your investment?

Generally speaking, app monetization strategies fall into one of two categories—direct monetization and indirect monetization.

Direct monetization is definitely the most popular. In fact, the vast majority of the app monetization models covered in this guide will fall into that bucket. But before we get into the specifics, I want to quickly clarify the difference between these two app monetization methods.

Direct Monetization

As the name implies, direct monetization is money generated straight from your app.

Indirect Monetization

Indirect monetization isn’t quite as black and white. You can still make money by creating an app, but the actual dollar amount can’t necessarily be tied to the app itself.The best example of indirect monetization is a standalone product or service that comes with a free app.

Identifying Which Business Model is Right for Your App

As we go through the app business models below, think about which would best suit your app. Start by answering the following four questions:

  1. What problem is your app trying to solve and how?
  2. What is unique about your app and would people pay for this?
  3. What else do you think your app users would be willing to pay for?
  4. What business models do competing apps use and how well have they worked?

Free, But With Ads (In-App Advertising)

This is a model you’ve probably seen frequently in the apps on your smartphone. In this business model, you remove the cost-barrier to purchasing your app and allow free downloads. Your goal is to accumulate a sizeable user base and gather information on the people interacting with your app. Then, this data gets sorted and sold to app publishers who pay you to place targeted ads in your app

Freemium (Gated Features)

Similar to in-app advertising, the app is also offered for free in a freemium business model, but certain features are gated and cost money to be unlocked. In other words, people have access to an app’s basic functionality, but there is a charge for premium or proprietary features. The premise of this model is that you attract people to your app and give them a rich preview of what your app can do (without giving them everything). The goal is to accumulate and engage app users until they are willing to pay for additional in-app tools.

Paid Apps (Cost Money to Download)

The paid app business model simply means your app is not free to download. If people want to use your app they must first purchase it from the app store. Paid apps can cost anywhere between $0.99 to $999.99, and brands make money upfront with every new user. They key to finding success with this model is in your ability to showcase the perceived value of your app with a killer app listing (which includes screenshots, five star reviews, etc.) that differentiates it from similar free apps. Put another way, the most profitable paid apps do a great job of selling their app’s unique features, be it design or functionality or brand.

In-App Purchases (Selling Physical/Virtual Goods)

In-app purchases are exactly what they sound like. In a nutshell, this app monetization strategy involves selling physical or virtual goods within your app, and then retaining the profits. In-app purchases can include a wide variety of consumer goods such as clothes and accessories. However, in-app purchases can also be virtual goods such as extra lives or in-game currency. Whatever your app is selling, make sure the in-app purchases feel like a natural part of your app.

Paywalls (Subscriptions)

The paywall app business model is similar to the premium model except that it focuses on gating content, not features. Paywalls allow an app user to view a predetermined amount of content for free and then prompts them to sign up for a paid subscription to get more. This model is best suited for service focused apps and allows brands to earn revenue on a recurring basis.

Sponsorship (Incentivized Advertising)

Of all the app business models listed in this post, this is probably the newest entrant in the mobile world. Sponsorship entails partnering with advertisers, who provide your users with rewards for completing certain in-app actions. In this model, brands and agencies pay to be part of an incentive system. Your app earns money by taking a share of the revenue from redeemed rewards. This way, you can incorporate advertising into your app that actually enhances your app’s ability to engage users.

Strive System Webtech has been helping its client create an app that generates the much-needed ROI on the investment. Contact us today for more information.

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