Even successful app developers often have trouble successfully monetizing their large user bases. Making people pay for the app is one way, but it is far from the only one.
Furthermore, there are multiple proven ways you can make money from a free app. That’s important because less than 10% of users will pay for an app. Here are five alternative ways developers can monetize their apps.
Ad Revenue
A top source of revenue for app developers is in-app ad revenue. Most free apps rely on this source of revenue. They may be paid per action, per click, or per thousand impressions. CPM is generally preferred because it doesn’t require a user to click on the ad for the developers to be paid. It pays less than the other options, but you won’t undermine the user experience, either.
On the other hand, you can use this to your advantage by making people pay to remove ads. This is why you may see two versions of an app. You can have a free one with ads enabled and a paid version with no ads. If too many of your users hate ads, consider sponsored content instead.
If you are going to fund your app through advertising, you need to be careful about implementing it. Studies suggest that adverts are very effective at influencing consumers spending behavior. However, many people have an instinctive aversion to adverts in the apps they use. If you aren’t careful, your app can become overrun by spammy and intrusive adverts that end up driving users away.
With that in mind, adverts can be a very effective way of monetizing an app. As well as working with advertising networks who will automatically serve up adverts in your app, you can also strike deals directly with other companies. Some businesses will be willing to pay a premium to be featured on a successful app. Some developers have found great success in setting aside some of the advertising space in their app for ads from ad networks while giving over other space to businesses that they partner with.
The Premium Version
We’ve already said that most app users won’t pay for an app. However, you can use the free version to promote a paid, premium version. Once someone gets used to the app, they may realize they want the additional features they’re missing and pay for the upgrade. A side benefit of having a paid app is that it identifies the most engaged and profitable users.
Many users will be happy to pay for a premium version of an app that removes adverts. If there are other differences between your free and premium versions, you might want to consider selling add removal as a stand-alone feature. This arrangement will enable users to pay you to remove ads from the app without having to fork out the premium version’s cost.
If you expect your users to pay an additional fee for a premium version of your app, you need to make it worth their while. If there are minimal differences between your free and premium versions, this is something that you need to factor in when deciding on a suitable price.
Affiliate Programs
Affiliate programs pay you to recommend a product or service. Most Big Tech companies have affiliate programs, and you can choose which apps you’ll promote. Promote it in your app, and you’ll get paid when others download it. Another approach is partnering with a business that has an affiliate program. Businesses with paid memberships are the most likely to pay well.
If you are releasing your app on iOS, you can take advantage of Apple’s own iTunes affiliate program. Known as the performance partners program, app developers can include a link to content from various Apple services. Every time one of their uses clicks on one of these links, and buys something, the app developers earn a commission.
In-App Purchases
In-app purchases make up nearly half of the total revenue generated from apps. This is very common in gaming apps, especially multiplayer games. They’ll pay to increase their odds of winning against the competition. Alternatively, you could incentivize them to watch marketing videos. For example, you could offer in-game items for every ad they watch. The longer the video that they watch, the more money you’re paid.
Finding an app development program requires careful thought. A popular option is to go for a merchant cash advance or something similar. You can borrow money now, and it is repaid as a percentage of all credit card transactions you process. This means that the steady revenue from in-app purchases will pay off the loan you took out to pay for the app’s development.
Many apps lend themselves naturally to the addition of in-app purchases. But for other apps, having in-app purchases can feel very artificial. Some app developers have forced in-app purchases in apps where they do not really belong. Doing this is the kind of thing that can easily put off users and generate bad reviews. Make sure that you do not commit the cardinal sin of stripping out features that should be free so that you can sell them back to users as in-app purchases. Many developers have made this mistake and incurred the wrath of their user bases as a result.
Data Monetization
Data monetization is a legally challenging route due to privacy laws. However, you may be able to sell customer data directly or collect user emails. You could start building the list by offering members’ only content available to those who sign up for your mailing list. Another option is utilizing SMS marketing since you probably have their phone number.
If you are going to go down this route, you must check the local laws. You need to know what the regulations are in your country of origin and in any markets where your app will be available. If you gather and sell user data illegally, you could end up incurring some severe fines as a result. Not only this, but your users will crucify you if you try to gather their data surreptitiously. Be clear with them about what you are doing and why. Your terms of service should be explicit about what data you are collecting and what you will do with it.
Publishing an app to the app store is only the first step. Making money from the app is the next big hurdle. However, there are a variety of ways you can do so, and you may be able to utilize more than one.
