Finding the Right Monetization Model for your App

In this article we’re going to have a look at the four most popular monetization models for mobile applications.

Pay once:

Now let’s first talk about the most obvious way to make money with an app. Put a price tag on it. Not every app is ideal for this concept, because let’s face it you will see far less downloads for an app that costs something than you would see for one that’s free of charge.

So my advice is, to really think about what your goals are as an app developer, do you just want to work with this one app and continue to improve it? Or are you for example a game developer and you develop plenty of games throughout the year?

Sometimes developers such as myself offer a few of their apps for free as a form of self advertisement. You want to get your name or the name of your company out there and chances are, if you offer a great app that users enjoy, they will checkout your other apps and maybe download them. It’s all very theoretical but none the less it’s still a very common practice among developers.

If however that’s not the case for you, then you should ask yourself, is the app that you offer really something people are willing to pay for? Would you pay for it? Ask your friends, if possible ask people that fit into your app’s targeted group. If most of them and you all agree that your app is one that is worth paying for, then you should definitely do it.

But don’t expect too much, if you’re just getting started with developing and publishing your own apps, unless your application is something incredible that everybody has been waiting for, you won’t see as much downloads as you may hope. You have to think about a marketing strategy, this is much more important for apps that aren’t free, since only a small percentage of people will buy it, compared to those who would download it if it was for free.

Freemium

Let’s talk about the freemium model. This is a way of monetization that is very popular among games. The basic premise of freemium is that the standard game can be played for free, but there are different aspects of the game that are only available for those that are willing to pay. This can be as simple as a new skin for your character or a certain item that makes it easier for you to be good at the game.

Basically there are two different freemium models, one is more straight forward the other is more subtle. In the first one there are certain aspects of the game that the user can not unlock unless he or she pays for them. In the more subtle one the user could technically get the desired item or upgrade through playing the game. But there’s a catch, the amount of time the user would have to invest to get access to the item bears no relation to the actual worth of it. So let’s say you have an item that costs the user about 100 coins of your in game currency and the maximum amount of in game currency a user can earn in a day would be about 50 coins, the user would then have to play for two days straight just to get the item. So the thought behind this is usually to tempt the user to buy it, because it’ll cost him only a dollar in real life and would allow him to advance in the game much quicker.

Subscription Service

Subscription Services are tricky, since you have to set a certain time frame in which you can make sure to fulfill your part of the agreement, meaning if you promise updates or any further content along the way, you have to deliver said content. Otherwise there is a discrepancy between what you promised when the customer signed up and what they’re actually getting, which will make you liable and technically allows the users to demand a refund. For some apps subscription services do make a lot of sense don’t get me wrong.

If you’re constantly adding new content to your application and provide more value overtime a subscription monetization model does make sense.

But if you remember Whatsapp’s subscription business model where you had to pay about $1 to use the service for one year. But they shut it down pretty soon after introducing the prize and made it free for all.

This example just shows that even big players such as Facebook or in this case more specifically WhatsApp are not perfect and it should give you somewhat confidence that even though you decide on one monetization model, it does not have to be set in stone.

Native Advertisements

Native ads are the banner ads of our generation, unlike banners they are more integrated in the app flow which doesn’t disturb the user as much as a popup banner ad. Native advertisements can be a lot of things such as sponsored stories on your newsfeed.

Users are much more likely to click on an advert that is not as clearly visible as such.

Other examples for native advertisements are the sponsored stories you see on snapchat or the ones you see on instagram.

You have to keep in mind that for native advertisements to really work and make you any real money, they have to match your user base. So let’s say you have an app that is a travel log, you have a pretty clearly structured user base, which is great because it is important for advertisers to know what kind of „ad space“ they’re buying. So it basically goes the better segmented your customers are the better for your wallet.

So before you decide on a monetization model make sure it fits the type of app you’re doing and don’t overthink it, do your research, look at your competition and then go with your gut.

If you’re not yet a professional developer but would like to become one make sure you check out our Udemy Course on iOS Development in Swift and get 90% off by using this link or the code MEDIUM15 on checkout.