Making money from an Android app in 2018 (part 3/3)
In this article series, I’ll talk about my experience making some solid beer money building and maintaining an Android app as a side project.
This is the last part in a series of blog post on making money from an Android app in 2018.
- In the first part, I talk about where the idea came from 💡 (1/3).
- In the second part, I talk about what went into building this app 🔨 (2/3).
Revenue model
So how do you make money out of an app? There are different options to produce revenue from an app:
- In-app advertisement: You “partner” up with some ads network. You trade some space in your app versus money. It’s important to note that there are different types of ads. You can have banners (the most commons) which are rectangular ads that occupy a portion of an app’s layout, you earn money when people click on them (you earn almost nothing if you just show an ad, people have to actually click it to generate some revenue). Then there are full-screen ads also called “interstitial ads” which appear at natural breaks and transitions, such as level completion. Finally, there is rewarded ads, an ad format that rewards users for watching ads. I have never experienced the latest.
- Paid app: Users pay a one time fee prior to downloading your app. This is rarer as users like to have some sense of what value the app provide before investing in it.
- In-app purchases: Users can buy items in your app. This could be new levels in a video game, books in a reading app, unlock more features in an app and so on.
- Subscriptions: Similar to in-app purchases, subscriptions are recurring payments users pay to keep some features activated. This makes more sense in apps that have a content that updates over time (think Spotify, Netflix, a newspaper app etc.).
- Partnerships: This is broader and the money doesn’t come from the customer itself. You could simply collect users email addresses and sell them, collect analytics data and sell it as well. Basically keeping the app free but sell the users data to third parties.
I went for a combination of advertisement and in-app purchases. There are ads in my app, then if people really like the app and want to remove the ads and/or support it, they can pay a one-time fee to do so (in-app purchase).
This is a very common business model. The advertisement is really nice as it allows you to monetize users that would never spend a dime on apps in general even if they like it a lot.
The key here is to find a balance between showing ads and not annoying the user. Remember, you want to avoid bad ratings to keep a good Play Store ranking. This really depends on the app itself. I went for a banner ad at the bottom of the timer screen (the most used screen in my app), coupled with interstitial ads when you launch a timer and/or open a workout (every dozen times, so it doesn’t spam the user but only happen once in a while).
Then there is the possibility for the users that are bothered by ads to remove them. The idea here for me was to find what would be a good price for people to pay and never see ads again.
Price setting experiment
Setting a price on your product is really hard. How much people are willing to pay for your idea? Setting the price too low could make people think that your product is cheap, setting it too high could prevent them from buying it.
On all the prices below, please consider Google takes a 30% cut on it, so if someones pay, say, $3.49, the real revenue would be $2.44 as a result.
At first, I set the price to be $2.49, randomly. That was my idea of what paying for an app would be. After further thinking, it wasn’t a stupid guess. If you try to compare that to the “Lifetime value” a user would bring only using ads, a single user would have to click an ad between 30 to 50 times. I don’t know you but even if I would use an app very regularly it’s unlikely I’d click 30 times on ads in it (maybe couple times by accident at most, some users would NEVER click on any ads). From there we can safely say that anything above $1 per buyer would be a win anyway.
So after adding a lot of new features to the app (and seeing people would already pay $2.49 for my app, yay!), I started to think about the pricing again.
I simply changed it to $3.49 and waited. People would still buy at around the same frequency. I just raised the price and no drops in “conversion”, amazing.
After a few weeks, I thought why not trying to raise the price again after all? So I put it for $4.99 this time (+$1, and Google’s cut). This time it didn’t work, I let this new price for like 10 days and during that time only a handful of users made the purchase.
At this point I was thinking, how would I optimize the earnings, knowing that some people would still pay $4.99 and other would not if it was higher than the $4 mark?
I decided to offer different options, $3.49, $4.99, $5.99 that would do the exact same thing. I figured why not giving the user the choice even if there is no added value between the offers, they would be able to pay what they think is fair.
Surprisingly enough, people would pay $4.99 more often than before, I even had some people (minority) that would spend $5.99 for my app!
Numbers & Passive income
All of this started in November 2017 with 0 downloads. To date, the app has around 23k active installs (number of Android devices that have been active in the previous 30 days that the app is installed on) and more than 600 reviews with an average rating of 4.8/5.
DAU ranges from 1.2k to 1.9k, there is a drop during the weekends, but users seem pretty engaged in the app overall. Out of 100 users downloading the app, 17 would still use it after 4 weeks, it’s a pretty decent retention rate.
The first 6 months, I was working quite a lot on it to build the bulk of the app. After that, this has become “passive income”, the income you get without actively working for it. As of now, I’d say I implemented almost all the features I wanted to and the crash-free rate is 99.5+%. I continue to translate the app, but that’s about it.
Below is a breakdown of the revenue the app generates, to date.
Conclusion
This idea started as a personal issue and became a humongous learning experience. It allowed me to deep dive into some tools and face problems I wouldn’t have had otherwise.
As of now, my app is the first result you’ll find typing “CrossFit timer” on the Google Play Store, which I consider a big win. I hope it will continue its steady growth over time and I can improve it even more!
