How Do Money Making Apps Profit

Mobile application development is a long and money-consuming process. How to make the result worth all the spends and overall, how do apps make money? Let’s open a secret of money making apps.

I Have an Idea for an App

Starting a project is exciting, but without a good roadmap, it could turn into a disaster. First of all, consider your idea. That your app does? For whom? How will the users benefit? Using this questions will help you define the idea clearly.

Now it’s time for a market research. You can check out the competitors’ apps in a store to discover the monetization strategy of the similar apps and get to know what users are excited or complaining about. The key point is to solve the weaknesses in your own app. Also, that will possibly give you insights into some new features.

What to do then the project idea is polished? Now you probably wonder how to create an application, and how much does it cost to make an app, right? We wrote an article about hiring app developers and app development process, check it out and let’s get right into the app monetization.

There Are a Lot of Money Making Apps. Almost 93% of Them Are Free to Download

There are billions of dollars in applications that cost nothing. It sounds like nonsense, but it’s true. In a mobile app marketplace users aren’t ready to spend even a $1 for an application. In that case, creating a free app doesn’t look like a bad idea, right? However, that doesn’t mean that a free app couldn’t be considered as beneficial.

There are several options available to monetize an app. Shure, you can make people pay for it, but the thing is they don’t want to. You gotta be inventive.

How to Sell an Idea to a Customer aka How Do Apps Make Money

FREEMIUM

Developers launch two versions of the app — free and paid (usually named Pro) to display basic and advanced function. When users download a free app, they get a kind of demo version of the product which shows what they can have. By using this strategy you give clients a strong reason to buy your app. It works best with mobile games and marketing solutions.

IN-APP PURCHASES

The option was implemented by Apple a few years ago. The app with in-app purchases is still free in the store, so you can have extra downloads. If a basic version of the app is not enough for a user, its performance could be improved by payments. For example, VSCO sells filters as an extra functionality. In that case the store takes a percentage of the revenue from each in-app purchase.

IN-APP ADVERTISING

Ads come in different sizes and position in the app and they are the most simple way to make money with an app. But placing an advertising is not a goldmine if there is no complex approach behind it. To profit with the in-app ads you should build an effective cooperation advertising networks and place the ad smartly. The profit depends on ad format (videos work better than static ads), impressions, total downloads, which countries the users are from.

iOS applications have a higher CPM rate (cost per thousand impressions) and make more money on in-app ads.

Gaining a profit works in two way: clicks and impressions, and views. The second one usually is chosen by the small companies.

In some cases, advertising can disaffect users which make app owners remove ads. Be prudent with the in-app advertising setup, target the audience and choose advertisers smartly.

COST PER INSTALL (CPI) MODEL

By advertising with the third parties, your app makes money on each installation — that was CPI means. That is a chance to work with top performing publishers, the most promising are Playhaven and Chartboost. But don’t make any beliefs on making crazy money per install. The fee varies from 0.90$ to 3.00$

APP SPONSORSHIP

Sponsors are the money-making driving force in YouTube and for the last couple years, apps get sponsored too. Developers promote big-name companies in their applications to receive money clicks-through. Except for money, you can get a good traffic from sponsor’s website or social media pages if the company mention your product somehow.

There is no universal formula to make your app profitable. Frequently, app owners use several monetization approaches simultaneously. As you can tell, every strategy has its own pros and cons.

Test your strategy. The smart approach will engage users and make your app financially successful.

Got a mobile development project idea? Contact us for a free estimate.

Originally published at Master of Code Global.