6 App Monetization Models that Help Mobile Apps Make Money

Mobile App Development

We are aware of the fact that Mobile apps are a marketing channel for your brand or basically for your business, and so that you’ve put efforts to get it launched, it is natural that you would be expecting a bang on the source of revenue. Many people enter this domain for the same because they are fantasized about this million-dollar idea and billion-dollar breakout of apps like Whatsapp, Instagram, etc. Smartphones are nowadays a big deal, but that doesn’t mean it would lead you to a big deal. Just to hit-the-wonder, you need to build a reliable, convenient and sustainable mobile business. So if you’re an app developer or marketer, with an ultimate ambition to earn profits from your mobile apps, read on the 6 app tools that would lead you to make money for your mobile app.

6 App Monetization Models that Help Mobile Apps Make Money

1. Free, but with adds (in-app advertising)
2. In-App Purchases (selling goods)
3. Freemimum
4. Paywalls
5. Sponsorship
6. Paid Model

1. Free, but with adds (in-app advertising)

The most pervasive model, and most commonly seen in smartphone apps, based on the idea of pulling in revenue, by assisting advertisements with-in apps. Moreover, various businesses, companies, and organizations get rid of the cost barrier and hence, allow free downloads. This implies that users while using this app, will be watching the advertisements making you earn money and generate revenues. So your ultimate goal is to accumulate the user base and gathering the information about the users interacting with your app. This data later gets sorted and sold to the app publishers, who then place specific ads in your app. By selling the data-driven advertising space, you generate revenues easily. Some pros and cons it offers

Pros

  1. through this model mobile apps are in a prime position to collect tons of data on their users. 
  2. As people are more inclined to use free apps, you can generate more users. 
  3. It can be effective if the advertisements are targeted and moderate. 

Cons

  1. people can easily get annoyed of apps, this may lead to app churn.
  2. Mobile apps can compromise the user’s app experience, and can also disgust the appearance of the app. 

2. In-App Purchases (selling goods)

 If we talk about this tool, in a nutshell, this app monetization strategy includes selling physical or virtual goods within your app and retaining the profits then after. It could include a wide variety of consumer goods for instance; clothes and accessories. There is a huge variety of virtual goods that are being sold through In-app purchases. And whatever your app is selling, you need to make sure that in-app purchases feel like a natural part of your app. In this model you allow your users to download this app as much as they like for free. Also, In-app purchases can vary from product to product. In this strategy, you use your app as a sales channel. 

Pros

  1. This type of model works particularly well for e/commerce brands and is flexible for other verticals too. 
  2. It also helps marketers enhance sales and generate comfortable revenues with the lowest amount of risk. 
  3. It basically leads to a deeper level of engagement while users buy virtual goods. 
  4. The profit margin , in‌ ‌general,s high because brands don’t have traditional expenses on mobile that stores do.

Cons

  1. For virtual goods, app stores , in‌ ‌general, take a cut of the revenue, purchased inside an app. 
  2. 2. If they imply In-app purchases, then apps would need to be more transparent on their app store listing.

3. Freemimum

Herein, you mix the free of cost and paid features and allow users to access the services but only up to a limit. Just like in-app advertising, the app is also offered for free, but certain features are gated and cost money to be unlocked. In other words, we could say, people have access to the app’s basic functionality, but there are charges for premium features. The premise of this strategy is that you attract people to your app and provide them with a rich and comprehensive preview of what exactly your app can do. The basic goal is to engage people until they are willing to pay for additional, extended in-app tools. 

Pros

  1. You are going to get more loyal customers as they would try first before they buy. 
  2. It is flexible and can be implemented for any type of vertical. 

Cons

  1. You need to provide as many features, or else app churn will be high. 
  2. You would also need to provide time and solid options to the customers if they should buy the premium offerings.

4. Paywalls

 Being similar to freemium, content except for the features are locked. In other words, It basically focuses on gating the content, and not the features. And in addition to it, a specific amount of content can be viewed for free, after which the users need to pay a certain amount or would be needing a subscription to view more content. This type of model is best suited for services apps and provides an opportunity for brands to earn more money on a recurring basis. This one is also best suited for the services which are planning to offer a live data feed (in the form of subscription to magazines and newspapers). In this case, if you’re in a position to deliver high-end original content, you can convert your leads into loyal customers through paywalls. For all this, you need to keep the quality consistently high. And this is an effective medium to actually trigger monetization for your app.  

Pros

  1. People here can experience all the features related to your app hence, it lowers the app churn. 
  2. Suppliers are more likely to be loyal here and can engage users for a long time. 

Cons

  1. It doesn’t easily translate all the verticals and most suited for lifestyle, entertainment and news since they can limit content. 
  2. Most of the time it is difficult to place a paywall.

5. Sponsorship

 As compared to other business models listed, this one is the newest entrant in the mobile world. Picking up this model your app assists users to redeem awards, recognition, and generate revenues, by participating in certain activities, being promoted by the different advertisers on your app. Herein, the companies who are involved in the promotion and also are placing the ads on your app helps you to generate revenue and basically monetize your app. It also asks for partnering up with advertisers, who actually reward your user when they complete in-app actions. When you include advertising in your app, your app would be able to engage and generate more users. To get the best results you may be, you may need to implement and invest in a number of methods, simultaneously. 

Pros

  1. It in general works three ways like app developers, marketers could earn more revenues, advertisers could generate more ads, also users benefit from promotional offers. 
  2. It also helps in enhancing your conversion rates. 

Cons

  1. You need to carefully intensive your app carefully being a marketer, as it could lead to failure if not approached well. 
  2. This model is not as tried and tested like other models, so you need to look into all the perspectives while opting for it. 

6. Paid Model

So, as the name suggests a particular app is not free for download. In case, you prefer a paid model that means you are more likely to attach a price tag to your app. This is actually the pay-and-get model for monetizing your app which asks for money for accessing or using the app. You should be able to showcase your app to be something new, different and unique, one which is different from similar free apps available. The vital role here is played by the mobile marketing team which is able to convince users to purchase the app rather than preferring the free ones.

Pros

  1. App developers and app marketers earn revenue upfront with every new download.
  2. People who have paid for an app are more likely to turn into engaged users (since they are paying for an app rather than choosing a free app). 
  3. In this model, the app does not usually have any in-app advertising thus allowing it to have a cleaner interface.

Cons

  1. The most difficult part is to sell these apps because the stores are overcrowded due to the stiff competition from the fee apps. 
  2. App stores take a cut of the revenue from paid apps. (Apple gets approximately 30%).
  3.  90% of paid apps are downloaded less than 500 times per day (cost-barrier to gaining a large number of users). 

Want to Generate Revenue With Mobile Apps?

Final Words

Remember that you may need to implement and invest in a number of methods simultaneously to get the best results. The freemium model, for instance, is a great way to market your app if you’re launching in on Android. Statistics prove that the freemium model is especially successful on the Android platform while iOS is preferable if you need to launch a paid app. Your decision to launch an app can be influenced by different factors – however, don’t forget to focus on the basics first and then set the goals.