The Art of App Monetization

So you’ve come up with a great idea for an app, everything lines up and you’re confident that its content and overall functionality is what the world needs, not wants! You know it’s going to be a hit amongst iOS and Android users and feel you’re the creator of the next big sensation. You’ve paid your $99 or $25 for your Apple and Google Play licenses respectively and you’re ready to start developing. Now you’ve just got to start thinking how you’re going to make it work financially, we take a look at the possible options available to you.

App owners need to ask themselves what their key goals are. Fundamentally the key questions is; is there any point in spending your time and hard earned money on a great idea if you’re not going to make any money from it in the future? After all, those yachts aren’t going to pay for themselves…

Your business intentions may vary; some may not be seeking profit from their work straight away, some shall be and there are those who aren’t seeking profit whatsoever (believe us they’re out there!).

Let’s look at some of the options that are available to app owners. We’ll be looking at paid apps (ideal for business tools); Freemium/Lite apps (great for addictive games); Paymium apps (fantastic for established brands); Native and banner advertising and other factors which can lead to effective ROI whilst you take app monetization into account.

Paid

Paid apps are deemed as one the most straightforward yet relatively risky forms of generating ROI. Yet if successful, distributing a ‘paid’ app will guarantee that you generate revenue upfront as you achieve downloads.

When pricing an app in your particular industry you have to take the mind-set of your potential consumer into consideration. Overall the paid download market is on the decline. The reason for this? Because there are so many apps out there who are operating on other models that sway the user with promises of free initial download and trials. You have to think realistically, what makes yours so worthy of making members of the public part from their hard earned cash when they can try a competitors app for free?

Business tool apps, such as task managers, are generally viewed to bring value to the workplace which means that people/businesses will be happy to purchase them as they will in theory bring return with them.

If you’re developing for iOS you generate 70% of your sales revenue per download, 30% goes straight to Apple. If you decide to sell your app at 99p you’ll receive just under 70p. However if you were to sell it at £1.29 you’ll receive just over 90p. This may seem not seem that much drastically higher at a first glance, but in the context of a hundred thousand downloads you’re sure to notice the increase in your revenue streams.

You may also be able to charge just that little bit more if you’ve done your marketing well beforehand. You need to put yourself in your consumers’ shoes here; once they have committed to buying your app are they going to put off by the extra 20p? If only a few users are put off from this slight increase this may still be a step forward in terms of maximising your revenue.

Freemium/’Lite’ Versions

According to CNBC in January 2014, 79% of the Apple Store’s revenue in the US was generated via ‘Freemium’ apps. To sum up the ‘freemium’ app is free to download, however often large sections of its content is only accessible by in-app purchases.

Freemium apps are often very popular with downloaders as they prove to be a risk free option where they can try out the app for free and get to know it before committing to a purchase. From an app owners’ point of view the risk is that users may find that they only need the basic features that come for free, but still expect the same level of support. According to The Guardian the infamous Candy Crush Saga had only 2.3% paying users in 2014, however through these dedicated users (and a huge user base) they still generated some $1.33 billion!

Paymium

‘Paymium’ apps are all about charging their consumer both an up-front cost along with in-app purchases. Despite this method of monetization not being so popular on the App Store (reportedly accountable for 2%), it is indeed a growing trend and are responsible for generating as much revenue as paid apps.

A good example of this model is world destruction mobile game, Plague Inc. It was first introduced as a simple premium app, but as it grew in popularity its creator James Vaughan began to add purchasable items throughout the game play. Despite its ‘Paymium’ approach it is now a huge success and generating further downloads as we speak.

A ‘paymium’ app needs to offer two things; a great product with even better add-ons. In terms of a business tool kit app it needs to offer an instant benefit, for instance a fire drill register function. Its original functionality allows fire marshals to quickly make a note on who is present, whereas its additional feature could be an online fire-drill for beginners’ course, which could save money and time for the company.

Ad Sponsored – Native & Banner

If your app is well known and achieving high quantity of downloads, native and banner sponsored adverts will benefit your business model. Native ads are those that appear to be the same content style as normal blog piece, therefore less intrusive, and tend to have a “sponsored story” mark on the bottom right. These are typically less intrusive to the end client because of this non-invasive reason.

Banner ads on the other hand are perceived as the more traditional method of app advertising, however not as effective. Smart Insights noted that only 0.1% of banner ads are clicked on, meaning that they are more likely going to be overlooked in favour of native.

When you start accumulating more users you’ll be able to start launching co-branded email campaigns with your apps sponsors, which will also generate you revenue via an alternative advertising platform.

Real World Goods

Another way to make a ROI is by using your app as a gateway to your main product(s) (if applicable). This can be applied to a variety of industries where apps are used as digital extensions to drive brand awareness and traffic to other consumer spaces. A photography app could send users off to its frames department on its official website, a cookery app to its cutlery, and a fitness tracker app to its trainers for example.

Your Audience/Consumer

Keeping all of these monetization factors in mind, you have to ensure that you’re happy with the messaging of your app and that you know who you’re targeting and how. When thinking of him or her you need to put yourself in their shoes and consider what will sway them into tapping that download button.

A well-rounded, thoroughly thought-out app will act as an effective lead generator for consumers and sponsors alike, and will therefore give your app the best possible chance of success.

Good luck!