You have created an incredible mobile app for your business, through which you are interacting with your customers and pulling customer data to market your brand in new ways.

But this is not all, there is something else you need to focus on- App Monetization.

App Monetization is not a new thing, it has been there for a while now. Many businesses are already reaping benefits from the mobile app monetization practices, contributing to their overall business revenue.

Before digging deeper into different techniques and business models, we want to set the stage by giving you a better picture of app monetization opportunities. To contribute to this fact, let’s establish how big is the demand for mobile apps today.

Márcio Cyrillo, Executive Director at CI&T says that “Our lives will be facilitated by a horde of mobile applications running on various devices, with different sensors, every one of them gathering tidbits about all that we do, and taking care of huge digital brains that can adjust applications to our necessities as they gradually get acquainted with us.”

From gaming to shopping and banking- mobile applications have gotten a staple for most smartphone users across the globe. Over recent years, the number of mobile app downloads has rocketed, reaching 218 billion annual downloads by 2020. With such countless users downloading and engaging with applications consistently, it comes as no surprise that brands and advertisers have started to tap into this industry and benefit from the rising interest in application content.

According to Statista, in 2020, the global mobile app revenues amounted to over 581 billion U.S.D, and are expected to produce more than 935 billion U.S.D in revenues in 2023.

Enthralled, aren’t you?

However, despite being so powerful and profit-incurring, many of the brands are still struggling to make profits from their apps. So, how to generate revenue from mobile app? and what are the most worthwhile app monetization methods the brands can use?

To help you with the same, we have listed here some of the most effective business models that you can leverage in your business and take it to the next level.

6 App Revenue Models: How Will Your App Make Money?

  1. 1. Paid Apps

    This model has been in existence since the launch of mobile app stores. It is a straightforward model according to which the user is charged with a fee to use an application i.e if they want to use an application, they need to pay for it.

    The question might arise in your mind about its usage in the current scenario as the demand for the paid apps is reducing. According to a study conducted by Cambridge University, only 20% of paid apps cross 100 downloads.

  2. Paid Apps
  3. Source: Statista However, you can still incorporate it into your business and make money out of it, as for certain types of applications like utility, photo & video, productivity, and navigation, more than any other model, the paid application model proves to be a more appropriate approach. To make it more fruitful, you can couple it with an effective marketing strategy. Seek assistance from the marketing experts and promote your applications in the best light.
  4. 2. Freemium

    Freemium business model also offers the applications to the users for free of charge, however with a slight twist i.e. including the gated function. In this model, the free version of the applications only comes with a limited set of features. Hence if the user wants to use premium features, they need to pay for them through in-app purchases.

    The Freemium model has worked great for many applications like Angry Birds, in which the user willingly purchases the premium features. The core idea here that works in this model is to offer those features in a free package that attracts and compels the users to pay for the premium features.

    Hence you should be extremely careful while selecting the features that you want to offer to the users in the free as well as a paid package. Make sure that features for the paid package are worth paying, on the other hand, the free features are also extremely interesting for the users, encouraging them to move ahead with your app. If you fail in creating the strategy, the freemium model might not work for your business.

  5. 3. Free App with In-App Advertising

    This model is a highly popular business model among users. The basic idea behind the model is that the app vendors can avail their applications to the users free of cost while making money by placing ads within the apps.

    Because of being free of cost, encouraging the user to download the applications becomes easier. This tends to increase the user base at a higher rate. However, mere downloads or placing ads would not work, to make money you should also make sure the ads within the application get clicked.

    For this, you can collect the user data, have a record of their interest and disinterest, and then place the ads appropriately. To get it done right, you can take help from digital marketing experts. There are 4 types of ads that can be included within your application-

    • Native ads: Native ads blend within the app content without interrupting the process.
    • Video ads: Video ads get played during the start of the app as well as at certain events.
    • Interstitial ads: Interstitial ads interrupt the user process and cover the entire screen. 
    • Banner ads: Banner of the apps appear at the allocated ad space of the application.
  6. 4. Subscription

    The subscription model is one of the most popular business models especially in the time of this pandemic when everything is going digital. Today people are trying to find new ways to get their needs fulfilled through the digital medium, without the compulsion to pay every time they make a purchase, hence opting for the subscription.

    The subscription model proves to be extremely beneficial for both the customers as well as the businesses. Where on the one hand the customers are getting continuous and better services for the long term, the businesses are making money on the other.

    For the businesses, the subscription model works as a recurrent revenue generation model,  earning them profits at regular intervals. Not only this, but the subscription model also helps the business to manage their inventory as well as keep a track of their finances accurately, helping them to make useful decisions for their business.

    This model works great for applications like entertainment, news, and lifestyle applications. One of the biggest examples of the model is Amazon Prime, which along with the entertainment resources, also extends facilities for other services.

  7. 5. In-App Purchases

    Users are attracted more towards the free app, thereby most of the apps in the market are free of cost. To monetize such apps, the in-app purchase comes into the picture. In-app purchase is gaining huge popularity lately, in fact, according to Sensor Tower reports- the user’s spend on in-app purchases ascended by 17 percent greater in 2019 from 2018.

    The term in-app purchases clearly say its meaning, i.e. adding a module that allows the users to make purchases through applications. This feature can be applied in both paid and free apps. In-app purchases can be offered in 2 major categories-

    • Item Purchase(Consumable and Non-Consumable)
    • Subscription Purchase(Renewable and Non-Renewable)

    Item Purchase – Let’s say a user uses a game app, you can offer various consumable and non-consumable items within the app, that the user can purchase within the application. Consumable items are the ones that complement the player and the game and the non-consumable items are the ones that are used to enhance the features of the applications.

    Subscription Purchase – This approach allows the user to purchase the subscription in 2 ways renewable and non-renewable. In a renewable subscription, the users have to pay for services periodically and the non-renewable in-app purchase will be a one-time purchase.

    While this model tends to be quite beneficial for business owners, they should remember the fact that not every user shows interest in purchasing these items. Hence they should focus on making their application more engaging and valuable, to encourage the users to stay longer and make in-app purchases for advanced services.

    6. Partnership Model

    Another way to increase your customer base and monetize your application is to partner with another brand. You can include the product and services of other brands in exchange for the promotion of your app or referral fee.

    However, you should be careful about the brand you partner with. Ensure your partner brands’ products and services complement your business idea and offer quality products to the customers. Collaborating and partnering with a brand/app with a larger user base proves to be a mutually beneficial relationship, helping each of the brands to expand their reach and boost their business profits.

    The collaboration of Nike+ and Headspace is a great example of this model. Through this, the users can improve motivation, focus, athletic performance, and recovery through coaching from Nike experts, along with enjoying their workouts even more with headspace.

Are you Ready to Boost up your App Revenue?

There are more than 5 million apps worldwide, becoming the 4th basic necessity for living after food, shelter, and clothing. Thousands of mobile apps are published per month on the Apple App Store and the Google Play Store.

Hence, to stand out in tough competition like this and boost your profit like never before, you have to be jacked up. Merely choosing a model won’t work for you, you need to focus on its implementation as well.

So, instead of just focusing on increasing the number of downloads, you should work on engaging and retaining your users for a longer time, which needs a deep understanding of the user mindset as well as the market. The most feasible approach for the same is hiring the expert team, who will handle the complexities at their end and make your app monetization venture a huge success.

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