No doubt, mobile apps are necessary for every business that wants to compete in a modern market.
They can provide a number of benefits for your business including raising awareness, gathering user information, and even making money.
To help create a source of revenue, mobile app development companies use these five monetization models:
Free models are just that – no up-front cost to download and no hidden fees. All of its features are free to use after it’s downloaded. If your goal is to get money from advertisements on your app, you first need a solid customer base that advertisers want to reach.
However, ads aren’t the only way for a free model app to make you money. The Chipotle Rewards app relies on driving purchases either in-app, online, or at the store. Every dollar spent earns 10 points and customers get a free entree every time they hit 1,250 points.
Sometimes users will view any price as a barrier and use it as an excuse to avoid purchasing any app, even if it’s only a dollar. These cost-conscious users will be much more open to trying your app out if it’s free. Once they download, you can use your free app to build an audience.
This model strikes a balance between free and paid. The standard version of the app is free, but the premium version of the app costs extra, offering features and services not found on the basic app.
Spotify is a great example of the freemium model. Users don’t have to pay to listen to music, but the free app will have commercials and only lets you stream music. The premium version gives you unlimited skips, no commercials, and lets users save music directly to their phone so they can listen offline.
While freemium needs an established user base to be viable, it can make money from users who upgrade to premium and from advertisements on the basic version.
The subscription model requires users to pay a monthly or yearly fee for access to the app.
Netflix’s model has multiple pricing options. The cheapest option is basic, while the most expensive offers ultra HD and lets multiple people use a single account at the same time.
While it generates a constant stream of revenue, users will expect consistent, new, and high-quality content often with the subscription model.
With the paid model, users get full access to the app after a one-time fee.
AdBlock’s app is $1.99 to download and block apps on your mobile device for both WIFI and cellular networks.
Because people won’t pay for an app if they don’t know much about it, sometimes it’s difficult to get the initial purchase. Thankfully, AdBlock’s name tells people exactly what it does.
Mobile app development companies recognize that if you choose this model, you will need a strong marketing effort to educate people about the app’s features.
The final model is paymium. As its name suggests, this has the highest price for users. People pay to initially download the app and then pay extra for premium features.
Minecraft uses the paymium model and sits at the top of the list of paid apps in the iOS app store. Its starting price is $6.99 and then users can additionally purchase items, skins, or textures in the app. It also offers a subscription to access an exclusive, in-game location.
To be successful, your app needs to have basic features and upgrades that users value. Many gaming apps like to use the paymium model, capitalizing on both initial and in-app purchases.
Choose the Right Monetization Model for Your App
Every app is different so make sure you research each model to figure out which will work best for yours. Choosing the right one can provide another consistent form of revenue for your company.
Free apps can result in a lot of downloads while paid apps require a solid marketing effort to convince people to purchase.
Freemium and paymium models let users upgrade for a price. Finally, the subscription model can create a steady stream of revenue in exchange for unique, valuable content.
If you would like to know more about developing an app for your business, contact us today. We look forward to chatting with you!