With so many monetization strategies out there, how do you know which strategy is the most effective for your business or app? The essence of monetizing mobile apps is having a robust user-driven strategy. In order to choose the right monetization model, similar to App Store Optimization, it is crucial to determine factors including the goals and purpose of the app, competitors, and target market. With the market becoming saturated with every free app imaginable, using the paid download model may not be feasible.
What to keep in mind before choosing a monetization model?
1. Determine objective and goals of the app
You need to first consider the purpose and services of your app, the problems it solves, and the needs that it’s able to satisfy. Some models work better for particular types of apps. For example, it may be more beneficial to use the in-app purchases model for dating apps or free-to-play games while the subscription model may work well with music and streaming services like Spotify and Netflix.
2. Understand your competition and market research
Market research can prepare you for changing markets and prevent your business from being left behind by the competition. Building a SWOT analysis and assessing what your competitors have to offer before diving in, allows you to understand the needs and gaps of the market and see if an opportunity where a gap is present. You can even obtain monetization ideas from similar apps, find improvements, and analyze how well the models they implemented are working.
3. Understand your target audience
It is a necessity to understand who your audience is, the needs of your audience, the values they hold, and what they are willing to pay for. This will assist you in determining the value your services offer, and what it takes to persuade your audience to either pay when downloading or further down the road for upgrades.
Monetization strategies for your app
This model involves a combination of the free and premium version. The free version offers basic services, while the premium version has additional features and benefits.
According to Statista, 94% of apps follow the free app business model. This is an effective way to grow the user base since users can try the app before paying for its full services.
Many developers struggle with grappling the balance between giving users enough value in the free app version, and giving them enough incentive to allow them to upgrade. To be successful with this model, you need to determine what features are free, and if those features are desirable enough to retain users and upgrade to premium. Clearly communicate the differences between the free and premium offers, especially in the marketing efforts so users can grasp the advantages and value they may be gaining. Analyzing the conversion rate and assessing it with your company’s target conversion rate will help you better modify your strategy.
In- app purchases model:
This model is especially popular with mobile app games with virtual goods such as buying lives or extra levels. When this model is used with addictive apps, it has a desirable outcome as users feed the need to buy virtual goods to get more out of the services or game. It also leads to greater user encouragement.
In order for this model to be successful, it is crucial to have a clear value proposition so users feel more inclined to purchase virtual goods. It’s helpful to start off with a few or even one purchase option to not overcomplicate the process, and examine how your users respond to them. Having a few strong in-app purchase options can create more significant value than offering multiple options with lesser value.
Advertising and sponsorship model:
Apps who utilize this model seek to gain information about users to place highly targeted ads for advertisers. Companies will want to collaborate with you if their brand’s target audience or niche is aligned with your app users. The most ideal ads are highly targeted as it adds value for both the advertisers and users. According to Mobile Marketer, in-app ads perform 11.4 times better than normal banner ads, demonstrating why in-app ads are often superior.
This model is more suitable for apps with a large base of users who often interact with the app.The more users there are viewing ads, the more income is generated. However, it is important to ensure in-app ads do not ruin the user-experience. Users may abandon an app if there are frequent pop-up ads.
The subscription model requires users to subscribe to the services in order to gain full access to benefits. This model is usually catered to service-oriented or content-centric apps, and is a great way to attract a large number of users and hook them onto your app. There are several subscription tiers where users have the option to choose a mix of features and pricing.
The key here is to not only attract new subscribers, but to also continuously add value to current users. The primary benefit of this model are the recurring revenues for
subscriptions. This model typically also leads to a more engaged audience. Users have already invested money into your app, so they feel more obligated to get their money’s worth by frequently using the services. To keep users engaged, your app will need constant maintenance, content, and features. The best way to introduce your app to a new user is through a trial period where they have access to the features for a set amount of time.
Many viral apps have been created but died down due to lacking models that generate revenue. Having effective monetization strategies implemented into your business plan is required to ensure the longevity of your app or business.
About the author:
MEDL Mobile is a mobile app development company with 10+ years of experience of helping innovative companies and entrepreneurs turn ideas into powerful technology. They specialize in development, UI/UX design, production, marketing & product management.