Application Monetization: 6 Profitable Business Models That Work

Developers create applications for different purposes. Someone needs to increase the level of audience loyalty to their company, someone wants to get more customers, and someone just wants to earn here and now. Often, mobile applications are an additional marketing channel for a brand, which in many cases starts working almost immediately after launch.

At the same time, some developers create something of their own, because they want to join the market, where some applications (for example, WhatsApp) cost billions of dollars. This area really provides a way to make money, and we at AppodealWe offer you to get acquainted with the most promising business models for mobile applications. In this article, we will describe time-tested ways to monetize applications that have proven their effectiveness more than once or twice.

How to choose the right business model for your application?

Below we will look at the six most popular and profitable ways to monetize. And now let's try to answer a few questions that will help determine the choice.

1. What problem and how does your application solve?

2. What makes your application unique, why will people pay for it?

3. What other positive aspects do your program have?

4. How well can the monetization method you have chosen for this application work?

It is also important to strike a balance between your desire to attract more users with the desire to receive money. Some methods of monetization allow you to start earning immediately after the release of the application, while other models provide a gradual set of user audience with monetization after a certain period. How much time do you have? Can you refrain from monetizing the application for a while to gain a user base?

Remember, the monetization plan must be developed and implemented in the application before the release. Moreover, the methods of monetization, which are described below, can be combined, it is not necessary to use only one of them.

Free application with ads

This is one of the most common ways to earn income from your program. There are no restrictions on downloading. The goal of the developer is to recruit as many users as possible. Data on their behavior is then analyzed and made available to advertisers willing to pay for advertising.

The Facebook mobile application is an ideal example of using such a model. Users do not pay a social network anything, but Facebook collects huge amounts of data about its users, then launching the display of targeted advertising. In their case, this model of work is unusually effective - a social network recently announced a 151% increase in advertising revenue in the second quarter of 2015.



Total: You will earn money by providing ad space in your application. You can work manually or using automatic optimization (yes, we, of course, hint at Appodeal ).

Pros A

free mobile application can very quickly gain a solid base of users who are attracted to the free program.

The size of the mobile advertising market has already exceeded the size of the market for traditional advertising on the radio, in magazines, in newspapers.

A popular application is able to quickly gather data about user behavior patterns, which can be useful to many advertisers.

The model is effective if targeted advertising is used.

Minuses

This is a very well-known monetization strategy, and many users are annoyed by advertising, which can lead to their outflow.

Mobile advertising is limited by the screen size of the device.

This method of monetization does not work for niche programs that are designed to help the user perform a limited number of functions (advertising may look unnatural).

Freemium

A great business model that we already talked about at Appodeal . Nevertheless, it is worth mentioning this method of monetization again, since it is one of the main ones. As a rule, a Freemium application has a set of basic and additional functions that a user can already purchase for money. The premise of the model is to attract people to the application with a set of basic functions. Over time, some users want more, and they begin to buy additional features. The main thing here is to recruit a large number of users and interest them in your application for a long time.

A great example now is the game Angry Birds. Rovio provides the application for free, but some features are hidden until payment, including additional levels, expanding the capabilities of birds and others. The game is very exciting, so users play it for months and some buy additional features for money.





Bottom line : Freemium allows you to attract users with the basic version of the application so that fans of the program buy additional features for money.

Pros

This method of monetizing the application allows you to collect a user base in a relatively short time, and many of them will work with the program for months.

People who try out the opportunities before buying are likely to become loyal users for a long time.

Very flexible solution, can be used in the vast majority of applications.

Can be combined using an advertising model.

Cons >

If you offer too few basic features, users will leave.

If there are too many basic functions, users will not buy additional ones.

Paid Apps

Another very common business model, which involves payment to gain access to the application. The cost can be very different - from $ 0.99 to $ 999.99 , and the developer receives money from each new user. The key to success is the ability of the developer to present the capabilities of the application in a favorable light, so as to interest the buyer at the very beginning. In the catalog, as a rule, the “killer features” of the program are indicated; this is, in the literal sense of the word, an offer that cannot be (ideally) refused.

An example of a successful application that uses this particular business model is Calendar 5, estimated by the developer at $ 4.99. The program is positioned as a smart calendar for corporate tasks and important events. The authors of the application are more able to convince users that Calendar 5 is better than the Android calendar, which comes with the OS by default.



Bottom line : this business model professes the principle of “pay, then take”, it is worth using for those teams that are confident that they can convince users to pay for the program.

Pluses

Funds are credited to the user’s account with each new program download.

People who paid for the application are likely to use it often - because the money has already been spent.

In a paid application, there is usually no advertising that can annoy users.

This model motivates developers to pay maximum attention to promotion and simplifies the calculation of ROI.

Cons

Selling programs is quite difficult, because competition in application directories is very high.

90% of paid programs are downloaded less than 500 times a day.

In-game purchases

Applications monetized according to this scheme sell goods - virtual or real. It can be clothes, accessories - the real things that users need. But it can be virtual goods, for example characters, clothes for them, game currency.

An example is the MeetMe program, a social application with the ability to purchase certain goods and services. For example, to increase the visibility of your profile you need to pay a certain amount. Developers get good income thanks to a clear sales model for users.



Bottom line : this kind of business model allows you to open another sales channel for your goods or services. In addition, it can be a way to make money in the game application - sell in-game currency and various bonuses.

pros

A fairly flexible business model that can be successfully used by companies working in the eCommerce / mCommerce field.

In-game purchases are a great way to sell goods or services with minimal risk.

The ability to purchase virtual goods can increase user loyalty.

The margin is usually quite high, since sellers do not incur incidental costs like renting premises for real stores.

Cons
Usually, application catalogs take away part of the income from the sale of virtual (but not real) goods purchased within the program.

Not so long ago, the US and EU authorities ordered Google and Apple to provide more details about the product in the applications from the catalog for better user protection.

Subscription

Another familiar business model that has much in common with Freemium. But here we are talking, as a rule, about getting the user access to the content, and not to the features of the program. Usually a subscription (paywall in some cases) involves receiving a certain amount of content for free. If the user wants to get more, you need to pay - usually provides full access payment for a certain time.

Umano is a good example of using just such a business model. The program provides users with access to news podcasts with a limited number of them for free. If you want to get unlimited access to the materials of the service, the user can pay for a subscription.



Bottom line : this model allows the user to try out the program before paying.

pros

Subscription provides a steady flow of funds over a long period of time, and after the expiration of the term, it usually renews automatically, unless the user has specified a different payment method.

Most users of such an application are quite loyal.

Subscription motivates developers to provide the most relevant and interesting content.

Cons

This business model can be used in a limited number of applications.

Determining when and where to place a paywall can be quite a challenge for the developer.

Sponsorship

Among all the business models presented, this monetization of the application is the newest. Its essence is that the advertiser rewards the user for performing certain actions within the application. Here, brands and agencies are a monetization tool. The program developer receives a certain percentage of the remuneration provided to the user.

RunKeeper is a great example of such a business model. Here, the user is encouraged to perform certain actions (walk a few steps or drive a certain number of laps without cycling). Advertisers pay the user, and the plus for the developer is that the program does not have ads that annoy users.



Total: The application allows you to attract a large number of users with both its functions and the premium from the advertiser. Moreover, part of the prize goes to the program developer.

Pros

This is a very flexible business model that can be used in a large number of applications of various types.

Users who receive the award will be very loyal.

The developer of the program receives money, the advertiser provides information about himself to the user audience, while users receive rewards and bonuses.

Cons

Due to the novelty, this business model has not been thoroughly tested by developers and marketers.

Requires a strong sales team specialist and manual persuasion of sponsors.

Conclusion

Last year, the developer Economics Research Agency published an infographic listing the characteristics of each of the popular ways to monetize an application.



As it turned out, the most used business model is the demonstration of advertising in the application, and the most profitable way of monetization is subscription.

Now the ecosystem of applications is becoming more complex and diverse, so we can expect the emergence of new methods of monetization, some of which will be a certain combination of the above business models.

The moral is this : do not repeat their actions after others, try to combine different monetization models of the application, adapt them for yourself.