Revenue generation is of principal importance while developing apps. Most developers face a dilemma while deciding which source of revenue would be the best for their app.
There are multiple monetization options available for app developers today:
- Paid apps
- In-app Purchases
1. Paid apps :
In this model, the app user pays upfront for the full app, usually at $0.99 or $1.99. It has been seen that price and revenue do not always correlate precisely and you should experiment with various price points.
Expert suggest to start with the highest price point and put it on various levels of discount to test out sales.
Some developers also use freemium model where first few users or few features are free, beyond which one needs to pay.
In-app purchases drive a large chunk of the revenues for a lot of mobile apps these days.There are basically three types of in-apps monetization:
- Consumable Items – the user pay real money for an item that can be used only once.
- Non-consumable Items (like weapons, armors, etc) – the user pay real money for an item that can be used for an unlimited amount of times.
- Game Modes (e.g., kids or hardcore)- the user pay real money for a new game mode.
3. Advertising :
Allowing banners and other forms of advertising on mobile apps is one of the most popular and simple way to monetize app these days. It allows app developers to acquire a lot of users without asking them to pay for it.
Mobile advertising has been touted as the next big thing since Apple’s iPhone debuted in 2007 by Shira Ovide and Greg Bensinger in The Wall Street Journal. The research firm eMarketer Inc. has projected less than 2% of all U.S. marketing spending, or just $2.6 billion, to go toward mobile advertising in year 2012.
The different ad units for mobile are:
- Text Ads
- Banner Ads
- Rich Media & Video Ads
4. Subscription :
- Live Data Feed – Have the user pay a monthly fee in return for up to date data (Newspaper subscriptions, Magazine subscriptions, Stock Ticker Data)
- Pay Per Data Usage – Have the user pay a recurring fee depending on how much they use (Examples: Dropbox)
- Software As a Service – Pay for usage of the software as-you-go.
There is no recipe that guarantees success for an app by monetizing through ads, paid app or in-app purchases. The apps that have maximized their revenue potential are the ones that have employed a mix of all options. The important thing to remember is that whichever option you choose, it has to be built into the app early in the development stages as it cannot be added effectively at a later stage without incurring significant additional expenses.