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How to make money with mobile apps

Some guys have all the luck; they score big with a venture capital company providing all the funding and can sit back and develop their apps and work on growing a user base. However that is not the case for most developers. Most of us need our apps to produce revenue so we can pay the bills and prove to investors that we are sustainable.

So how do you go about doing that?

It’s all about the business model

Selecting the right business model for you (and your company) is a very important aspect in the success of your app. Even if you have a fantastic idea and create something very good, the wrong plan can limit you whereas the right plan can maximize users and thus revenue.

Before deciding on a model you need to answer a few important questions:

  1. Will my users be willing to pay for my app? In some cases it makes sense with a very unique product. Or is it better to keep it free and monetize through advertising?
  2. Is this a high usage app, meaning will people use it quickly or for longer sessions? This is important from an advertising perspective.
  3. Will people be compelled to buy it without a free trial version?
  4. Is this app big enough to break down into multiple parts to be sold as multiple purchases or can it only work as a combined package?

Business model option

Here are four common business models. After thinking about your app in relation to the questions you just answered, it should be easy to determine the right model to follow.

  • Advertising Model – Your app is free and you get advertisers to pay you by placing banners and pop-ups on your app. When the ads get clicked, you get paid. Let’s face it, people love free. If your app costs nothing then it increases the chance of being downloaded, shared, and used. For apps with long usage time this is a good choice or those which are used daily.
  • Free for Basic – This is also sometimes called “freemium”. You give away a basic version for free to entice people to try it and get hooked. Then the upgrade cost is a small fee in either a one-time charge or regular subscription. This is a great option for games or lifestyle apps. It might be additional storage or special features for the serious users.
  • In-app Purchase – This is similar to the above but instead you have various add-ons or features you can buy. Again this is great for games where you can buy abilities. Candy Crush is a great example with options such as purchasing tools or new levels. This also works for productivity apps and utilities.
  • Pay per Download – This is a simple method; they buy it and own it. But as the simplest it is also not the best because of so many free options which makes users less likely to buy first. While it used to be the prime method for sales, the effectiveness has been dwindling. Only about 25% of app revenue is currently coming from paid apps and you need a well-known commodity to really cash in.

Picking the right business model is an important part of the design process. If you figure out how to make money off it or how you want to make money off it) then the design process can be tweaked to meet the model rather than trying to pick a model that fits the app after the fact.







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