Top Mobile App Monetization Strategies Worth Implementing
In tech circles, you’ll come across plenty of people with interesting ideas for developing mobile apps. They are experts in their chosen mobile disciplines; however, for every other blockbuster app that gets released, there are several thousand apps that end up on the cutting floor. One of the biggest culprits is a generally poor or lack of proper monetization strategy.
Monetization strategies for your mobile app need to be devised as early as possible, even before development begins – what you’re after is long-term profitability and sustainability. Let’s discuss some of these strategies in detail. At the end of this article, we’re also going to shed light on a few apps that have had winning monetization strategies.
Strategy #1: Determine Your Business Model
Asking yourself these questions is a good place to start:
- What problem does my app aim to solve and how exactly?
- Is my app unique enough to coax people to pay for it?
- What other features will my users want to pay for?
- Look at business models of competing apps; have they worked out well?
When researching business models and strategies, you need to make use of resources. MonetizationLab for example, lets you select a business model, say, fitness, a niche (gym equipment), after which you’re given monetization strategies to consider. Different strategies might be suggested such as digital information products or sponsored widgets.
Strategy #2: Incentivizing Offers
Incentivize users to take actions on offers that pop up in the app. For instance, the user sees a pop up and is asked to rate the product/service and get incentives accordingly. These ads typically go along well with high volume, lower end products mostly.
However, you certainly don’t want to put your eggs in one basket; utilize multiple advertisers to determine which one offers the most lucrative returns. The Runkeeper app, for example, motivates users to keep a check on their running activity, after which they receive in-app awards. After completion, these awards come in the form of sponsor/advertiser discounts.
Strategy#3: Transactional Commerce
Initially tricky, but a good way of securing start-up success, transactional commerce works especially well if you happen to have an established user-base in place. The strategy entails facilitating the sales process between buyers and sellers on your platform.
Let’s use AirBnB example – the focus isn’t on owning the home, rather having a natural system where monetization has to take place one way or another.
How about creating a subscription-based model where you’d charge users a fixed fee via an in-app purchase, so they can access app features, add-ons and services?
Strategy #4: Going Down the Fremium Route (initially)
You initially allow users to download the free version of your app which unlocks basic functionality. To unlock premium sections or features of the app, such as extra levels or achievements in a game, users would need to pay. You’ll need to plan this out carefully though – users should never have to second-guess in-app purchases in the app.
In the US app store alone, 79% revenue is attributed to in-app purchases, while the Asian markets stand at 90%.
This is a widely popular strategy, particularly when we talk about the mobile gaming sector. Building large audiences is easy since barriers to entry aren’t very high – users are not required to pay for using the app, initially.
Strategy #5: The Premium Route
The premium model – charging users upfront for using the app – will require you to offer real value to your user so they readily purchase your app.
Free apps have become widely popular, though once your brand is established, users will most likely (and happily) purchase the premium version of your previously free app. A prime example: Minecraft.
Here are more reasons to pursue the premium model:
- An app that’s licensed by a well-known brand will sell big time, if marketed the right way. I.e. book or movie adaptations. The three dollar X-Men Days of Future Past comes to mind.
- The app’s price is always lower than the average maintenance cost per user. Highly advantageous since free apps cost more in the long haul, while sustained revenues are never guaranteed.
- Paid apps are usually in high demand – works great for niche services, especially games, where the user remains engaged in a high-quality experience. The app need not even have a very large user base.
Strategy #6: Get Merchandising
Let’s assume for a second you see your app doing something really fresh and innovative, establishing a cult status so to speak. In this case, merchandising can really pay off. We can’t help but use Angry Birds as an example. What started out as a humble, mobile game has an entire franchise revolving around itself today, in the form of clothes, books, soft toys and more.
Passionate mobile gamers are always enticed by merchandise where they find themselves completely committed to the game. Small companies though, are likely to break even rather than becoming overnight millionaires by selling merchandise, but then again, it shouldn’t be about the money. It’s about building a brand that’s well-established and easily identifiable among audiences. Gaining loyalty is a key objective.
That’s a Wrap
Just to round things off:
Know Thy App
Know your app and the industry you’re in, and you’ll acquire success eventually. Understand your app’s value in the market, and you’re going to make money. Determine if there’s demand for your planned product. If you get the green light, go for it.
Know Thy Market
The same strategies are not going to sit well in each type of market. An app that helps you de-stress or meditate does not need to have ads. A fast-paced mobile game, however, can offer in-app purchases and generate serious revenue in the process. Analyze the competition, see what works in your niche, and get to work.
Know Thy Audience
You need to do everything you can to retain users – a workout app which has in-app purchases to avail discounts on Doritos is not the best idea. Why not reward your users for their hard work and commitment to working out by offering discounts on the new Reebok trainers?
Come to Terms with the Mobile Ecosystem
Mobile adoption is all set to shoot past 4 billion users by the year 2017. To stay “relevant” to your users, you’ll need to really set yourself apart. Stay in touch with the ongoing issues pertaining to localization and globalization – this ensures you keep the revenue coming in while standing apart from competitors.
Determine the Optimal Pricing Strategy
Conduct some research to see which pricing strategy best suits your app. Find the sweet spot: cost of production, maintenance and what users are realistically willing to pay.
To get better hands-on expertise on monetizing and developing your app, talk to one of our mobile app development team. We’d also love to have your thoughts on mobile app monetization strategies. Leave them below.