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Start-Ups

6 Mobile App Monetization Models

By Barbara Beauregard   |    October 17, 2016   |    11:36 AM


These days, it's never been easier for developers to create their own apps. Unfortunately, the same cannot always be said about effective monetization. 

Confronted with a saturated market and wary users, developers must carefully consider every app monetization option. Before you eagerly release your new creation, learn some of the most effective ways to acquire users and increase your ROI.

Paid Apps: 

The most straightforward model, this involves charging a direct, one-time fee to download your app from Google Play or the App Store.

  • Pros: Revenue is generated with every download. Users also tend to be more engaged with apps that cost them money.

  • Cons: It's hard to stand out from competitors, and Google and Apple take a cut from your revenue.

Free with In-App Advertising:

Fast becoming one of the more dominant models for app developers, this involves giving your app away to encourage more downloads and create a larger user base. Once you've acquired a wide number of users, you collect data and use it to sell ad space on your app.

  • Pros: You can quickly generate a big user base. You should also have no trouble selling ad space if you have a lot of users.

  • Cons: Intrusive ads can alienate users, especially if they interfere with essential functions.

Freemium: 

With this hybrid monetization model, you offer basic functionality at no cost, keeping premium functions gated behind paid access.

  • Pros: Users tend to respond positively to a “try before you buy" model.

  • Cons: Tends to work only with highly engaged users. The free portion of your product must also offer real value.

Subscription: 

Best suited to lifestyle, entertainment and news-type apps, this model places content behind a pay wall.

  • Pros: Promotes engaged users and creates a regular, ongoing revenue stream.

  • Cons: Requires regular, high-quality content creation that will entice users to maintain subscriptions.

In App Purchases: 

The biggest source of revenue in free apps, this model allows you to sell pretty much anything, as long as it seems like a logical extension of the app experience.

  • Pros: Low risk and high profit potential. Good flexibility with affiliate and partnership programs.

  • Cons: App marketplaces can take a sizable chunk from your in-app purchases. Safeguards are also necessary to prevent unauthorized and accidental purchases.

Partnerships:

With this model, you work with another business, allowing it to offer products or services in your app for a referral fee.

  • Pros: Usually well-received by users as long as the content is valuable and relevant.

  • Cons: Can be difficult to find partners with products or services that align with your users.

Things to Consider

Many times, successful monetization comes from effective trial and error. Depending on your particular app and your specific goals, you may want to test various methods to see which works best. You should also consider blending monetization models if you can do it without overwhelming or alienating users.