Mobile app development and mobile apps, in general, have been making billions of dollars over the last few years. The rising usage of smartphone devices has cast an impeccable opportunity for innovators to develop mobile apps to solve problems.
Moreover, smartphone manufacturing companies have come up with more affordable devices for a wider market of adopters. These mobile phones are also becoming more user-friendly for older generations to use.
With all these emerging trends, mobile app development has become a channel for people to build businesses, startups and even solve their own problems. When these app developers solve a problem, they have the chance to get in between the exchange of value between users.
When that happens, mobile apps can make money.
Value Creation FIRST
Before wanting to make money with the mobile app, we have to ensure that the app that has been created has value to users. We cannot build an app that is not useful to users and expects to make money out of it.
Therefore, the crux of monetising mobile applications is to first give as much value as possible in the mobile app. This allows you to build a user base easily.
With the user base and initial traction, you can monetise this target market more effectively and efficiently.
If you do not have a mobile app developed yet, look around you and think. I’m confident that you will find problems that can be solved with a mobile app.
For example, do you see people feeling anxious because they are failing exams? Create a highly educational proven method to study, using an app!
Do you see people not being able to find parking lots? Create an app to solve it!
The key is to SOLVE PROBLEMS in your mobile app. The more important the problem, the better your value. In addition, the more people this problem affects the better your value.
Mobile App Monetisation Strategies
Now, since we have defined what it takes to build a mobile app that is valuable to users, we can start to think of monetisation strategies. There are 7 main monetisation strategies that we will be covering. They are:
- Selling a Product/Offering a Service
- Mobile App Advertising
- Paid Apps
- Freemium Model
- Subscription Models
- In-App Purchases
- Time Saved
Selling a Product or Offering a Service
You can sell a product using a mobile app. For example, starting a clothing business with mobile apps as your main marketing channel. This can be a unique advantage for your business.
If you have a service that you have to offer, you can also offer a service. This is slightly more common in terms of mobile app development. Such a service can include ride-hailing, food delivery, etc. If you are a skilled locksmith, you can also offer a booking and scheduling mobile app for your customers.
In addition to offering your own products or service, you can also build a marketplace of products or service for your users. For example, instead of offering locksmith services, you can gather the leads and offer them to real locksmiths. You can then earn a commission from each sale that was made.
This is also part of the monetisation strategy.
As you can tell, mobile apps are very dynamic. It depends on how you orientate the mobile app to your favour. You can leverage tools and knowledge to monetise the mobile app.
Mobile App Advertising
Showing advertisements to users is the most common ways that mobile apps and websites make money. We usually can leverage on 3rd party software to show these advertisements. For example, for mobile app ads, we can use Google AdMob. Google AdMob gives you the ability to monetize your app with ads with their network of advertisers.
The payouts are dependant on the quality of the mobile app audience. These are usually calculated by every 1000 visits, e.g. $5/1000 visits.
In addition to using 3rd party advertising platforms, we can also use custom advertisements.
If you have a specific niche of users, for example, students, you can reach out to interested parties to post their products or services on the platform. In this scenario, you can use educational companies or game companies. Those are suitable for the demographics of students.
However, for this, it is harder to implement as you have to build your own advertising platform. If you have achieved enough traction and users in your mobile app, this is the best ROI in the mobile app. For example, Facebook and Google has built their own mobile app and web advertising platform.
Top mobile app development and mobile app companies generally use this for advertising as it is the most profitable option.
Another common way that mobile apps are making money is to get users to pay for mobile apps. This means that users have to pay a fee for the mobile app to be downloaded. This is the fastest way to get ROI from a mobile app since users have to pay even before using the app.
Mobile app developers generally use this if they have a good idea that shows its value for sure. If you need time for the user to see the value, then getting paid mobile apps is not the best idea.
The drawback to this is that it is a higher barrier to entry if users have to pay to use the software. Therefore, paid apps do not get many downloads if there isn’t a real need for users.
To counter the drawback of paid mobile apps, it is to use freemium mobile apps. In other words, to let the user try the mobile apps for free, then charge a fee for the full app.
This way, we have to position the mobile app development to satisfy the need of the workflow. In other words, the mobile app developers in charge of the app must understand this business need and develop the codes accordingly.
This is a very popular model in many successful startups. Users get a taste of how the app can help them improve their lives or save time. Then, they upgrade to more premium features when they feel like they need more from the app.
Subscription models are also another way to curb the drawbacks of paid mobile apps.
In most subscription mobile apps, there will be a free trial for the users to try out the mobile app. However, during the free trial (on average, the free trial is 2 weeks), the credit card information of the users have already been collected. After the free trial is over, the users will be charged and the subscription will start.
This causes a bit of unhappiness among the users. The alternative will be to offer a free trial before collecting their credit card information and block the usage of the apps the free trial is over to prompt payment for the subscription.
Although this way might reduce the number of people who subscribes, if your app is good, you will not have to worry about it.
One thing to note in the subscription model is that you will have to use In-App Purchases (IAP), instead of external payment gateways like Stripe or Paypal. This is a policy from Apple’s Developer Program. If external payment gateways are used for in-app functionalities, your app will get rejected by them.
Unless you are selling off-the-app items or services, it is better to integrate In-App Purchases for the mobile app development.
In-App Purchases are usually used for games. This is mostly to top-up in-game currencies to buy certain items or attain certain achievements. In addition to games, apps like Carousell have a credit system where you can top up credits to “bump” your listings to a higher priority.
Depending on how you intend to permutate the mobile app, it can also be very profitable. This is especially so when you have high amounts of traffic, as you will have the option to choose how to monetise your users.
Time saved is a different way to look at mobile app development monetisation. By saving time using mobile app development, you are technically getting returns on your money.
Therefore, if there is a task that you are doing manually currently, it is a good idea to try and automate the task using mobile app development. This way, you can save time. In essence, if your time is worth $30 an hour, and you are doing a form of paperwork daily, you are wasting about $11,000 every year. If you build a mobile app that saves 1 hour every day, you can save $11,000 with a starting investment of $4,000, depending on the mobile app development costs.
This can also be applicable to businesses. More often than not, companies are wasting time on tasks that can be digitised. Mobile app development solves these problems and saves time and more can be spent on more productive activities. Moreover, it might improve the customer experience for some businesses.
Why Data Is Important For Mobile App Monetisation
Monetising a mobile app is the easy part. The challenge will be to ensure that the monetisation process will not be too intrusive to the users. Therefore, it is a good idea to look at the historical data of the purchases from users.
For example, for the subscription models, what are the trends for the subscription? Are users opting out after the free trial? Are the mobile app users repeating the subscription after one year? These are data that should be needed to be known in order to bring better user experience to the users.
Therefore, instead of just an Android and iOS mobile app, we also need to have an admin panel with a robust dashboard to show comprehensive data. It is best if we can filter the data and export the data for further data analytics.
We have to look at the data to have a smooth mobile app monetisation progress.
Why Innovation is Important for Mobile App Monetisation
Out of these mobile app tactics, you should also come up with innovative strategies that can be a better idea than those we have pointed out. This can help you stand out from the crowd.
This is a type of mobile app blue ocean strategy that can be used to help you get better mobile app users. For example, instead of a pure subscription model, you can have multiple subscription models to choose from. For people who are not interested in investing in the app, you can offer them a cheaper solution. This can help you get some revenue instead of them refusing to subscribe at all.
Monetisation is something that all mobile app developers and mobile app startup founders have to go through. These are just some basic strategies that might be helpful in helping you kickstart the interesting mobile app development journey.
If you need help with any monetisation, feel free to reach out to us. We do offer mobile app consulting that can help you spark an idea for your next big project.
Contact us, SleekDigital, for all your mobile app development needs.