Making Money from Apps

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As app developers, one of the most commonly asked questions we receive usually relates to “how do I make money from my app”. Whilst there are many variables to take into account, like “target market” and “purpose” for example, it generally boils down to “free apps vs. paid apps vs. freemium apps”.

The common misconception in the marketplace is there is only one way to generate revenue from an app – and that’s with a paid app! However, this is not necessarily the case. There are many ways to generate an income stream from your app and it’s easier than you think!

Firstly, it would be sensible for me to point out here that your app developer should always flesh out the revenue generation strategy before commencing the app development process. I preface this now because iPhone, iPad and Android apps should be uniquely designed and developed to align to the revenue generation strategy (if applicable) – right from the outset.

So which monetisation strategy will work best for you? Unfortunately there is no direct and effortless solution to this question. It generally starts in the initial consultation with your app developer.

In the meantime, let’s take a look at the three most common revenue models.

Paid apps are apps that make you money when consumers download your app from the App Store or Google Play. Whilst the price of an app ranges immensely, generally you will see most paid apps range between $1.29 and $2.99. Whilst there are many variables to consider, paid apps are perceived as the easiest way to monetise your apps.

A free app is exactly that – no cost to the end user to download your app. Free apps exist for many reasons, but they’re generally offered to consumers to keep up with the competition or to generate bulk traffic. Consistent traffic to your app may enable you to place banner advertising within your app to generate an income stream from click throughs and impressions and/or may open up affiliate marketing opportunities for you.

On the other hand free apps sometimes disguise themselves as a “lite version” for a paid app. This means an app developer may construct two versions of the same app. For example, the free app may have limited functionality, banner advertising, push notifications etc. Whereas, the paid version of the same app may contain full functionality, no banner advertising and no/limited push notifications. It’s a great way to cultivate interest and loyalty towards your paid version.

Lastly, freemium apps are widely regarded as the fusion of both free & paid apps. For example, let’s use an app game to describe the freemium model. Firstly, you download the app for free and commence playing the app with full functionality. However, as you become increasingly engaged in the game, progressing from level to level, you finally reach level 4 and it doesn’t allow you to advance further without downloading the paid version of the app by simply “clicking here”. This method is a great way to generate traffic and interest in your app at first, without the price tag, with the view of converting the consumer into a paid customer! This strategy is often referred to as “in app purchasing”.

In closing, choosing your revenue model always needs to be considered and well thought out. Free doesn’t necessarily mean traffic and paid doesn’t necessarily mean profit. The app purpose, target market, and marketing strategy play a big part in formulating the right monetisation strategy for your app.  To find out how The App Team can help you monetise your app idea, get in touch today.

The App Team is based in Brisbane and specialises in app development for iPad, iPhone & Android.

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