Mobile Application Monetization

With over 3 billion smartphone and tablet users worldwide, it is no surprise that the mobile app industry is booming. Standing out amongst the competition has never been so challenging and the path to successful monetization depends upon a defined and proven process.

Profitability for mobile applications requires the integration of a strategic revenue model. When finding the right model to fit a specific business plan there are several approaches that can be taken. The most common models for app monetization are free, paid, subscription, freemium, and paymium. These methods are designated in regards to the applications target market and competition. 

The process of app monetization requires rigorous market research and comprehension of the users persona and behavior habits. Mobile apps can act as an extension to a business, and subsequently, one of the most challenging pieces of this puzzle for app creators is ensuring a viable plan for profit.

Free Applications: Everybody loves free stuff!

The title “free” may not sound initially appealing to developers and stakeholders but the hidden opportunity is immense – as free apps conceal a high amount of earning potential.

The main methods for monetization of free apps are advertisements and marketing tactics. Once an app gains momentum and popularity it can be used as a catalyst for online advertisements such as displays ads, banners, emails, and videos. Additional earning opportunities lie in building a reputable brand which can generate partnerships for affiliate marketing. If an app has a high-volume of user downloads then developers can also collect and sell data to businesses and government.

Freemium Model:

The freemium app revenue model is considered the most common and widely-used practice for app profitability. It typically stands out amongst the other pricing models because it offers much more flexibility. The freemium model is a type of digital upsell where the initial download is free-of-charge but then will contain premium or paid features that can be acquired through in-app purchases. The freemium approach is the most fashionable revenue model in app development today but it does come with some risks. If the value offered isn’t equivalent to expectations users are quicker to switch or cancel in-app services or purchases as the probability of a viable (possibly free) substitutes is likely. Offering a reasonable selling point and a highly competitive service are two key approaches to profitably for freemium apps.

Subscriptions Models:

The subscription model consists of a recurring subscription agreement that may have an initial trial period and a free-of-charge download allowing the user to test run the app before they decide to commit to their purchase.

Paid Model:

This represents apps that require a one-time single payment upon initial download then allow users to access the entire app and all of its features. This approach has lost momentum recently due to the expansion of free and freemium apps. The paid model is considered to be the least successful and is not recommended unless the product is exceptionally competitive and lacks viable substitutes. Even then, it is recommended to keep the price as low as possible to avoid deterring users from downloading the app or leaving the market open to new competition. If the app is paid and the user experience is poor then it is more likely the product will receive negative feedback and reviews from users.

Paymium Model

This model combines the paid and freemium approaches, users will purchase the app upon initial download and then will have the option for additional in-app purchases for premiere features and content. Similar to the paid model, the paymium model requires a competitive product to ensure the value of the purchase and also requires dedicated development and design teams to be constantly updating the app to consistently offer the best-in-class features and content to keep users engaged. If the product solves a difficult challenge or offers a unique service the paymium model can have enormous potential for new income and profit streams.

The monetization model utilized for an application has the ability to make or break a project. Adopting a strategy based on detailed market research and overall project expectations are key steps toward choosing the best one.

↑ Go up