You’ve heard of apps like Instagram and Candy Crush making millions of dollars or being bought for millions of dollars, which makes sense when all your friends have been addicted to them like crack. Candy Crush makes billions of dollars a year with no problem. Now what we’re all wondering is how the hell do they do it?
First of all, there are many different monetization models when it comes to mobile apps and different companies choose different models depending on what works best with their app and their business. Candy Crush utilized in-app purchases as well as social media. In the game you can either buy more lives when you die or wait an eternity (thirty minutes) to continue playing. These in-app purchases (IAP) are called micropayments and are usually under $5. If they have millions of users spending $5 a year in their app, you do the math. It’s a lot of money being made for not a lot being spent on the user’s part. The app also links to Facebook where it becomes more social so people can share their lives and progress and not feel like they’re playing alone in their bedrooms, even if they are. Both of these tactics were vital in their success, but might not work for other kinds of apps.
Before you decide how you’re going to make money, there are a few different revenue streams to look at. You can go with paidmium or freemium models, pay-to-download, or in-app advertising. It’s important to consider each one as well as whether or not you want social aspects incorporated and experiment if you need to in order to figure out which one works best with your users and your app.
- Paidmium is the strategy where a user must first pay to download the app and then sees ads within the app or is encouraged to make in-app purchases. It requires users to pay more than once but tends to not bring in as much revenue as in-app advertising and freemium models.
- Freemium apps offer a free version of the app and then offer purchases within the app, just like buying lives in Candy Crush. This also includes apps that offer monthly subscriptions, which can be perfect for products that users depend on or need regularly. Keep in mind that Apple and Android both take a 30% cut of your revenue from in-app purchases as well as download costs.
- Pay-to-download apps are on the decline except when it comes to productivity apps and niche markets and they don’t bring in nearly as much revenue as freemium or advertising models. Most users gravitate toward free apps versus ones they have to pay for.
- In-app advertising can be a very effective way of bringing in revenue, but it’s important to figure out what format of ads works best for your product, whether it’s banner ads, interstitial ads, or video ads. You also don’t want to piss of your users with ad after ad, causing them to condemn your app forever.
When you’re deciding which monetization model to use for your app, you need to keep in mind who your users are and what your product is. Nobody will want to download an app they have to pay for if they can’t even tell what the hell it is. At the same time, nobody will want to continue using a free app that’s littered with ads or bugging them to buy something every five seconds. However, if your app is enticing enough for a user to be willing to spend money, then a freemium model may work perfectly. You just need to consider the functions and features of your app and whether users will want to pay for them or not.
With mobile users spending an average of 127 minutes on their phone a day and having 65 apps installed on their phone, it’s a great opportunity to make money from something that will play a big role in someone’s daily mobile usage, but in a small amount of time each day. It also means you have to carefully consider the pros and cons of each option (look out for more detailed posts on this in the near future) and understand the importance of having a monetization model that fits into your app effortlessly and adds to the user experience rather than taking away from it. You want to draw users in, not away. If you can figure out the best way to take advantage of that opportunity, you could find yourself swimming in a pool full of money.