App Monetization, App Revenue Models
Apps can be monetized via paid models, freemiums, in-app purchases, and others. It depends on your business needs and targeted goals that which model you would like to choose from. Each model comes with a different set of benefits, shortfalls, and a different monetizing strategy. Let's see, which app revenue models have a best match with your business and its goals.
Model 1: Free App - Ad Revenue
In this model, your app will be free for users, and your revenue will come from ads shown by your app. Ad revenue model is a slowest money maker for which you have to keep some patience. Once your app gets fixed in a huge number of smartphones, it will give you a way of constant earning. Facebook, Yelp, etc are some successful examples of ad revenue model.
Characteristics
- It is easy to build traffic with free app
- From total app downloads, 95% are free
- Ad revenue model is quite challenging for startups
Model 2: Free App - Alternate Revenue Model
Alternate revenue model refers to offer an app at free of cost and follow the multiple ways of earning revenue from it. You can offer ads, deals, coupons, redirection to an eCommerce site, and other app monetization strategies. It means earning from the free app via different revenue models. Here, you are free to follow any strategy as per changing circumstances of your business or changing moods of your users. A popular app named Urbanspoon follows various revenue models including affiliate networks, ads, brand advertising, city search ads, etc.
Characteristics
- Appreneurs are free to follow and change the revenue model
- With alternate options, chances are more to grab the huge number of users
- Quite challenging to follow this model
Model 3: Paid App - Freemium Model
Freemium model includes two types of app: one is free to download for users and second one is a part of the upgrade with advance features for which users have to pay. Your free app will convince users to turn to upgrade version by paying for it. Freemium model is considered as the best money maker for apps of almost all categories like games, entertainment, utility, etc. StickTennis, Angry Birds, etc. are some great inspirations of the freemium model.
Characteristics
- Freemium model is a best way to promote your paid app
- With free app version, you can also use ads to earn revenue
- Appreneurs have to manage two apps
Model 4: Paid App - Price Model
Paid apps generate a direct and immediate income. But only few consumers get convinced to pay for the apps, they haven't used any more. For startups, launching a paid app had been an ever challenging task as their business name is not a brand on which users can trust and pay for their app. For big brands like Microsoft, it is easy to grab users even with paid app.
Characteristics
- A direct way to earn revenue, especially for big brands
- Quite difficult to get the users for a paid app
- Required to have a good traffic growing source
Model 5: Gaming App - Virtual Currency Model
Nowadays, virtual currency is the most profitable model in the app world. Gaming apps have their own virtual currency, which users can use to move to the further levels and to obtain this currency; users are required to pay real money. This model is connected with gaming apps and if the game is truly addictive in nature, then users will not wait a lot to pay for it. Some popular apps like Temple Run, Gunship Battle, etc. are additive games that easily convince the users to pay for virtual currency.
- Best revenue model for addictive games
- Easy to earn in a short amount of time
- Creating an addictive game app may cost you a lot
Model 6: An App - Subscription Model
Subscription model works best for magazine and video content publishers, but they have to put a lot of work to get the users sign up and keep up with a subscription on a regular basis. The developer has to maintain a constant innovation within the apps to keep up with this model as it is quite weak to hold the users for a long time.
- Only some apps can have an assured success with it
- Requires constant innovation by developers
- The most risky model to follow
Conclusion
It is not mandatory to use any one model listed ahead. You can even go for multiple models with one app like following a freemium model along with ad revenue, so when users switch to upgrade, they can get rid of extra ads. Opportunities are many, but you have to be creative to grab them and get the most out of them.
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