Google Play and App Store have millions of applications that users can pick and choose to download and spend on. In these leading marketplaces, while there are apps like Pokemon Go and Snapchat that are making millions in revenue, there are also apps that make hardly $1000 per year. But why is it so when users literally need a mobile app for almost everything? That’s where a monetization strategy comes into play. It helps app founders create a framework for earning money for years.
Step 1: Understanding Your Mobile Apps and Audience
The first step into creating a monetization strategy for your Mobile Apps is to deeply understand your target audience and the market you are tapping. While you would have already done it during the product development strategy or the ideal validation phase, it’s still not too late if you haven’t.
Think about:
- Your app’s purpose
- The unique value proposition of your Mobile Apps
- Users’ preferences and demands
- Target users’ problems and pain points
- The location and income segment of your target audience
- The professional or business affiliations of your target audience
- The purchasing power of your audience
- Their willingness to spend money on app
To deepen your analysis, also think about factors like geographical or medical history of your target users, the time of the day or week or month or year when they’ll use your app and so on.
Once you know the type of audience you are targeting, you’ll have a better idea of their affordability, willingness to spend and appetite for your app’s features. After this, you decide which app monetization strategy is best for you.
- If you are targeting an elite group that values user experience above all – go for subscription.
- If you have a target audience that is a mix of professions and may choose to spend, go for the freemium model. Give basic features for free and earn from ads. Give premium features for a membership.
- If your target audience is limited, but there are a lot of competitor apps, then go for a free app – and earn from ads, sponsored content, featured listings and data monetization and maybe in-app purchases.
If you are currently in the process of building and launching a mobile application and are working with a reputable mobile app development company in Dubai, it’s likely that their product development strategist will share the monetization framework with you. Match the framework with yours and look for the monetization strategies we are discussing in the next section.
Top 5 Monetization Models for Mobile Applications
- Freemium Model
The freemium model has become increasingly popular among app founders – because in a way, it utilizes all the monetization models in one strategy and caters to different segments of target audience. In the freemium model, app founders offer a basic version of the app for free, then premium features are through in-app purchases or subscriptions. Users can experience the app’s core functionality before deciding to upgrade for additional features or content.
One classic example of the freemium model in action is Spotify. The music streaming service offers a free tier with ads, while premium subscribers enjoy an ad-free experience, offline listening and other perks.
- In-App Advertising
Different types of ads and featured content make the most lucrative monetization strategy for apps that have an engaging user experience but a lot of competitors, for example social media and games. These are suitable for apps with a large user base.
App founders can choose from various ad formats to choose from like banner ads, interstitial ads, native ads and rewarded videos. The key here is to find the right balance between monetization and user experience to avoid irritating your users and interrupting their user experience.
Take the example of apps like Facebook and Instagram. These are social media sites and effectively utilize in-app advertising to generate revenue but never compromise on user experience.
- Paid Downloads
This is the conventional paid download model where app founders set a one-time price for the app download. We have seen that this initially puts a price tag on the app and may hinder the initial reach for the app but is an ideal option for apps targeting niche audiences.
However, there are certain factors that play an important role in determining if you’ll be able to successfully earn from paid downloads. Think about your app category, competition and perceived value when deciding the pricing structure.
Think about games like Monument Valley. It has found success with the paid download model by delivering exceptional gameplay and stunning visuals and so the experience actually justifies the upfront cost.
- Subscriptions
These are monthly membership fees or charges that users pay to continue using the app. App founders offer access to premium content and features through recurring subscriptions – and let’s not think that the price tag here limits the revenue because most apps currently utilizing the subscription model are doing well.
A lot of apps also offer their ad-free versions on subscription models – ones with high-end user experience are making money with this model.
Apps like Headspace, a meditation and mindfulness app, offer subscription plans with varying levels of content and features to cater to different user needs and preferences.
- Sponsorships and Partnerships
These are mostly influencer sponsorships and B2B partnerships – but they can be leveraged combined with other models like subscriptions. You can collaborate with brands and businesses for sponsored content or co-branded features or sell corporate plans that employers buy for their employees as part of the recruitment benefits. These can be a mutually beneficial strategy because you’ll get money from recurring plans and companies improve their branding and reputation.
Think about the Calm app – it currently supports corporate plans and employers interested in the mental and emotional well-being of their employees are sponsoring them.
Factors to Consider When Implementing Monetization Strategy
Once you’ve chosen the right monetization model for your app, the next step is to integrate it into the user experience – in a way that it looks part of the experience and not a money-making trick.
Whether it’s through in-app purchases, ads or subscriptions, app founders have to strike a balance between monetization and user satisfaction. I would recommend analyzing the experience before and after integrating monetization strategies through techniques like A/B testing and gathering occasional user feedback.
Also use app analytics to optimize and improve your monetization strategy.
Legal and Ethical Considerations
While you generate revenue, you need to also prioritize user privacy and adhere to relevant regulations such as GDPR and CCPA.
Maintain transparency in advertising practices, data protection measures and ethical business practices to build and retain trust with your audience and create a positive brand image.
I also recommend app founders to implement robust data encryption and anonymization techniques to safeguard user data and ensure compliance with regulatory requirements.
Monetization Strategies of Leading Apps
These are case studies of successful apps on how well they have curated their monetization strategies to their apps into scalable businesses – while only increasing user acquisition and never compromising on experience.
- Snapchat
Snapchat is widely known for helping users enjoy the moment – and it has features like disappearing photo and video messages. It primarily monetizes through advertising. The app offers various ad formats, including Snap Ads, Story Ads and sponsored lenses, which allow B2C brands to engage with users in creative ways. Additionally, Snapchat introduced premium features like Snapstreaks and Replay and all users can purchase them through in-app purchases.
LinkedIn is the professional networking platform and it is actually a case study of monetizing the B2B audience. It utilizes multiple monetization channels. Its premium subscription service, LinkedIn Premium, offers features such as InMail messaging and advanced search filters for job seekers and recruiters. LinkedIn also generates revenue through sponsored content, display ads and recruitment solutions for businesses.
- Facebook and Instagram
As two of the most widely used social media platforms and owned by the same Meta group, Facebook and Instagram, utilize similar monetization strategies. They leverage targeted advertising to deliver relevant ads to users based on their interests, demographics and online behavior. Both platforms offer various ad formats, including sponsored posts, stories and carousel ads.
- Tinder
Tinder is the most popular dating app and it monetizes through its premium subscription services, Tinder Plus and Tinder Gold. These subscription tiers offer features like unlimited swipes, passport to swipe in different locations and Super Likes. Tinder also generates revenue through ads and in-app purchases.
- Calm
Calm, also mentioned earlier, is a meditation and mindfulness app and you can also make a web or web app for this by visiting website development company Dubai that adopts a subscription-based monetization model. It offers a free trial period with limited access to its content, after which users can subscribe to Calm Premium for full access to guided meditations and sleep stories. Calm also partners with corporates for sponsored content and collaborations.
- Uber
Uber is the ride-sharing and food delivery service. It generates revenue from commissions and transactional fees charged to both riders and drivers. It takes a commission from each ride or delivery made through its platform. Additionally, Uber offers premium services like UberX, Uber Black and Uber Eats Plus, which come with higher fares and service fees.
- Subway Surfers
Subway Surfers is the most endless running mobile game which is primarily free and utilizes a combination of in-app advertising and in-game purchases to generate revenue. The game offers players the option to watch rewarded video ads to earn in-game currency, power-ups and additional lives. Subway Surfers also sells in-app purchases for costumes like character skins, hoverboards and boosters.
- Pokémon GO
Pokémon GO is an augmented reality (AR) mobile game developed by Niantic in collaboration with Nintendo and The Pokémon Company. The game has utilized a multifaceted monetization strategy. The game offers in-app purchases for items such as Poké Balls, Incense and Lucky Eggs, which also enhance the gameplay experience and aid in Pokémon catching and training.
Pokémon GO also features sponsored locations and events in partnership with brands and businesses. This provides brands with increased foot traffic and exposure to players, who later might get interested in buying products or services. Furthermore, the game offers a premium subscription service called Pokémon GO Plus, which unlocks additional features and perks for dedicated players.
Conclusion
So this quick blueprint on mobile apps monetization concludes here.
