Mobile applications stores, be it Apple’s App Store or Google Play, allow publisher to sell their apps. Although it is an obvious way to monetize an app, it is not the only one. In this article, we will have a look at the various monetization means that are opened to apps developers.

Paid app

This is the classic and proven monetization method, well-known both by users and publishers. Some apps priced below one dollar have had a staggering success.

• The model is very straightforward, the revenue is propotional to the downloads
• 70% for the developer / 30% for the platform
• Pricing can be different from one OS to the other
• Some users may be reluctant to buy apps, mainly on Android
• With paid apps, you are less likely to reach a lot of users

Trial version

In order to promote a paid app, a developer may decide to make a trial/lite/free version. Although limited, it should enable the user to make up his mind about the quality of the app and urge him to buy the paid version.

• It multiplies the chances that your app will be bought (as long as it is worth it)
• This model is a particularly good fit for games (levels, maps, characters, items, … )
• Two versions on the store is a bit heavier for the developer

Advertisement

Often in the form of a banner or an interstitial, ads are used by developers who want to spread their app as largely as possible but still get some income.

• Mobile advertising companies mostly pay by the click
• Hard to estimate income from ads
• Ads must not alter user experience (slowness, misclicks)
• Ads integration should be part of the development process
• Ads must be well-targeted

Sponsoring

It is a kind of advertisement that prompts the user to carry out an action against a virtual good. This business model, particularly adapted to games, allows to target the audience very well and potentially to increase the revenue of the developer.

• Business model particularly suited for games
• Well-targeted audience, thus ads seem less invasive than purely random ones
• More users reached, thus potentially more income

Freemium app

This very fashionable business model trades digital content for real money. It is based on Apple’s in-app purchase or Google’s in-app billing, which can be implemented in both paid or free apps. Thus, developers can tune their business model at best. According to a study by Distimo, the freemium model is also more effective on Android than on iOS.

• Quality apps increase loyalty, thus profit
• In-app content must be worth the price
• Purchase process must be simple and fast (as few clicks as possible)
• 70% for the developer / 30% for the platform at each transaction
• Experience must be limited but not damaged otherwise the user may end up being frustrated

Ask yourself a few questions before starting

Each of these monetization method has its strengths and weaknesses, which must be measured before publishing an app.

Do you target a niche market?

• Yes: your app should be paid and relatively expensive (> $1)
• No: you may consider displaying ads

What value would the audience give to this app?

• < $.99: you may consider displaying ads
• otherwise: your app may be paid

Which platform is aimed at this app?

• iOS: a paid app can be successful. Users usually prefer to pay rather than having ads.
• Android: a paid app will not be as successful as on iOS. Unlike iOS users, Android users mostly prefer to have ads rather than paying their apps.
• Windows Phone: it is useless to make a trial version. In-app purchases are not yet available.

Is the app modular?

• Yes: a trial or freemium version is suitable

Does the app have long-term costs? (use of webservices, push notifications, … )

• Yes: ads can cover operating costs. It is also possible to consider subscription (recently on Android, quite tricky on iOS)

Finally, it is also possible to combine these monetization means. Disney does it with its “Where’s my water?” app: on the one hand a trial version with ads for other Disney apps, on the other hand a paid version with in-app purchase to unlock new levels. The business model should thus be adapted to the app and to the destination platform.