Show Me the Money: How Mobile Apps Make Money
It’s estimated that somewhere around 90% of apps in the app stores are able to be downloaded for free, causing many clients to wonder how app creators are able to actually make money. Some apps are designed to make money if they are connecting to a wider business, such as shopping apps. This has only increased now that online casinos are more popular than ever, leading to a boom in gambling apps. However, other apps exist independently, meaning that they need to make money on their own. There are a number of different ways to earn revenue, or “monetize” your app, but no one of them is a silver bullet. The right paid user experience is heavily dependent on your target market, so it’s important to make sure you understand your audience before selecting a monetization model.
We don’t have the space in this post to talk about how to familiarize yourself with your market and competition, but we do provide those insights in our free e-book Inspiring Apps: A Business Perspective on Building Mobile Apps. In this post, we’ll review the most common monetization strategies available so you can figure out the best way to make money off your app.
As you read the options, we encourage you to think about what’s unique about your app and what people would pay for the ability to use it. Likewise, it’s important to contemplate your financial situation and timetable as you select a monetization model – can you initially forego revenue to gather users and perhaps gain more revenue overall? Some models earn more money initially while profits come later in others.
This frequently employed model enables you to make money by selling advertising space within your app. The benefit to users is that the app, and potentially all of its features, remain free to them, while you obtain revenue from the advertisers.
In-app ads literally come in all shapes and sizes, with various placements and formats typically commanding different value. Moderate and targeted advertising is most effective, so your goal is to develop a sizable user base and gather information on the people who use the app. This enables you to acquire advertisers who are interested in reaching the types of users you have.
Facebook is an example of an app that does this well, gathering vast amounts of data that enable them to serve up highly targeted ads. Advertisers are willing to pay (for either impressions or clicks) because they feel confident their ad will be seen by the right kind of people.
While ads do offer advantages to the user, people can be annoyed enough by the ads to stop using the app. Interestingly, this has led to an another revenue stream – paying for an ‘ad free’ experience!
A relatively new model within monetization, sponsorship involves partnering with brands who provide users with rewards for completing certain in-app activities. No actual space within the app is dedicated to a traditional ad, but rather the sponsorship is integrated into the function of the app. The app creator obtain a share of the revenue generated when rewards are redeemed, in a way somewhat comparable to traditional affiliate marketing.
For example, a fitness app might partner with a sponsor brand to offer a discount coupon for gear. The coupon is obtained by the user if they achieve a particular goal. When the user makes a purchase with the reward coupon, the app creator is then paid a portion of the revenue from the redeemed rewards.
A similar ad-free sponsorship model has been created by apponsor. apponsor works to align brands with apps that might be utilized by their target audience. The brands pay the app developer a fee to sponsor the app, and in return, the app asks the user (on initial download) to sign up for the sponsor’s newsletter. The app then remains ad-free for the duration of use.
In this model, people are able to enjoy the app for free, but are offered the option to buy additional goods within the app. Users are often motivated to do so because the app experience is typically improved by the purchase of these optional features.
The model is very common in gaming where players buy items or gear, such as a sword that offers special powers or virtual currency, in order to increase their likelihood of success. For example, in Plants vs Zombies 2, there are upgraded/premium plants that users need to purchase if they desire to advance to to a higher level.
While extremely popular in games, in-app purchases are not limited to gaming. Music services like Apple Music offer in-app purchases in order to allow someone to buy a song. Similarly, cooking apps like The Photo Cookbook offer additional sets of recipes via in-app purchases. While the in-app purchases in most gaming apps are consumable (e.g. you use them up when you play them), the purchased content in these other types of apps are available in an on-going way once acquired.
Another monetization model, commonly referred to as “freemium,” offers users a basic set of services for free, then provides access to premium or proprietary features for an additional fee.
Freemium models can be a great way to get users hooked on your product. Since there is no risk to downloading the app, they are more likely to give it a try. The skill comes in knowing how much access to offer so that all users are reaping benefits, while still gating features that people would be willing to pay more to get.
There are many apps in the business arena that do this well. Dropbox, a popular cloud storage platform, offers a free plan that enables some simple file sharing and backup. The storage limit is fairly small, but it allows people to see how easy it is to use the platform and entices many to sign on for more storage, for a fee. Similarly, Evernote, a platform that helps people to “capture, organize, and share notes from anywhere,” has a free version that works well for one person on a limited number of devices. As people experience the benefits of using it, they often want to have accessibility on more devices and/or see benefits to using it with a team – both services that are offered for a fee.
In this model, users pay to access content for finite but renewable durations. The model is very similar to the freemium model, but typically focuses on gating content rather than features. In both cases, though, successful apps are those that provide updates that regularly improve the app experience, ensuring that users want to continue their subscription.
Most subscription apps allow users to view a predetermined amount of content for free and then prompts them to sign up for a paid subscription to get more. Subscription-based apps offer steady source of reliable income, which makes planning and investing in upgrades much less risky. Many subscription models also offer discounts for longer subscriptions, which is a win-win for both parties.
Some of the most well-known subscription apps are those that offer music or news, such as Spotify or WSJ. In general, entertainment or lifestyle type apps are most suited to a subscription model since content can be limited to articles read or videos watched, etc. Venture Beat offers some great insights on how to succeed with this model.
While we’ve been focused on how to make money from apps that are able to be downloaded for free, we’ll close by noting that there is also the option to generate revenue by requiring payment to download the app. The key to success with this model is solid marketing across all channels, as you must convince the potential user upfront that your app offers something unique. Further, since paid apps have only one point of monetization at purchase, ongoing marketing efforts are required to keep acquiring new users and more revenue.
While numerous options for creating revenue exist, the most successful strategy for your app will be the one that integrates well enough that it feels like a normal part of the app experience. We’re always happy to talk with our clients on which model – or combination of models – could be most effective for you, so please contact us.
With technology and a collaborative spirit, a meaningful new brand is born. BOULDER, CO -- After nearly a decade and a half of the same look and feel, InspiringApps is glowing up–and it only took pivot to remote work for inspiration to strike. The company, an industry-leading web and mobile app and software solutions group headquartered in Boulder, officially launched an innovative new brand and website encompassing its roots and plans for the future. A Collaborative Innovation While some companies struggled to work collaboratively and adjust to the new reality of remote teams, the InspiringApps team took on the massive challenge to become more cohesive than before. “Emerging from over a year of pandemic isolation and recognizing that InspiringApps had used the same branding for over a decade, it was the perfect time for a change. Our teams are doing amazing work for start-ups and huge enterprises alike. I welcomed a fresh perspective on our logo and color schemes,” Brad Weber, founder and president of InspiringApps shared. InspiringApps’ new logo reflects the company’s collaborative nature, combining efforts from our UI/UX and marketing teams. “We collaborated a lot remotely; we had Slack open, cameras on, and worked from shared Adobe XD artboards, moving elements around while we discussed them. It was a powerful way to leverage technology for a smoother, more collaborative process,” Becca Collins, UI/UX designer, explains. “Somehow, working remotely with shared screens produced even better results than we could have achieved if we were in the same office,” Aaron Lea, Art Director, noted. A Meaningful Brand The team started with a concept that encapsulated the InspiringApps foundation: the original location in Boulder, Colorado, the code that developers use to build web and mobile apps, and the core values the team holds at the center of everything they do. Designers visually translated these elements into three simplified shapes: a triangle to encompass the mountainous Flatirons of Boulder, and a semicolon and less-than symbol representing code. Designers merged the three symbols into an abstract I and A–the company’s abbreviated initials–for a unique and meaningful new logo. Although the company leads with intentional design with clients, rapid growth brought an increased demand for the services and little time for internal branding. For several years, the original design established the InspiringApps brand, but that logo had limitations. “The logo served us well initially, but it was hard to work with. It was time for a change,” Aaron said. A newly designed dynamic website accompanied the brand’s unveiling. On the new site, visitors can find valuable resources and downloads, case studies, and advice for companies considering a mobile or web app. The site also includes case studies from past clients to inspire new ideas. “Our goal is to provide a design and web experience that reflects our mission and core values. We’re committed to putting just as much care and intention into your project as we did with our own,” Brad shared.
9 days ago
Extensive experience with startups and enterprises encourages success in the role Boulder, CO – InspiringApps, a premier app design and development provider, announces the addition of Jonathan Laramy to the senior management team as Director of Sales. Jonathan will plan and execute InspiringApps’ sales strategy and continue the company’s steady growth with a focus on enterprise clients. Jonathan has deep experience navigating complex sales cycles with multiple project owners at all levels of the organization. With a successful history of establishing and nurturing long-term relationships with strategic customers, Jonathan brings loyalty, integrity, and transparency to the InspiringApps organization. “InspiringApps has enjoyed steady organic growth for years. I’m excited that Jonathan will help to accelerate that growth, especially with enterprise customers, which has been the source of much of our new business in recent years. Jonathan’s style and approach to sales are very much aligned with our practices at InspiringApps,” Brad Weber, president and CEO of InspiringApps, said. “App development has so much potential to improve customer experiences and help companies communicate better with their teams. I’m honored to be a part of InspiringApps, and looking forward to bringing innovative solutions to more enterprise companies,” Jonathan said. Jonathan’s experience spans various industries, including retail, manufacturing, on-demand services, real estate, property management, and music. Jonathan launched his career as a key sales manager at Move.com, one of the most successful dotcom companies of the early 2000s, and has enjoyed a successful career in sales in more than a half-dozen companies. About InspiringApps InspiringApps is a web and mobile app design and development company that crafts beautiful and engaging apps that inspire how people live, work, and play. With over 13 years in business and experience building hundreds of mobile and web apps for top global brands and startups alike, InspiringApps helps transform organizations and consumer experiences. Contact: Stephanie MikulsMarketing DirectorInspiringAppsBoulder, COstephanie@InspiringApps.comwww.InspiringApps.com
2 months ago