Developing an app takes a lot of hard work, such as thorough market research, features, and ideas to make your app stand out, graphic designing, and getting it approved to be on the App Store. An individual cannot handle all the work by themselves, and often, the person that comes up with the idea of the app has to seek out skilled professionals to help him. Putting together a team of trustworthy and experienced designers is hard enough. So, after all that work that goes into developing an app, how does one make a profit?
Did you know that the global app revenue market reached a revenue of over 318 billion USD in 2020? It is a massive industry, and you too can benefit from it, provided you know the right ways to do so. There are many mobile app revenue models or monetization trending methods to help you make money from an app, some more popular than others. This article introduces you to some of the most common ways you can make money as an app developer and how to implement them.
4 Most Common Mobile App Revenue Models
Listed below are the best app advertising revenue models to make significant profits from an app.
1. In-app Advertisements
This is the most common way for apps to make money, and even apps that are free to download can significantly benefit from the advertising method. In this revenue model, apps display advertisements within the application. For instance, how apps often promote brands with short videos and product images. In turn, the companies pay you every time you run an ad for them.
Therefore, there is no limit to how much an app can earn through advertising, as it only increases over time when the number of downloads and users goes up. Moreover, if the app is engaging enough to entice the users to stay, they might willingly spend more time watching short videos until the end. Another way of making them stay is by rewarding them with something at the end of the video. For instance, games that allow you to resurrect after watching a short video.
Another excellent app revenue model example is Instagram. It is free to download and use; however, it rakes billions of dollars in ad revenue. As the number of users is very high, Instagram monetizes that fact and helps businesses reach a higher audience.
However, it is critical to find the right balance as too many ads may cause a drop in the number of users. Thus, short and scattered ads are the way to go!
Subscriptions are an app advertising revenue model that benefits you in the long run. If we compare it to the running ads where you get paid by the ads, subscriptions help you get paid over some time, often recurring. For instance, Netflix’s subscription model earned a revenue of almost 30 billion USD in 2021! So, when it comes to generating long-term and recurring revenue, a subscription model is a fantastic option.
An easy way to convince users to opt for a subscription plan is by providing them with a free trial period with the premium features. Doing so allows them to get a feel of what your app offers and if it will be worth it for them to pay the subscription fee. It is also advisable to have options within the plans, so they have the option if someone wants to opt for a lower-priced subscription. Otherwise, many potential users may turn away upon seeing that they have to pay without even knowing whether the features you’re offering will be beneficial to them.
This mobile app revenue model is great for constant cash flow as you do not have to actively look for new users. Moreover, user data allows you to display personalized ads and earn more revenue. However, it may not be suitable for all apps and business models, and you may have trouble determining whether to classify a feature as premium.
3. In-app Purchases
Another widely used in-app advertising revenue model, in-app purchases are easy to implement and convenient for the users. This model is based on the products or services you would usually provide for free, but at a basic level. So, if the users want to get an upgrade, they must pay for the advanced tools or services. Thus, even when you provide the basics of the app for free, the profit made by in-app purchases will help you overcome the costs.
Freemium is a type of mobile app revenue model where you have to initially offer the application at no cost. Essentially, it is free to download and use; however, the users must pay to unlock advanced features. App developers vastly use this model to catch users’ attention by distributing it for free and later on monetizing their user base. Thus, they are still able to profit from the application.
One of the best freemium app revenue model examples is Spotify. The app offers complete access to users for free, supported by some ads. It even provides the option to watch longer ads for a 30-minute trial of the premium features. Occasionally, they even offer three months of the free premium trial, so the users can get an idea of the paid features.
The only thing you should remember is to not bombard the users with ads and that the App Stores will charge a commission on each user that pays.
If you wish to implement any of the mobile app revenue models to your app but require data to run personalized subscription plan for a better user retention rate, Appflow.ai has got you covered! We provide not only data related to user preference but also their location and other important information, such as who are your potential buyers.
We use Artificial Intelligence to generate Suggestions so you can receive advice on what to do with your data! Our goal is to become your go-to for easily accessible subscription analytics tool, so you can boost your mobile app subscriptions in a short time!
Mobile App Revenue Models: All You Need to Know