At first glance, the outlook for app developers looks bright. According to Statista, there were 178.1 billion mobile app downloads in 2017, and projections for 2022 estimate that number will climb to 258.2 billion. Although the number of downloads is growing, however, it’s not necessarily an indication that developer revenues are increasing at the same pace. Users, whether business or consumer, tend to look for tools they can use free of charge. So what’s the secret to monetizing apps that earn revenue and still have a healthy download rate?
Strategies for Monetizing Apps
Beyond requiring users to pay before they download, there are other effective options for monetizing apps:
- Offer your app through app stores. For a fee, you can make your app available through app stores such as Google Play Store and Apple’s App Store. Even if your app is designed for a narrow target audience, you can still benefit from the added visibility an app store offers.
- Offer both free and paid versions. Give users the option to upgrade from a free version to a paid version to unlock additional features.
- Offer your app on a subscription or Software as a Service basis. Add value by providing support or additional features.
- In-app purchase: Offer your app free of charge, but require payment for items within the app. For example, an app for social media management could charge a fee for stock art accessed through the app.
- Payment residuals. If the user can make purchases through your app, partner with a payment processor and receive revenue with each transaction.
- Provide advertising space to companies with products related to your target industry or personalize ads based on the user’s online browsing history. Remember, however, to find the right balance so you don’t diminish the user experience. There are a number of platforms available to help integrate advertising with your app.
- Cross-selling. Work cooperatively with a developer of complementary software to expand your reach and to add value by offering a comprehensive solution.
- White label. Solutions providers or B2C businesses in your industry may want to purchase a fully developed solution that they can brand and offer to their customers. Consider white labeling your solution and selling rights to these companies.
- Ready to expand functionality or take your app to a new audience? Investors may be interested in being a part of your company’s growth. Negotiate a deal that’s mutually beneficial.
Best Practices for Maximizing App Revenue
Not all of these strategies will be appropriate for every app. Depending on your product and your user base, you will need to determine the right strategy— or a combination of strategies — for monetizing your app to yield the greatest return. Regardless of the methods you choose for monetizing apps, however, there are some best practices to follow to maximize revenue:
- Protect your intellectual property. If people are using an unlicensed version of your app or disabling revenue-generating features, you lose income. Take measures to prevent reverse engineering, theft, and fraud.
- Base decisions on data. When you package features for free vs. premium versions, don’t guess. Track use to learn who is using your app, how they are using it, and which features they use the most. Build versions based on which features your users would be most likely to pay for. With the right data analytics program, you will be able to segment your user list and create profiles of the people who are using the app, which will help you be more effective at marketing and for direction with future development.
- Build in adaptability. Embed code into your app that allows you to adapt features easily so you can change packaging and pricing in the future.
Don’t approach monetizing apps as a one-time task. Revisit your plan throughout your products’ lifecycles. As the industry and user preferences change, you may find you need to make adjustments to maximize revenues. It’s worth your time and attention: You developed a great app that provides users with a lot of value— make sure it is providing your business with value as well.