The boom in mobile applications continues unabated, and users are increasingly willing to invest money in mobile applications either by purchasing an application or by making micro purchases within it for additional benefits.
This is certainly a great advantage for us as developers, since it opens doors to make money by developing applications. Although some people think that making money by making applications is a simple job, the truth is that it requires a lot of dedication and perseverance.
Here are the key ways of making money within app stores.
This type of application is one of the simplest that currently exists; here, the developer establishes a price for their application at the time of publishing to stores, and the sales revenue is distributed between 70% for the developer and 30% for the store (Apple/Google).
Free applications with Micropayments (Freemium)
Developers and companies use this approach frequently. The applications are shown as free in stores; however, to be able to use certain functionalities within the app, users need to make micropayments, depending on the implementation of the application.
There are two types of products within the application: managed products and subscriptions.
Products within the app can be divided into two types, consumables and non-consumables.
These are payments that users make, and that may be repeated. Which means that you can re-buy the same product endless times.
The typical case is in game apps, when you can buy a certain amount of coins or currency, and each group has a different price. After making the purchase, you get virtual items, and you can purchase the same product again (the same group of coins). Example: Purchasing coins in PokemonGO.
These are payments that customers make to purchase a specific product, which means that after they buy the product, they can’t buy it again.
These type of products are generally used in the following cases:
– Payment for removing ads from the app.
– Payment to access a “premium” functionality of the application. Example: Unlock levels in Mario Run.
– Payment for a non-consumable virtual item. Example: Purchasing new plants in Plants vs. Zombies.
Just like with payment applications, the store takes 30% of the revenue.
This business model works based on a user signing up to a subscription within the application. This means the application requires the user to be subscribed to use certain additional functionalities.
You must select a period for the product with subscription, which may be monthly, quarterly, biannual, or annual, according to the application store.
Video streaming or music applications typically use this model, which allow access to their content with a subscription.
In this case, the store takes 30% of revenue; in the case of Apple, if the subscription of the user is more than 1 year, Apple only takes 15% of the revenue.
Free apps with ads
As well as freemium apps, free apps are used a lot nowadays; indeed, they complement well freemium apps.
These types of applications are free and do not have micropayments, but they do have ads or banners within the application in different parts, depending on how the developer decided to implement them.
There is a new model, which is known as: “Incentivized advertising”, which involves getting together and reaching an agreement with a company wishing to advertise. Then the developer includes this advertising in the application, whether with company logos or banners that only show information and announcements of the company. The amount and method of payment will depend on the agreement reached with the associated company.
After reviewing the ways available to generate money, which one should you choose? The answer will vary depending on your application. Keep in mind that it is possible to combine different methods of payment, and that will depend on your chosen strategy.
Defining a good business model based on your application, is one of the key factors in being able to make a profit from your application. Good luck!