6 Main Mobile App Monetisation Strategies

Many businesses like the idea of having an app. There are also a lot of entrepreneurs who would like to start a business based on a mobile app. In both situations, you need a clear reason for going through the process of developing and then marketing a mobile app.

Some companies, particularly large companies, use mobile apps to build a base of users or for branding purposes.

However, it is usually more important that the app itself makes money. This requires a monetisation strategy. Here are six of the most common.

1. Advertising

If you have good content on your app and lots of people use it, advertising could be a viable option.

There are two main ways you generate money from ads:

  • Creating advertising space on your app and then charging businesses and brands to run ads in that space
  • Using affiliate marketing where you don’t charge upfront for the ad, but instead get paid whenever someone clicks on your ad and then goes onto make a purchase at the merchant

There are two main types of ad on mobile apps:

  • Banner ads – where the ad appears as a small banner, usually at the bottom of the screen
  • Interstitial ads – where the ad takes over the entire screen, hiding the content

2. E-Commerce

If you sell products online, you can create a mobile app to give you another sales channel, selling products directly through the app.

3. Freemium Model

The freemium model is one of the most common app monetisation strategies. It involves developing two different versions of your app:

  • A slimmed down version which you offer to users for free
  • A full version which users have to pay for

The idea is to get people to download and use the slimmed down version. If they like it, they will then upgrade to get the additional features offered on the full version.

This can be a tricky model to get right as you want to make sure people like the free version. There are lots of examples of apps who try this strategy but make the free version so frustrating to use (because they want people to upgrade) that it gets lots of bad reviews.

You need to strike the right balance between leaving enough features that people will think it is worthwhile upgrading, but also ensuring the free version experience is satisfying.

4. Premium Model

The premium model skips over offering users a free version of your app and instead involves having one version that you charge for.

This monetisation strategy sometimes works well when combined with the next one on this list – in-app purchases.

5. In-App Purchases

In-app purchases are when you offer additional features that users have to pay to access. It is a very common strategy in mobile games.

It’s a strategy that can work with a paid-for app (as mentioned above), but it is more common on apps that users can download for free.

6. Subscription

The subscription model, where you charge users to access the features or content of your app, is popular with a range of different types of app, from dating apps to newspapers. For it to work, you need content or features that users will want to access regularly.

Choosing the Right Monetisation Strategy

Each of the monetisation strategies outlined above is best used in certain situations. Finding the right one for your business is an essential part of the development planning process.

11 Essential Things to do at the Start of a Mobile App Development Project

You have a fantastic idea for an app, so the next step must be to find a mobile app developer to build it for you, right? Well, not necessarily.

In fact, there are 11 things you should do before you appoint a developer that will not only make the development process go smoother but will also set the foundations for making your app a success.

Define What the Mobile App Will Do

The first step is to define what your mobile app will do. The best way to do this is to write down a description of your app in as few sentences/words as possible.

You might find this process difficult as condensing the idea in your head into a succinct explanation is often not as easy as it sounds. It is an essential step in the process, though.

When doing this, remember this is not a final description or a features list. A features list comes later, plus your app can – and probably will – change as you go through the development process. All you need to do now is write down your idea in its current form.

Define the Target Audience

Next, you must define the audience for your app, making that definition as specific as possible. Think about things like age, gender, location, the type of job they have, and their interests.

Understand Why Your Target Audience Will Want/Need Your App

Following on from the last point, you must also identify and understand a reason why the audience you create in the step above will want or need your app. Obviously, the more compelling this reason is, the more likely your app will be a success.

Identify Methods of Reaching Your Target Audience

You will also need a plan for marketing your app to your target audience. You don’t need any detail and you don’t need to draft a full marketing plan, but you must have an idea of how you will get people to find out about, download, and use your app. Simply putting it on the app store and hoping for success will get you nowhere.

If your app is for existing customers, users, or readers, you can consider using current communication methods to reach them. If your app is for a new audience, however, you will probably need a website and a social media presence, and you may need to advertise.

Research the Competition

You should also do thorough market research to find out more about your competition. Go through this step even if you have a unique idea that doesn’t have a direct competitor. You can do this by identifying other apps your target audience uses that are in a similar category to yours.

Find out as much as you can about the app including how many downloads it has, what do people say in the reviews, does the app get updated regularly (if it doesn’t it may indicate the developer isn’t allocating resources to it), what features does it have, etc.

Finding out this information may change, enhance, or improve the idea you have for your app.

Decide the Platforms You Want

You will also need to decide on the platforms you want the mobile app to be available on. The most popular in New Zealand are iOS (for iPhones) and Android. Remember, your mobile app developer will go through a separate build process for each platform you choose.

Decide Your Initial Build Budget

The next step is deciding the budget you have for the initial build. This will cover all elements of the build include the app design, coding, and testing, as well as app store fees (you will need to pay for developer accounts on both the App Store for iOS apps and the Google Play Store for Android apps).

Decide on an Ongoing Maintenance Budget

Apps are not a build and forget task. Instead, they require regular maintenance and updating so you will need to allocate an ongoing maintenance budget. This may also include hosting fees depending on the type of app you are building and the features it has.

You should also remember that an ongoing maintenance budget is separate to a marketing budget, which you will probably also need.

Map Out a Timeline

You should then decide when you would like to release the app. When do this, make sure you factor in that it will take several months to complete the build process. Of course, this depends on the features you need but even a simple app can take a month per platform to complete.

Write Down All the Features You Would Like the App to Have

All the above steps will probably have refined the idea you have for your app. The next stage is to write down all the features you would like the app to have. Add as many features and functions to this list as you think your target audience will need or like. You don’t have to be cautious at this stage – that comes next.

Write Down All the Features the App Must Have

The final step you should take at the start of a mobile app development project is to use the list created in the previous step, stripping out everything except for the core and essential features. There are several reasons for doing this:

  • You may not be able to get all the features you want because of your budget
  • Developing all the features might increase the development time beyond your planned timeline
  • You might want to test the idea in the market before you invest in getting the full app developed
  • Developing the essential features and releasing the app lets you start building a user base sooner rather than later

The Next Stage

Once you have completed the 11 steps above, you will be ready to find and hire a mobile app developer to start working on your app. Not only that, the process of getting the development started will be easier because you have done the work above. This is because the developer will have a clear understanding of what you want and expect, so can get on with the work quickly.

This will let you concentrate on the next stages which include developing and implementing an app marketing plan.