How To Make Money From An App
Got a great idea for a new app, but not sure how to make money from it? There are a few different ways to make an income from an app. Below are just a few examples.
Charge people to download it
The traditional way of making money from an app is to charge users to download the app. There are apps currently available in the App Store for as much as $999.99. However, most apps aren’t this expensive. In fact, the majority of paid apps are less than $5.
Charging people to download your app allows you to turn every user into a paying customer. The downside is that there are now so many free apps available that it has become harder to persuade users to pay upfront for an app. If your app is pretty unique or all your competitors are charging, you may be able to get away with a paid app. But if your app is very similar to other free apps on the market, you may find it very hard to get people to part with their money. This begs the question: how do people make money from free apps?
Opt for the freemium model
‘Freemium’ is a business model that involves allowing users to download an app for free with limited features. In order to access all the features of the app, users must pay an extra charge. This could be a single payment or a subscription payment.
The advantage of a freemium app is that it allows users to test the features of your app and then determine whether they’re willing to pay extra. It’s up to you as to how many features you offer for free and how many features you charge for. Ideally you should provide enough basic features to make your app enjoyable for free, while still leaving users for more so that they’re willing to pay extra.
Freemium apps with paid subscription features typically make more money than freemium apps with one-off upgrade charges. Examples include Spotify, Tinder, LinkedIn and Zoom. While subscriptions offer steady recurring payments, they do come with disadvantages such as a high chargeback rate. Setting up a high risk merchant account is therefore necessary if you’re going to accept payments on credit card.
Provide in-app purchases
A popular model used by many free mobile games is in-app purchases. These are items, levels or shortcuts that you can purchase within the game. It’s essentially the freemium model, but rather than paying for a full limitless version of the app, you’re paying for select features.
In-app purchases in mobile games could include features that can only be unlocked by spending money or features that can also be unlocked through free gameplay. For example, Pokemon Go allows you to collect Pokeballs by visiting Pokestops. However, if you don’t want to do this, you also have the option to purchase Pokeballs.
The best mobile games are able to provide in-app purchases without giving paying users too much of an advantage that non-paying users are put off. Games that can only be won by paying for in-app purchases are typically referred to as ‘pay-to-win’ games and can risk receiving backlash.
Display adverts on your app
One of the most popular ways that free apps make money is by displaying ads. These are typically adverts promoting other apps. When you display adverts on your app, you get a small amount of ad revenue every time a user interacts with these adverts.
The more adverts you display on your app, the more potential revenue you can make. However, you need to be careful not to display too many ads to the point that you end up losing users. You can read more about in-app advertising here.
Use an app to support another business
If you already own a business, an app could be a means of helping to generate extra sales. Apps allow you to market directly to users through their phones via in app notifications and exclusive features. They can be a great way to generate return customers if designed correctly.
Loyalty card apps are a prime example that encourage customers to spend more by gaining access to discounts after collecting a certain amount of points after a certain amount of purchases. Meanwhile, many restaurants have started releasing apps that enable customers to order from their table. By promoting such apps in your store, you can get people to start using them and hopefully start boosting sales.
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