How can you make money from an app?
Recently several of our app clients have been asking for more information on monetizing their app so we decided to write an article on the topic. We created a list of some of the best ways to start making money from an app, as well as two ways to avoid (at first!). The list applies whether you are developing an app, website or computer software.
Paid For App
With a paid-for app, customers pay an upfront charge to access your app indefinitely. A paywall like this can be off-putting so it’s usually best to start with a free trial to give customers a chance to see if they want it. Examples: Minecraft, Risk Online.
In-App Purchases
Give people free access to your app and make money by selling products and premium features (known as freemium). This works great if you sell physical products, digital products, services or offer additional premium features. Examples: eBay, Candy Crush, Tinder.
Affiliate links
If your website links to products from other brands on other websites you can be paid a referral fee for helping them make a sale. The money you make on each referral can be small so encourage customers to make regular, large affiliate purchases. Examples: Amazon, Fiverr.
Subscription
Offer a free trial period then charge a recurring payment for access to part or all of your app. The free trial helps customers discover the app’s full value. Regular payment revenue from customers who continue using the app can be used to develop new features which makes this a popular choice with app owners. Examples: Netflix, Spotify.
App monetization options to avoid (at first)
The options above can all start generating cash with a relatively small number of customers so they are a great way to get going. The following two options generally require a larger number of customers regularly using your app before you can make a successful business.
In-app advertising
Make money by growing a large group of regular users and selling advertising space and user data. In-app advertising means you may not need to charge for access to your app but too many ads can create a less enjoyable user experience which may cost you customers. Examples: Facebook, LinkedIn.
Partnerships and sponsors
If your app is popular, other companies with similar groups of customers may pay you for exposure to your customer base.
How to decide which option to choose
Generally, we recommend looking at how similar apps are making money and start there. If you aren’t making enough money, you can experiment with another revenue model or combination of models until you find the right choice for your customers and your business.
Find out more about developing an app or Book your free confidential idea review with one of our innovation advisers.
Do you have an app idea?
Find out more about developing an app – Book your confidential idea review with one of our innovation advisers.
