From the inception of the idea to the final launch of the product, developing an app is no joke. However, a general perception has formed among the users of digital services that they should always be free to use. When there are so many free products in the market, you need to break a strong psychological barrier within your users in order for them to actually pay for it, which usually takes a high level of brand recognition and popularity. Unfortunately, for this reason, so many great ideas stay only in the minds, without ever being executed into a product. The trick here is to work your way around the initial payment for your app by making it “free” to download, and strategizing your business plan to keep both your user and yourself happy.
To start with, let us list down all the options you have when it comes to making a sustainable and recurring revenue from a mobile app.
1. User pays you directly.
- Premium Paid Apps
- User Subscription fees
- In-app Purchases
2. Other parties pay you to target your user
- Selling collected big data – Using your user as a product
From the above options, let us recommend you 4 trusted methods for recurring income and a few more methods which can be incorporated into them which will ensure a gradual growth of the overall revenue.
Well isn’t this the most loved and hated thing ever in the app industry!
However, this is probably the closest way to make yourself and every stakeholder connected to your mobile app happy at least for a certain level. In this business model, you offer two versions of your app; one with basic features and the other with more features and/or infrastructure access such as more storage, templates etc. As a slight twist on the “freemium” model, you can also offer an “ad-free” version of the app for a premium price as well.
The key here is to offer just enough for the user to function well with the free version of the app while creating enough hype with the premium version in order to push them to go ahead and get that. It would be an unsuccessful freemium model if your user cannot survive with the free version at all. There is no use of giving them a Printer if you are not giving them any ink to print.
Most of the success stories of the freemium model offer a great package with the free version and offering an even more attractive package with the premium model. The user will be motivated to take the next step, only if they are satisfied with the free version at first.
One of the risks when it comes to the freemium model is that there is a chance that users might take your free version for granted, and complain about the money that they have to spend for the premium model, making it difficult to sustain as a company. Therefore, you might need an option of a VC to back you up in order to close the gap of your free users and the premium users.
While this is rather similar to the Freemium model, what it offers will be an extension of the service that is useful for the most dedicated users of your service/product. This could be a monthly report, analysis or anything that further extends their quality of usage.
Using your User as a Product
This is one of the methods which is becoming increasingly popular especially in certain niche markets. With your mobile app, there is the possibility for you to collect a lot of usage data. This method uses collected Big Data in a way that can be packaged as analytics of interest to a different user group in the same niche.
For an example, if your app is made to track people’s health and there’s the possibility to track their location alongside, you can sell those data to companies in the health industry which can use those data. This could also lead for those companies to advertise within your app, which we will discuss next.
This is probably the most popular and widely used method in making a recurring revenue via free apps. Especially if you are a startup which offers a free service, people usually expect this as well. The important thing here is to make sure your app is not too cluttered with advertising, that it affects negatively to the user experience. You can avoid too much ad clutter by designing your app in a way that the ads do not interfere too much with the usage. Balance is important!
Other than these main strategies of monetizing your app, there are a few other methods you incorporate with these although they would not promise a recurring revenue as the above.
This is less intrusive than other in-app advertising methods, giving the option for the user to opt for an activity such as watching an advertising video or taking a survey. These activities grant certain “reward” to the user such as points, power-ups, etc.
If your app manages to gather a good viral growth, you can make revenue through selling merchandise. “Angry Birds” was a great example which made this method work. The more your user base grows, you can even be a third party which sells merchandise from other companies as well.
Having updated quality content
While this may not be a direct revenue strategy, having a solid flow of quality content through your app will ensure a steady growth of users, allowing you to increase your revenue through other methods. Content is King!
Monetizing your app is important, however, your main focus should always be giving a great user experience to your user while providing what they expect from you.