Monetizing an app is a tricky business because most people expect to be able to download a new app for their phone without paying. The problem, of course, is that as an app developer, you need to be paid for all your hard work. It doesn’t do you much good to invest countless hours creating an app if you aren’t going to receive any kind of compensation for it.
Because of this, many developers allow ads to be placed within their app as a means of generating revenue. While this is a good practice in theory, it often backfires when the proliferation of ads disrupts the user experience and causes them to delete the app altogether.
It’s also worth noting that you’ll only really earn money from advertisements if a lot of people have downloaded your app — something that often isn’t possible without a big marketing budget to start with. Needless to say, in-app advertising isn’t always an effective method of generating predictable app revenue.
Thankfully, there’s a better way.
The potential for in-app purchases.
The best way for app developers to make money is to offer what is commonly referred to as “freemium” apps. The app or game itself is free to download, but within the app, users have the ability to make additional transactions. These typically involve subscriptions, payments for additional features and content, or even enabling users to buy physical goods within their digital app.
In-app purchases have already demonstrated a clear potential for delivering significant revenue. Some studies estimate that only 5.2 percent of smartphone users make in-app purchases, but those users can spend 20 times as much as other users on a monthly basis.
How to create a successful app
You need to ensure that the experience is worthwhile for paying and non-paying users. The initial free experience needs to provide value — with a smartphone game, for example, the game should still be fun to play even if a user never makes an in-app purchase.
Paid content should add value to what is already viewed as a worthwhile experience. This way, you will attract more people to the app and get them to continue using it in the long run, which increases your potential revenue.
Streamline the buying process.
Many games and apps transcend national borders — a game could be just as popular in Russia as it is in the United States. As such, you can’t assume that all of your app’s users will be able to use a credit card or Paypal account to make in-app purchases. Failure to account for alternative payment options in international markets could cause many app developers to miss out on big opportunities.
App developers need to consider ways to streamline the buying process for users from all parts of the globe. Tools like CloudMoolah, for example, serve as aggregators that process a wide range of payment options for gaming apps.
For credit card holders, using systems like Stripe to process payments will increase security and make it easier for your customers to have peace of mind regarding their transaction. The easier you make it for your audience to buy, the greater your potential for successfully monetizing your app.
Don’t get stagnant.
It’s also important to remember that in-app purchases require continual optimization. As Apple’s overview of the freemium business model notes, “Successful freemium apps offer continuously evolving content or services to provide value to users and to encourage engagement and monetization. Engaged users sometimes move quickly through content, and planning and resources are required to keep the pipeline full.”
In other words, you can’t take a “set it and forget it” approach to monetization if you want to generate predictable income from your app. You need to use analytics data to fine-tune your offering so you can better appeal to your core audience (especially those who already make in-app purchases).
Make updates that keep people coming back for more. You need to help users form a habit of making in-app purchases rather than relying on one-time buys.
Your app must be user-friendly.
Whether you’ve created an addictive game or an organizational tool, how you plan to successfully monetize your app should be given just as much consideration as creating a user-friendly platform.
As you create convenient and repeatable in-app transactions, you’ll be better positioned to retain your users and generate lasting revenue.