Taking a groundbreaking idea and turning it into an app isn’t always easy, but the biggest struggle that app creators often come up against is determining how to monetize their efforts. Between in-app ads, freemium or subscription-based models, or one-time fees, there’s a lot to consider—but which strategy is going to work best for you and your project?
In this article, we’ll share the various app monetization options available to you and help you better understand the conceptual game behind generating an increasing ROI. Whether you’re a developer, investor, or product owner, this guide can help you lay the foundation you need leading up to the launch of your app.
What is Mobile App Monetization?
Mobile app monetization is the process of generating a stream of revenue by leveraging an application’s user base to convert engagement and actions into rewards.
If this technical definition is making you shake your head, no worries! In the following sections, we’ll elaborate on this concept and provide you a more holistic view of the what, when, and how regarding app monetization.
Why Should You Build a Mobile App in the First Place?
According to this 2017 survey on user media consumption habits, smartphone phone applications consumption is as common as all other platforms combined, and that number has grown even more drastically today in 2021.
The stats do not end there either. Since mobile devices dominate laptops and tablets due to their ease of use and close proximity, the time people spend using smartphone apps is remarkable. The image below exhibits the average daily hours a visitor spends on a mobile app.
Do I Need to Monetize My App?
The short answer is “yes“. Without implementing a proper monetization strategy, your app won’t generate any revenue and it will be difficult for you to recoup the cost, time, and resources sacrificed during the app development process. The app market continues to expand and is worth billions of dollars. According to an expert prediction from 2016 to 2020, revenue generated by apps will be doubled. However, not all apps or all parts of an app need to be monetized. For instance, let’s take an example of a workplace app which is not required to be monetized at all since you will not be charging your employees for using the app.
Methods to make money through an App
There are two general categories in which the strategies to conduct app monetization fall, named as direct monetization and indirect monetization. Let’s have a look at what each stands for and the difference between two.
Direct Monetization
It is the most popular method and it generates money straight from the application. The income comes directly from the app when users pay some amount on Google Play or Apple Store to download your app. Similarly if a user buys something while operating your e-commerce application, that particular sale also comes from the application.
Indirect Monetization
This type is quite popular among software products. In this method, an independent product or service comes with the application. The app acts as secondary and you make profit regardless of the app usage. Indirect monetization acts as a clever strategy to make products more appealing to valuable customers, thus, improving the user experience.
The majority of app monetization strategies (i.e., explained later) fall under the direct monetization category.