How do apps make money? All about app monetization

Creative27

Of all the business opportunities in tech, apps are maybe the least straightforward when it comes to monetization strategies. The A to B from creation to profit tends to have many scratching their head.

In Creative27’s decade plus of experience, we have designed, developed, marketed and witnessed innumerable apps go to market; some succeed, others do not. The path to success is not a straight one, and there are many options out there when it comes to monetization. Let’s take a look.

In-app purchases
In-app purchases allow users to unlock features or purchase more of something in the app. This keeps the app free to download but gives the app creators endless opportunity to market additional services and generate revenue from committed fans of the app.

This is by far the best path to monetizing an app. You don’t need as big a user base as you would with advertising to see the impact of your in-app purchases. The primary challenge is creating a feature (and marketing it) that is worth your users’ buying.

In-app ads
Advertising is an obvious route for apps seeking to monetize. However, the key to converting any revenue from ads is having an extensive user base to make sure you can reap enough out of a pay per click (PPC) deal. If you have 10,000-50,000 users, this is not going to be all that substantial. However, if your user base is closer to one million, you can make some serious revenue through PPC.

Another option is interstitial ads which are the advertisements that cover the entire screen of the phone and can be exited by the user only after the media content has finished playing or after a timer has elapsed. These adverts tend to be more profitable than regular banner ads.

Premium version
This option requires having a second version of your app that’s paid. The first version may be a “Lite” or “Regular” version which is free. The free app will always promote the premium app. This is a nice way to introduce users to your app for free before committing them to the upgrade. However, with the popularization of the in-app purchase, users can be put off by having to download another app to get the premium.

Sponsorship
Sponsorship is a great way to make money on a free app. It is money up front and can help you with brand credibility through alignment. This would mean having to white-label or alter the design of your app to reflect the sponsor, and it is unlikely this will come before you have some proven traction.

Deciding a monetization strategy is not always an easy and straightforward decision. At Creative27 we are specialists in app design, development, and marketing; for guidance and strategic direction on how to monetize your app, why not get in touch with our team on (877) 543-8883 or via our contact page online.


by Vasile Tiplea
CEO & Director of Product & Design @Creative27