App Monetization

Invigilator: What does your app do?

Developer : We are focusing on trying to solve the local problem prevailing in Nepal. Like, there are so many construction running around us, but we citizen are not known to it. We are trying to bring those data to the public.

Invigilator : How will you charge for the app?

Developer : We are trying to solve social issue and we won’t charge user for the information.

Invigilator: Then what is your idea to monetize app?

Developer: Sorry, we are trying to provide app for free.

Invigilator: So, you’ll work for free and then how are you planning to earn if you don’t have a module to earn money. How will investor earn money from investment?

When we as a developer try to develop an app for the first time we all face the same Question; “What is your monetization model for the product you are working on ?”, and normally we reply with “No, I am trying to help people I don’t want money. I’ll think about it later”. But the fact is, we are infatuated by reality of company acquisition for millions/billions of dollar for apps like WhatsApp, Viber, Instagram etc.

Even if we are to provide free apps to the user, we need to have some idea to monetize. Some of way to monetize the mobile app as per current scenario are listed as following:.

1. Advertisement
   In this freemium model, we allow the user to download the app for free, but we can add Ads inside app so that the developer can earn money according to the view/click within the app. Best example of it would be Facebook, where Ads are placed alongside the feed. It has been proven to be a

   good strategy.

   
   Pros:

→ Ease of access to the User, as they don’t need to pay for it.
→ Maximum user engagement due to the quality of ads shown which might be of their interest.

Cons:
→ User might be irritated, if Ads are not user friendly
→ User experience will be compromised if the ads take up most of the viewable screen.

2. Partnership
Here, the developer can create an integrated experience for user. An App can add Ads or offer from another app so they both are able to get the users from each other and earn money.
4pic one word is an example of an app which follows this pattern to earn money.

Pros:

→ Easy way get payment/investment
→ Easy to get user data

Cons:
→ Partner’s app may get higher user than yours.
→ Profit is not just yours

3. Sponsorship
Sponsorship is partnering with advertisers, who provide users with rewards for completing certain in-app actions. Brands and agencies pay to be a part of an incentive system where developer can take a share of the revenue from redeemed rewards.
Runkeeper follows this business model to incentivized advertising to motivate its users to track their running activity with their app to unlock exclusive rewards and promotions. This strategy lets RunKeeper monetize their app without disrupting their app’s experience with banner ads.

Pros:
→ User gets related and relevant advertising.
→ Better way to earn revenue. User benefits from advertisement.

Cons:
 → Developers need to be careful with who/what he/she will tie up and display ads.

4. In-app Purchases
As the heading suggests “In-App Purchases”, developer permit the user to pay to buy a level or different item to be used within the game/app. In this model developer grant the functionality to let the user purchase an important item within the game/app which blocks user’s progress.

Clash of clan is one of the best example for this model. In Clash of Clans, user can purchase Gems to speed up upgrade, training or creation of army.

Pros:

→ Better suited for e-Commerce type 
→ Allowing user to buy virtual goods lets them have deeper feeling of engagement
→ High profit margin

Cons: 
→ Need to share profit with playstore
→ Children may buy in-app items accidentally and play store will need to refund it

5. Subscription
In this business model, user are charged according to the service they prompt to use. This model is mainly used by service focused apps and allows brands to earn revenue on a recurring basis.

Google play can be seen using this model as it charges user on the basis of service they want to use.

Pros:

 → User will have curiosity to explore more level and will be more engaged to app.
 → Developers will be responsible to make next level more interesting.
 
 Cons:
 → Hard to determine the content on increase of subscription level (especially to developer)

6. Notification
Notification? Yes, notification can be used to keep the user engaged to app. So, after getting notified, user may come back to your app and carry on the task which have been left undone.
An example for this would Clash of clans and 4pic 1Word where user is notified of an army being trained or a for a tip to complete a level.

Pros:
→ User will be notified of the app presence in mobile device
→ User’s engagement will increase
Cons:
→ User may get irritated due to regular notification and it might lead to user uninstalling the app.

Happy Earning !!

This post is on Medium too