You have launched your application, wonderful! But how do you secure a return on your
investment following a lengthy and demanding development journey? The straightforward answer is:
monetise your app. In this piece, we'll explore what app monetisation entails,
and what strategies can be used to maintain a steady user base and generate revenue.
App monetisation is the method of converting your app users into revenue. It's about turning your app into a cash-generating machine! However, it's not as straightforward as it seems. There are many different methods to monetise your app, but the choice depends on the app's purpose, its content, and crucially - its audience.
Common app monetisation strategies
App monetisation strategies can be complex (and tiring). So, we have simplified it with a brief list of some of the most common strategies available:
Before exploring monetisation strategies, it's vital to understand that generating income is crucial to fund your application's ongoing development and upkeep. Without a steady income stream for improvements, users may begin to feel the app is becoming obsolete and stagnant. This is a primary reason why users abandon apps. Keeping the user experience fresh and engaging will help you increase user interaction.
An explanation of app monetisation strategies
Reviewing the pros and cons of the aforementioned app monetisation strategies might assist you in deciding which direction to take. It's important to remember that there's no single universal approach to monetising your app, as every app has unique objectives.
With in-app purchases, users can buy virtual items and services for a fee. Existing users will engage more with the app as they anticipate the new product or service you've promoted. This is an excellent way to generate revenue if your app contains a lot of high-value content. Once a user makes a purchase, their loyalty to your app is likely to increase, so always provide a compelling reason for them to buy.
The disadvantage of in-app purchases is that they can be challenging to market well. It is never easy to persuade your users that the items or services you provide are worth their price.
In-app advertising is one of the most widespread and successful methods of app monetisation. Offering free-to-use content and features attracts users. But how do you earn income from in-app ads? When a user interacts with an advertisement in your app, you receive a small payment. Below are various pricing models that benefit both the app publisher and the advertiser.
Cost per mille (CPM) is where the publisher is paid by the advertiser for the number of times an ad is displayed within the app.
Cost per click (CPC) means the advertiser pays the publisher for the number of times an ad is clicked.
Cost per action (CPA) involves the advertiser paying the publisher when a user completes a specific, predefined action in the app. For instance, if you have an app for reading articles and a user clicks on an article, the content creator would pay the publisher.
Cost per install (CPI) is when the publisher gets paid for every installation of the advertised app. For example, a user is prompted to download the advertised application. Once the user clicks the ad to download and install it, the advertiser pays the publisher.
However, using in-app ads might lead to a decrease in your user base. This is because users can become annoyed by the number of ads. A way to mitigate this is to experiment with the design and placement of your ad banners.
Paid app downloads represent another effective app monetisation strategy. The user pays a single, one-time fee to download your application. This strategy works well if you have a dedicated user base and your app delivers significant value.
The drawback of paid app downloads is that users are less inclined to upgrade to a premium package later. It is very challenging to market this model effectively, as you must convince the user they are receiving sufficient value for their money when purchasing the app.
Crowdfunding presents a great opportunity to monetise your app. By enabling users to contribute donations, you can determine which audience to focus on and what features to prioritise. This can help you maximise your app development efforts. If you are a startup with constrained resources, this strategy is ideal for you. By teasing new features in a 'coming soon' section, you can build interest among users and, by allowing them to donate for early access, you can retain a consistent user base.
While crowdfunding can be an excellent way to fund a new project, it is important to note that it is not a reliable source of income. App development and maintenance could be affected if funding fluctuates from one month to the next.
Premium subscriptions let users download a fundamental version of your app for free, charging them only for access to exclusive content and features. This is an effective method for generating interest in your app. Users who have access to some content are often more inclined to upgrade to higher-tier packages.
The main difficulty with premium subscriptions is finding the right balance. You need to offer enough free features to maintain a steady user base while also enticing them to purchase the premium version. However, offering too much or too little may either cause the user to lose interest or feel there isn't enough value in purchasing the premium option.
