Generate an income stream from your digital product
Having a brilliant idea that solves a problem is only the beginning of executing a mobile app solution. Generating an income stream from your app is essential to its success. Even if the app is just an add-on service to your already established business, all mobile apps require ongoing support and maintenance, so it is essential to think about monitisation right from the start. Monetising your mobile app is often forgotten in the early stages of design and development, however, it is key to your app’s success in the long run.
There are lots of methods to monetise your mobile app. Below, we discuss 5 methods that we believe are the most effective:
The most obvious way to monetise your mobile app is a paid app, whether that be an upfront payment or a subscription. Apps that you must pay for upfront have a lower download rate because users cannot judge the value of the app before they use it. Therefore, we would suggest setting up a subscription instead. This way, users can try the app and opt out if they wish to at a later stage.
Setting up a subscription model is best ways to monetise your mobile app as subscriptions bring in a regular income stream which grows as your user base grows. Subscriptions work best when you have something valuable to offer your users. If you want users to part with £1.99 or even £9.99 a month, you must offer them something worthy of that money. To ensure that users sign up for a minimum 3-month subscription, you must provide new, informative and useful content on a regular basis. This consistency will generate frequent app visits and happy customers who value your content. This method of monetisation is often used for fitness apps or magazine apps that are constantly producing new content and experiences for their users.
If your app does not provide content but offers a service instead, they may still be willing to sign up to a subscription if you provide an ongoing service of value. Evernote, Dropbox, and Strava are good examples of this. The key to the success of this model is having a free version which gives enough away for people to start using the service and then entice them into upgrading to a premium paid version with extra features.
As mentioned briefly above, offering Free and Premium versions is another method of monetising your mobile app. Of course, users will always opt for the Free version of your app first, however, if they like what they have downloaded and want access to more features in the future, you can offer them a premium version. For example “Please download the Premium version to unlock these features”. You can even combine this approach with advertising, many games, for example, allow you to pay to remove the advertising. Typically between 4% and 10% of users will upgrade to the premium version, but since free apps are downloaded much more than paid ones this can be a good strategy.
According to Gartner, when it comes to app purchases it seems that consumers prefer to spend their cash in-app than upfront. Gartner found that “mobile app users spend 24% more on in-app transactions than upfront app payments [because] in-app purchases allow for enhanced flexibility allowing consumers to test an app for free before they decide to pay for additional features.”
Another way to monetise your mobile app is by email marketing your registered users. This way of approaching individuals and companies is quick, and if your app is free, most people are willing to register and give their email address to use your app. With this approach, you must have a reason to ask people to register, for example storing their profile. For with the new GDPR regulations coming in May, you will need to ensure people actively opt into your email list.
The good thing about email marketing is that most people check their emails on a daily basis and this ensures that they will see and engage with your content. Therefore you must ensure you have an exciting subject line. For example, think of a question your users may have or maybe something relevant and funny.
Your email strategy can be varied - from just promoting valuable content, or offering a discount, or maybe in the form of a newsletter, whilst reminding them that everything you have to give is accessible via the app.
Placing ads in your app can be a huge way to monetise your mobile app. Most games, for example, make their money through advertising. Ads work well when people use your app regularly or for long periods of time as this gives you the opportunity to display plenty of adverts. Users generally don’t mind seeing ads in an app if the app is of value. However, if it is a free app, you must be careful not to put too many ads as this may frustrate users, as some video and full-screen ads are very disruptive and should be used sparingly.
Another option to generate ad revenue is Affiliate Marketing, this is where you promote a product or service and receive a cut of any sales that come from your advert. Amazon, for example, has an affiliate scheme where you earn 5-8% on any sales from your promotions. Affiliate marketing works well when you have a narrow target market, eg. A gardening advice app could promote gardening tools or seeds from an online store.
Equity share is another strategy to monetise your mobile app. This involves finding a partner or sponsor who believes in your idea and is willing to financially support the design and development of your product, in return for a percentage of the end profit or the promotion of their brand in your app. Once you have found an appropriate partner, it is important to agree what their role is in the project before development begins, to ensure there are no disagreements. Once the app has been launched and is growing users, both parties will benefit financially.
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