There are five popular ways to make money from your app
Direct Advertising involves showing different types of clickable ad in your app.
Indirect Advertising involves adding directory listings or sponsored mentions to your app
You can create a premium app where users must pay to download the app
Subscriptions are a popular approach where you charge users a recurring fee
In app purchases involves allowing users to buy products or game items in your app
When you have an app developed, how you make money is determined primarily by your reason for launching an app.
If you have an existing business and you are developing an app for your customers, the key benefits you are looking for are related to your business.
These include things like increased sales for your business, better customer experience, more returning customers and better online reviews.
In this article, we will be looking at the other scenario – where you are aiming to make money directly from your app.
The 5 most popular ways to make money directly from your app are
1. Direct Advertising
2. Indirect Advertising
3. Premium apps
5. In app purchases
We will go into each of these in detail in this blog post. Each method has different benefits and drawbacks and your choice depends on many things including the type and category of app you have, your app customers, your own company and how well funded you are, etc.
You can also use a mixture of these strategies in your app and many apps employ at least two different types of monetisation approach.
Direct Advertising means showing different types of clickable ad in your app. This is the traditional advertising model where your app shows ads and you get paid when users click on these ads or watch rewarded videos. Usually these ads are provided by 3rd party companies.
There are four main types of ads – banner, interstitial, video and rewarded video.
A banner ad is a shown on a small part of the screen, usually near the bottom. It is often shown during gameplay or other app activities. e.g. during a quiz round below the answer buttons.
An interstitial ad is a full screen advertisement that is shown between pages on your app. For example, at the end of a quiz round.
A video ad is full screen ad which plays a video that you can exit out of.
A rewarded video ad is a full screen video ad where you must watch the ad for a certain amount of time to get a reward or get access to the app functionality.
With the first three types, you get paid only if the user clicks on the ad. With rewarded videos, you get paid either way.
1. Easier to organise than indirect advertising
2. Attracts users who cannot or will not pay for your app features. They may choose your app over premium ones.
3. Allows you to make revenue from users without having to charge them rather than relying on the small number of users who will upgrade to a premium model.
1. Ads can be annoying in apps
2. Ads can increase the change of bad reviews because they interfere with the user experience
3. Ad revenue can be variable and you often need a lot of users to make any money from ads.
A more subtle way to advertise on your app is to list a premium directory of related services or products and ask the members of this directory to pay you to be on it or to give you commission when a user buys a product or service.
This requires more leg work on your part as you will need to organise this yourself and gather members, seeing the service to them.
It takes more time and initial money on your part as you may need to make phone calls, travel to meet members, join networking groups or hire sales people.
The upside of this method is that you can get a regular income from the members without interfering with user’s app experience.
A similar idea is that your app could be sponsored by one or more company and that company would be listed on the splash page or in other parts of the app.
1. This can be a way to make much more money than direct advertising.
2. You can get a regular fee from your members once they sign up.
3. This is discreet and does not interfere with the user experience and can often be seen as a handy feature for users e.g. a directory at their fingertips
1. Initial time/money investment involved
2. You need to be able to prove that you have a solid group of active app users in their region
3. You need to create this directory and also a way for these suppliers to add and update their details on the app.
Also known as paid apps, the traditional premium app model involves setting a price for the app on the App Store or Google Play.
Users must pay this upfront before downloading the app. This is a one-time fee (with the average paid app costing around 1 Euro).
The app will also have a listing in the ‘paid apps’ section and since there are fewer paid apps than free apps, it is more likely to be seen there.
1. Instant revenue. This is the quickest way to convert app downloads to revenue. No need for a sales team to gather members.
2. You are listed in the paid app area in Google Play and the App Store
3. Better user experience with no ads needed.
1. Competition from free apps which do the same thing as your app
2. Users like to try apps before they buy them but this is not possible with premium apps.
3. On Google, you cannot change an app to free once you have made it premium.
The Subscription based monetisation strategy works like this. A user downloads your app and within the app there is an ‘Upgrade’ option where they can opt to pay a regular (usually monthly) fee to use your app or use a premium part of your app.
This is delivered as an in-app purchase from either Apple or Google. The users set up the subscription and Apple/Google pay you.
There is usually a free trial mode (7 days) that enables users to download and try out your app for free, and after that time expires, the subscription fees automatically get charged to the user.
A popular choice is allowing a user to access certain parts of your app for free and then asking them to become premium members in order to access the rest of your app.
It is important here to make sure that users have enough benefit from the premium area to make them want to sign up. For our app, Bubblegum fiction, we give the user one
1. Relatively fast way to get revenue and regular payments are more stable than ad revenue.
2. No need to gather members and sell membership to them.
3. Users can try your app for free and get a taste of it before committing, making them more likely to download it than a premium app.
4. No ads makes for a better user experience.
1. You need to get a certain amount of users before you start seeing revenue as only a small percentage of users will upgrade
2. You need to have enough functionality in your app to warrant a monthly fee for app use.
This is a one off payment made by your user to access something within the app.
Similar to subscriptions, it is delivered as an in-app purchase from either Apple or Google. The users makes the in app purchase and Apple/Google pay you.
It is often associated with things like gems for games or an ad-free upgrade for the app but this can apply to any in-app object or access to any part of the app.
You can also ad in-app purchases directly (i.e. not through Apple or Google) to allow users to buy your products or services but this is generally classed as e-commerce rather than the traditional in-app purchase.
Combine multiple monetisation methods in your app
To combine building a good user experience with earning money, the best approach might be combining several monetization methods.
One very popular strategy is offering in-game items in exchange for watching a rewarded video ad and offering the same in-game items as in-app purchases.
The user can decide whether they would rather pay a fee or watch multiple video ads instead.
This approach allows you to get revenue from users who do not have the means to buy in-app purchases but also allows other users who would rather pay than watch an ad a better, more user friendly alternative than simply being forced to watch the ad.
You could also combine in-app purchases with in direct advertising – provide an app with a supplier directory and offer a good section of features for free but also charge users for some high end, premium features.
Another popular choice is to have a version of your app with ads and a once off in-app purchase to remove ads.
First things first…Let’s get started on the app… Want an app developed? Get in touch with us to discuss what we can do for you!