Launching an app that your customers can change the lives of your users is just the first step towards successful mobile app development. The second, and more important step is choosing the right monetization strategy for your application.
App monetization is the process of turning a user base into a consistent revenue stream for entrepreneurs and mobile app developers.
Although your app monetization strategies can vary depending on the product/service you provide. Nonetheless, the end goal always remains the same — to build a steady revenue stream for you.
You see, it could be quite a daunting task to choose the best mobile app monetization strategy because there are many options available.
So how exactly should you move forward with this?
Which strategy should you choose?
Well, in this article, we will tell you about the top 4, most successful app monetization strategies for 2023 that you can choose from.
Top App Monetization Strategies For 2023
In-app purchases are a massive source of revenue for mobile applications nowadays, drawing in $85.3 billion in sales in 2020.
Within an app, users can purchase content, services, or unique features (such as game boosters that skips levels, photo filters, or tailored workout plans).
If you're thinking of including in-app purchases, make sure they enhance rather than detract from the user experience. Each one should add value to your app's users rather than just be a cash grab.
Also, make it clear on your App Store page that, although your app is free, it does include in-app purchases.
You'll need a plan to enable users to make in-app purchases if you're going to be effective with this approach. Send users customized updates about in-app transactions that are relevant to their browsing or activity history, as well as time-sensitive discounts and thank-you messages.
Using push alerts, you can boost in-app transactions by 16%.
In-app advertisements are the most common way for free apps to make money, with sales hitting nearly $10 billion in 2019.
Since you aren't bound to sell virtual products like lives for a character in a game, in-app purchases can be used in a variety of verticals. You can also sell almost any physical item in-app, like Gimbels for your photography app, particularly if the purchase feels like a natural extension of the app's experience.
Although this model fits well for mCommerce and eCommerce retail stores, physical products in-app transactions aren't exclusive to this industry.
In the freemium model, you combine free and paid features and give users limited access to the service through gated features. In a sense, using the Freemium model allows users to access only the basic features or limited services of your app for free.
To effectively pitch and sell the premium offering, you must provide your users with a rich preview and detailed insight into the features. The goal here is to keep the user engaged until they are able to pay for the app's expanded or enhanced version.
As an example, the popular game Angry Birds adopted the same approach, allowing users to become acquainted with the game before eventually increasing their curiosity and convincing them to purchase the paying portion – monetizing apps the Freemium way.
Subscriptions are a type of in-app purchases.
Although most in-app purchases are consumable, meaning they're paid for each time they're used, subscriptions can provide you with a steady stream of revenue. You choose the subscription model, such as monthly or annual, and then the money comes in on a regular basis once you've gained customers.
Providing value is the secret to gaining those loyal, paying customers. When done correctly, putting some features and content behind a subscription can be very successful.
After all, a freemium model helped transform Spotify, a music streaming service, into a multibillion-dollar corporation. In terms of popularity, Spotify is a unicorn, but a freemium subscription-based monetization model can be used by users of all sizes. For example, if paying a subscription means eliminating advertising from the app, loyal users will be willing to pay.
It's all about knowing your customers and how much they trust your product to see if subscriptions are a good fit for your app. After all, your subscription-based monetization strategy will be effective if you charge the right amount and deliver value.
Mixing Things Up A Little
To enhance the sales numbers, more and more enterprises are turning to blended monetization models.
In-app ads, for example, can be present in the free version of your app but disappear if a user upgrades to paid features or content. To increase monetization, paid applications can also provide in-app purchases. Partnership agreements may also be incorporated into any business model.
Apple’s iCloud is the finest example of the Blended monetization model - where the users get 5GB for storage for free but have to purchase the extra storage if they need it (freemium). Then, the payment is recurring i.e. you have to pay $0.99 every month (subscription) for 50GB of storage.
Simply remember that the best monetization methods don't disrupt the app's normal flow and aren't too disruptive to the consumer that they trigger churn.
According to recent trends and app marketing data from prominent research forums and sources, these four app monetization models are the most popular and trusted among businesses.
As a business owner, you should expect to implement one of these models, or a tactical blend of them, to help you develop the best strategy for generating revenue for your mobile app.