If we’re completely honest with ourselves, a key reason to create a mobile app is to make money. And there’s nothing necessarily wrong with that, as developing an app is costly. Whether we like it or not, we need to recoup those development costs unless we have money left to burn. But most of us are not in that position and need our apps to turn a profit.
While all this may sound sensible, it’s not what often happens. Many first-time appreneurs decide to create a mobile app and release it on a whim, hoping it will become a huge hit. And then see the poor reception and low download numbers of their app quash their entrepreneurial dreams.
And even experienced appreneurs often have to come to terms with disappointing results. That’s because releasing several money-making apps doesn’t mean their next app will perform similarly. The truth is that it’s hard out there for app developers. Moreover, many users suffer app fatigue nowadays, whereby they’re not too keen to install yet another app.
So what should app developers do now? Should they stop making apps and move on with their lives? Or should they look at things from another angle? Well, it’s best not to be defeatist and start looking at apps differently and pragmatically.
It’s not easy finding success in the app stores, as these are tightly controlled walled gardens. Furthermore, these app stores have a plethora of apps that seem to cover every niche. But that doesn’t mean that there aren’t new opportunities waiting for savvy developers to discover. Below, we go into greater detail on how to create a mobile app that will find success today.
Understanding App Monetization
A common mistake of first-time appreneurs is releasing an app without the correct monetization model. They usually either overvalue their app and release it as a paid app, or they undervalue it and release it as a free app with no clear monetization strategy further down the road. Thus, leaving money on the table that more savvy developers will grab!
Now, let’s quickly cover the paid app model briefly. Most developers shouldn’t consider this avenue unless their app is undoubtedly premium or a high-quality game aimed at true enthusiasts of the game’s genre or franchise.
Two good examples include Adventures of Mana by Square Enix and Grand Theft Auto: Vice City by Rockstar Games. These titles already have a solid fanbase and were developed by reputable companies. Therefore, users already trust these companies and want to play their games without the hassle of watching ads, so they opt to pay the asking price without any qualms.
However, most developers are not in that privileged position and must adopt different app monetization strategies such as:
- In-app purchases: It’s a model where you provide the basic functionality free of charge, but users unlock extra features via in-app purchases.
- In-app advertisements: Probably one of the most common ways to monetize an app using platforms such as AdMob. At regular intervals and on certain parts of the screens, ads will appear that the user may decide to tap. And you, as the developer, will earn money depending on the click-through rate (CTR) when ads appear.
- Subscriptions: Users pay a recurring fee to enjoy the full functionality of the app or some functionality based on a tiered pricing structure.
- Sponsorships: If your app serves a niche market, you can partner with a brand that will likely appeal to your audience.
When Should You Create A Mobile App With In-App Purchases?
If you’re developing an app or game that works well by offering functionality or additional stages gradually, then in-app purchases make sense.
For example, your drawing app could offer the most basic drawing tools from the get-go. These should satisfy most of your users as they get a feel for your app. But users that want to do more advanced things with your app will want to unlock its additional features.
You can also combine in-app purchases with advertisements, as long as this doesn’t frustrate users or inhibit the usage of your app. You don’t want a banner ad to cover part of your drawing app’s user interface (UI). Or have an ad pop up when the user wants to save an image. These are surefire ways to lose users at a record pace!
But avoid in-app purchases if you’re making a food delivery or any on-demand app. That counts double if this app represents your brand or one that belongs to your customer. And if there are any ads in this app, these should be related to the brand’s product offerings. After all, it wouldn’t make sense if your restaurant’s food delivery app displays advertisements from a rival.
Furthermore, the amount of in-app purchases will differ on Android and iOS, with the latter likely having more. And that’s because iOS users are more affluent and can afford to spend more on in-app purchases and even premium apps. However, that doesn’t mean you should ignore the Android market, as there are significantly more users, and you can tap into more app marketplaces.
In-App Advertisements Vs. Sponsorships
In-app advertisements are a viable option for most startups, as they’re a quick and easy way to monetize an app. But its ad revenue largely depends on the number of downloads it receives and the regions it’s made available. Western countries such as Australia, Canada, the United Kingdom, and the United States of America have higher cost per thousand (CPM) rates than developing countries.
Furthermore, CPM rates differ depending on the types of ads shown and whether they’re on Android or iOS. Traditionally, iOS CPMs have been higher, but lately, it’s not uncommon for Android CPMs to surpass iOS.
But in-app advertisements may not be worthwhile if downloads are too low. An app with a few thousand downloads won’t likely recoup its development costs. So, it’s best to look at another monetization model, such as sponsorships.
However, sponsorships work best if the app serves a dedicated audience in a niche market. For example, you may have developed an app that helps fishermen locate good fishing spots in North American lakes and rivers. And these fishermen love using your app because of its easy-to-use UI and no-nonsense approach to delivering accurate information.
Given that you’ve amassed a small but dedicated group of users, a fishing shop or brand could make for a good partner. They can pay a fee to promote their brand or offerings within your app. And if you manage to establish a long-term partnership, it could generate revenue that far surpasses your development costs.
Create A Mobile App With Subscriptions In Mind
Subscriptions have risen in popularity recently, as users have become accustomed to paying a recurring fee for their favorite apps. Adobe popularized subscriptions when they shifted to the software-as-a-service model over a decade ago.
But will subscriptions work for your app? Well, that depends on what you have planned for your app long-term.
You may launch a mostly fully-featured app for free to grow your user base quickly. And once you reach a certain threshold of users, you can switch to a subscription model that offers additional features. However, these features must be so good that it incentivizes users to move from the free tier to a paid tier.
It’s an exciting time when you get to plan and create a mobile app. But at the back of your mind, you’re wondering if it will make you money. And while there are no guarantees if your app will succeed in a highly competitive market, you can increase your chances with the right strategies.
Taking a hard look at your app monetization strategies early on and adopting the ones that best suit your app will make a huge difference. Contact NS804 to learn how we’ll help you develop apps that succeed in today’s market!