You can count on me to be there for you. This article will help you choose your company's best app monetization strategies. Learn about different methods of generating revenue for your mobile application and their pros and cons. Mobile users can download free or paid apps using a Freemium model.
App Monetization is a New Concept
App monetization involves generating cash and profit from mobile apps. App monetization can be done through developer payments, such as in-app purchases by users, advertising in the app, subscriptions and payments to affiliates for referrals of retail purchases. Mobile app monetization technology as a strategy can help increase downloads of apps and revenue.
App Monetization Competition
It is a challenge to create an app. It is essential to have new ideas and to market these in a manner that reaches as many people as possible. The competition will make it harder to reach these users in the future. The reason for this is a shift in how users look up apps.
More users rely on word-of-mouth recommendations rather than searching through an app database, such as the one found on iPhones. To increase app monetization, you must be able to reach the right audience while keeping them interested. Apps are increasingly being downloaded from search engines, social media and other sources.
Social media ads are available through Facebook, Instagram, TikTok, Twitter and LinkedIn to attract users. Advertising and influencers can be effective strategies to increase downloads and revenue. If you want to boost your revenue, advertising and in-app purchase are both effective ways. To stay ahead of the competition, developers need to think creatively and innovatively about creating and monetizing apps.
App Monetization Statistics
A study reports that the total number of app downloads worldwide in 2024 will be 418 billion. This is up by 55% from 2019's 240.68 billion. The global spending on mobile applications (app monetization), which is the monetary value of apps, increased by 248% in 2023 to $243 Billion from $87.7 Billion in 2020.
Study provides stats on the number of apps available in 2023 for Apple App Stores and Google Play Stores. Study reported that in July 2021, 95.8% of free downloads on Google Play and 93.4% at the Apple App Store. In contrast, Apple App Store and Android App Store only had 6.6% paid downloads.
Research reports that global app downloads will total 343 billion in 2024, 309 billion on Google Play and 34 billion through Apple Store. Research estimated that consumer spending in 2020 on premium apps, in-app subscriptions and in-app purchases was $111 Billion.
According to Business of Apps, games revenues will account for 91% of all app revenue by 2024. This includes $47.5 billion in revenue generated from iOS devices and $31.9 from Google Play. iOS devices accounted for 65% of all app revenue. According to Mobile Report in its article, consumers will spend $1.4 billion this year on apps for health and fitness.
Why Is Having a Monetization Plan for Apps Important?
Let me illustrate this answer by using the example of collegiate sports. Teams join sports leagues for pride in their school, not money. Let's be honest. You need money in today's competitive collegiate sports scene to remain competitive. Teams look to corporate sponsors, endorsements and other financial resources.
Mobile app development is no different. You may not be aiming to create an app for pure revenue, but you should still ensure your idea for the app has some way of generating income. If you do not plan your monetization from the beginning, you may find it challenging to make money later. Redesigning your app to integrate or fit a new business model can be expensive. Let's discuss your various app monetization choices now that you understand why it is essential to consider your app monetization strategies carefully.
What Are the Best Models for App Monetization to Grow Your Business in 2023, and Which is Most Proven?
#1 In-app Purchase Model
App revenue models allow free mobile applications to generate revenue by selling items and services. This can be anything from consumables to virtual characters in games. In-app purchases are a popular way to generate revenue for mobile apps. However, they're most common in mobile games and mobile e-commerce applications. Around 79% of games and 50% of apps that are not gaming use this model.
Mobile app revenue is 48.2% and $380 billion, or 380% of the total user spend. Tool hire provides users with a platform that allows them to rent or buy equipment for free. This allows the user to create a vast customer base, including demand and supply. The app generates revenue through a fee charged for every completed transaction.
To monetize via in-app purchases, tool hire first achieved a precondition: engaging a large audience. How did they achieve this? How? By addressing the critical factors for a successful venture in app development.
- They identified the need first. This was a platform where renters of equipment and those who rent it could connect.
- They then came up with an idea to meet the demand.
- They selected the best partner to design a clutter-free, user-friendly platform to meet their market's requirements.
The in-app Purchase Model Has Many Advantages:
- Increases User Base: With the model, you can generate revenue from your app without charging for download. You can attract and nurture more users who you may convert to paying customers.
- Increases User Engagement: It has been proven that giving users access to your app's basic functionality without any commitment increases app engagement. Your chances of selling in-app items increase as your users engage with your mobile app.
The in-app Purchase Model Has Its Pros and Cons:
- Doesn't Guarantee Significant Revenue: Since app users don't all convert into sales, in-app purchases require many users to generate substantial revenue. Apps must be compelling enough to promote upgrade purchases.
#2 In-app Subscription Model
Freemium is the name of this app monetization method. This model allows app publishers to give users limited access to their app features during the download. The app users who wish to access the full features or premium versions of an application must pay a fee.
A study found that the freemium app model was the second most popular and lucrative monetization method (as of 2019). Geavi is an excellent freemium mobile app developed by our expert team. Downloading and using the powerful application for recording video evidence is free. Users can also subscribe to the paid version for cloud storage, advanced features and other benefits.
Benefits of the In-App Subscription Model:
- Increases the user base. Freemium applications are attractive to many users because they do not cost anything. App developers can build an initial audience of users and then convert them into paying subscribers.
- Increases retention and acquisition of users. It is a great way to boost app engagement by allowing users to test your app and its features without any restrictions. When users feel engaged, they're more inclined to upgrade your app and refer it to others.
- It helps create a predictable cash flow. It is much easier to forecast monthly revenues and keep a healthy cash flow once you've established your app name and have sufficient paying subscribers.
Pros and Cons of the in-app Subscription model:
- Many competitors use it. The free app market is an open-ended marketplace. It's a crowded market. Study reported that 97% of Android and 93.9% of iOS apps were free. To make your app stand out, optimize it and show your users its value.
- No guarantee is given of conversion. You can only expect some people to become customers. The average conversion rate for freemium applications is 1%. It's essential to ensure that the app you create is compelling enough for users to want to pay.
#3 Paid App Model
The paid-per-download app monetization method, also known as the pay-per-download model, allows app developers to earn revenue by charging their users a fee upfront to download and use certain app features. This is an ancient way to monetize an app, and it is often used by streaming apps such as HBO Max, Disney and Netflix.
Benefits of the Paid App Model
- Generates Revenue Effectively: Paid Apps provide an instant cash flow, giving app developers a stable source of income and cash flow once they've gained sufficient brand recognition.
- Better User Experience: One of the most vital selling points for paid downloads is that they do not contain unwanted ads, which can annoy users and cause them to uninstall. Users can enjoy your app more if you remove the annoying ads.
Pros and Cons of the Paid Apps Model
- Hard to Sell: From our experience, users tend to be less willing to pay for brands and apps they've never used. Paid apps need a lot more marketing to build brand awareness. Your mobile app must also offer users an exclusive value or feature to drive conversions. They may be exclusive content, as in streaming apps.
- Has a Slow ROI: Although the paid-download model provides instant revenue, a faster return on investment must be needed. You must first build up a large enough user base to see an impressive return on investment.
- Intense Competition with Free Apps: The abundance of free applications is one of the reasons it's hard to convince users to download your app. To encourage your users to buy your app, make sure it has something they cannot get for free anywhere else.
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#4 In-app Advertising Model
The mobile app monetization model is similar to traditional advertising platforms like television or newspapers. Instead of offering ad spots or space, in-app advertising apps offer their platform to advertisers that want to market goods and services. Video ads, interstitials, banners, screens, and native advertisements are all examples of in-app advertising.
The in-app Advertising Model Has Many Advantages:
- Straightforward to Implement: The implementation of in-app advertising is pretty straightforward. It is as simple as choosing an ad network, selecting the right ad type, and then choosing the pricing model.
- High Monetization Potential: Many Advertisers take advantage of mobile users spending 4-5 hours per day in the app, using the popularity of platforms to promote their services and products.
Marketers now prefer mobile app marketing as a way to promote their products. Research estimates that the in-app marketing market will reach $226.4 Billion in 2025.
Pros and Cons of the In-App Advertising Model:
- Your App Needs an Extensive Base of Engaged Users: Your application must have an adequate number of active users to generate ad revenues sustainably. As we have already mentioned, annoying ads can lead to user disengagement.
You'll need to solve this chicken-and-egg dilemma if you want to create a model for in-app advertising that is sustainable.
- A Highly Competitive Market with a Crowded Marketplace: In-App Advertising is highly competitive. In-app advertisements are the primary source of revenue for nearly all free apps and even some paid apps.
- User Experience Disruptive: In-app Advertisers pay according to how many clicks your users make. Also, they spend more money to take up more space on your platform. The in-app revenue model has its costs. It can negatively impact the user experience and even cause uninstalls.
A study found that excessive app ads are third on the list of reasons why app users abandon their applications. Therefore, you must plan your in-app marketing carefully and strategically before implementing this model.
Delivering an Experience that Your Users Expect
Let's look again at what causes app uninstalls before we get to the final and fifth app monetization models. Technical issues, as well as excessive advertising, are also reasons why users remove apps. We need to focus on this topic because it can be quickly resolved by selecting the right partner for app development.
#5 Hybrid App Monetization
The hybrid strategy is a combination of more than one app-monetization method. Some mobile app publishers, for example, combine in-app advertising with in-app purchases to maximize revenue. Some mobile app publishers combine paid downloads and another strategy, such as a referral program.
COD uses three different app monetization methods: in-app ads, freemium and in-app purchases. Download the app and play the game for free. Players can also purchase items such as weapons, loot and more to progress in the game. Players of COD can upgrade their accounts to gain access to the Battle Pass. This includes premium content and exclusive features.
The advantages of hybrid monetization:
- Flexibility: You have complete control of how to implement your hybrid strategy. We suggest determining which of the three strategies will be your primary revenue source. You can make more informed decisions if you are faced with a scenario where your strategy needs to change.
- Increases Income: The hybrid mobile app monetization strategy follows an old rule of not putting all your eggs into one basket. Adopting multiple strategies allows you to reach a wider audience, increase your market share, diversify revenue streams, and minimize potential losses.
Pros and Cons of Hybrid Monetization
- App developers need to maintain a keen sense of balance for hybrid app revenue models to succeed. You want to make sure your customers are manageable.
Hybrid app monetization adopts practices from more than one model. All the disadvantages that come with other models apply as well. It's essential to find the right balance when implementing both approaches.
App Store Fees on Apple iOS Apps and Google Play Android Apps
Apple App Store iOS and Google Play Android charge app developers a fee based on a percentage (including paid downloads of apps and in-app purchases) from the app revenues. Apple App Store charges a 30% commission for users of large apps. Apple Store fees for developers of small apps with annual sales below $1 million will be reduced to 15% in January 2021. App Store Small Businesses Program is the name of this new program with lower fees.
Apple App Store generally charges a subscription fee of 30% for the first year and 15% after that for all developers, regardless of their size. Apple changed its subscription policy in August 2021 to include some app developers. Apple has reduced its publisher app fees from 30% to only 15% for the first year if you provide Apple News with content, starting August 26 2021.
Apple has changed its policy on subscription fees for apps that are not games, effective August 26 2021. Apple changed its subscription fee policy for non-game apps on August 26, 2021. Google Play will receive fees of up to 30% from Android developers for in-app and paid downloads. Google Play will reduce its fees to 15% from 50% for developers who generate up to $1,000,000 in annual revenue.
Asia Leads App Monetization Revenue and Developer Payments
App developers around the globe are creating new apps in the hopes of finding the next big thing. However, Asia is the top earner, with 41% of all app revenues. Why are apps so profitable in Asia? The historical statistics and data show how Asia's culture and technology differ from the West.
Wandoujia
China doesn't have Android like the United States or other countries. China instead offers Wandoujia. Google Play is installed on only 3.5 percent of computers capable of running it. Developers who depend on Google Play are severely limited.
Revenues
In 2013, Asia accounted for 41 per cent of all app revenues, while the United States and Europe accounted for 41 and 23, respectively. The top gaming apps to increase developer payment include:
- Angry Birds Go
- CarrotFantasy2
The most challenging game in history. When creating their game, developers may be interested in what makes these games popular. The similarity in design or strategy can help sell a game. Over a year, revenues in Asia increased by 162 per cent and in America, they increased by 46 per cent. South Korea, with a staggering 271 per cent growth rate, was the country that showed the most significant increase.
It is clear from the stats that app development is still profitable. By including India and Wandoujia in your game, you can increase revenue as you are appealing to the two most populous countries. There are software programs that can handle multiple currencies and payment methods.
App Monetization Tools
App developers can use trends for app monetization. They don't offer an immediate return but provide the data needed to enhance the customer experience and improve user satisfaction.
In-app Customer Survey
You can earn a lot of money by offering in-app purchases. Still, it's also worth allowing people to complete a survey. You can offer rewards or allow people to get the product by answering questions. You can offer this throughout the entire year or only for a short time. It will give you valuable marketing information. You can ask your customers for feedback on what they like, dislike, or any other information you need. This information can be used to edit your app, increase customers' downloads and usage, and have developers make changes.
Slide Sidebar
Your developer can now add products to your app. A sidebar can be swiped to encourage clients to stay longer in your app. It can include links to social networks for sharing and payment methods for in-app purchases. It can be linked to any payout platform you prefer for your customers' convenience. You can integrate iFrame to make payments seamless without leaving the app if you decide that an external company will handle them. You want your customers to stay in the sidebar as long as possible.
Conclusion - App Monetization
Developers are constantly being presented with new and tested methods or models of app monetization. Increase your profit margin by customizing and adding these optimization options to your app. Most app categories can be monetized, but specific strategies are more valuable than others, depending on the app type and app monetization companies.
Choose the best app monetization firms. You can learn how to monetize apps by watching videos and taking courses. Stats such as the number of active app users, revenue and retention rate are vital. When an app developer is publicly listed or sold, its value will increase the better its stats are.
