The 5 Most Common Ways to Monetize Mobile Apps

Most companies invest in developing mobile apps for a particular reason: they see apps as being essential tools for the modern marketplace, and believe an app can help them reach new customers and increase sales — or generate a completely new revenue stream by monetizing their brand in new ways, or by creating a new brand altogether.

But while some users are willing to pay money for certain kinds of app, only about 8% of apps are pay to download, so it’s short sighted to assume your existing customers will invest in your app if they don’t have a chance to use it first. Instead, you need to view the app as being an opportunity to either expand your current revenue streams by making it easier for customers to shop, or as a portal for creating completely new revenue streams.

If you want to make a great mobile app that will expand your customer base and bring in more revenue, knowing exactly what mechanism it will use to make money is one of the first things you should consider. Here are the five most common ways of monetizing mobile apps.

1. E-Commerce

The most common way to monetize an app is to use as an e-commerce platform selling products or services you already offer. Turning your app into an online store is an effective way to give your customers a more seamless mobile shopping experience, and can expedite the payment and ordering process.

If you think the e-commerce model is right for you, you will still need to figure out how to make the purchasing process seamless and secure. You will not, however, need to worry about charging for the download or monetizing use of the app itself — your goal is simply to make the app free and as widely available as possible so as to expand your customer base.

2. Paid Apps

A paid app is purchased from an app store like Google Play or the Apple App Store. This model works best for games and other entertainment features users will be willing to pay to use because they already know what to expect from it thanks to advertising, word-of-mouth, or online reviews.

While it can also work for tools that people need in their daily lives, you’ll need to make sure that a competitor isn’t offering a similar type of app free-of-charge.

3. Advertising

Even in the age of ad blockers and google ads, advertising can be a legitimate way to make money off of your app. The language-learning app Duolingo includes paid advertising as part of its business model, and because the ads don’t excessively disrupt the user experience (and because the app provides so much value to users) it has proven to be a fairly effective way to monetize the software while still making it widely available.

4. Freemium

A freemium app is one that is free to download and use, but which offers other extra features for a price. For example, the popular dating app Tinder has a basic version that allows users to meet singles in their area, but also offers a premium versions like Tinder Plus, Tinder Gold, and Tinder Platinum that expand the basic menu of services.

Freemium apps are a great way to attract users with a service they become accustomed to, and then upsell them on the product once they are hooked.

5. Paymium

This is the newest model for monetizing apps, and under the right circumstances it can be one of the most lucrative. The key to paymium apps is that they cost money to download, but also include monetized features.

Due to the expense involved, this model works best with a user base that is already highly motivated to use the app, and has seen most success with online games like Angry Birds.

In many ways, apps are to twenty-first century marketing what newspapers and sales catalogues were to the twentieth. But apps also represent a completely new way of doing business, and consulting with experienced mobile app development companies that can help you find the right monetization model for your idea is the best way to ensure you build an app that will generate real profits.