4 Business Models To Generate Revenue From A Mobile App

4 Business Models To Generate Revenue From A Mobile App

Posted on by privateuser

Mobile Apps have given rise to the biggest businesses in the world. This is because Mobile Apps have become smart enough to tackle real world problems and efficiently solve them. The growth and delivery of Digital Media has also benefited from business-oriented Mobile apps.

Everyone in the tech space, may it be developers or new Startups, is banking on the power of Mobile Apps to propagate their business. Sometimes, Mobile Apps serve the tools for business while other times, they’re the business themselves.

Consumers worldwide spent a total of $82 billion as reported on mobile apps in 2017. The figure is supposed to cross the $150 billion mark by 2022, which is a clear signal of profitability in this domain.

As Mobile App Development grows smarter, the business of Apps will also rise, giving a wide horizon of opportunity to innovation and constructive ideas. Only in 2017-18, we aided the deployment of three mobile app businesses as the technology partners.

But where do you get started? What is the best way to earn from a Mobile App? These questions are quite subjective. There are a number of business models that can be used for generating revenue from a Mobile App but it depends upon the use case a lot.

We have laid down the top 5 business models that would suit developers and development startups alike!

Sell Advertisement Space

In-App ads is one of the most widely used revenue models by individual developers as it is fairly successful. It works on the idea of publishing free-to-download apps that gather a large number of users over the time, which establishes a sizeable advertisement space.

Once the app crosses a hundred thousand downloads, you can expect to start making significant income by only selling ads. There is evidence that more than half mobile app users around the world click on ads, which makes this a viable option.

Only in US, the mobile app advertising grossed over $33 billion in 2017. The availability of Ad space and smart ad placing algorithms will only increase the scope of revenue generation in this case.

Pitfalls

  • In-app ads annoy users and often contribute to bad UX.
  • Not all apps go well with the advertising model. If you have a utility app, the idea of ads acts counterproductively.
  • Ads can slow down the performance of the app and decrease engagement.  

Freemium Apps

The next best thing that you can do while keeping the app free to download is offering Freemium apps. This is the second most popular model used by developers and companies alike. You can offer the basic functionalities free for use and encourage users to opt for advanced features for a price.

Apps like Elevate, DesignEvo and Tinder etc have been quite successful in using this business model to drive sales.

It not only lets the users to try the app without any intrusive ads, it captures their trust with the functionality of the app.

Pitfalls

  • Limiting the functionalities of the free app too much can result in poor sales.
  • Handing out the core functionalities for free may not generate the need to upgrade to paid features.

Hence, a striking balance between great features and lucrative premiums must be created.

Paid Download Apps

Paid download apps simply mean selling your apps for a fees to the user at the time of download. The process is mostly regulated by App stores such as Apple App Store and Google Play Store.

This model guarantees direct sales as you don’t have to lure users into buying upgrades after doing all the hard-work and each download earns a definite revenue.

There is a healthy listing of paid mobile apps that are too good to be ignored and users are comfortable paying for them. In 2017, paid mobile apps generated a revenue of $29 billion in the US alone.

Paid mobile apps often demand a high user rating, a strong focus on the app performance and marketing efforts in order to make the app really buyable.

Pitfalls

  • The competition given by free apps is overwhelming for paid apps.
  • Counterfeit stores offer free APK downloads for paid apps. Estimatedly, more than 90% Google Play apps have free APKs around the web.
  • The costs of developing an app that is worthy of paid-app model are high to begin with.

Apps as a Service

A number of apps are designed to work as a service for the users where they can carry out real world trade or transactions. This model basically provides the apps as a platform to the users, wherein users pay for utilizing it.

The idea works really well for use cases that usually involves a large number of users. There are instances for this model in almost every app that you have on your phone.

For instance, Facebook uses advertising to generate revenue but it’s provided as a service to the users. Further, Tinder provides some paid features that enable real life convenience which directly integrates into the app.

We recently worked on a Mobile App that acts as a platform for ideators and businesses to find resources for their app ideas. It’s called Thunk and it banks on the same idea. The difference is that it’s basic usage is free.

Pitfalls

  • Users may deter from the app and try to find free alternatives.
  • A large and proliferating user base is required to actually run the model.