HOW APPS MAKE MONEY?

Smartphones have taken the world by storm that I am writing this piece of blog from my smartphone. The mobile market has shown phenomenal growth since the beginning and it continues to surprise its users even today. With the advent of smartphones, mobile internet usage beat desktop usage way back in 2014! This is no surprise considering that 80% of the internet users in the world own smartphones. The mobile market is definitely the new place to be. It’s no wonder that EVERYBODY is trying to get in on the action.

While traditional businesses stick to the conventional business models, they are unable to target the majority of their target audience whose world revolves around their mobile devices. A traditional entrepreneur is usually skeptical about getting an App for his business because of the following reasons:

  • App Development Costs: Normally, business people consider making an App as one of the small investments in their business. This notion is completely wrong because making an App is equivalent to starting your business from scratch, considering the new platform and audience. Traditional businesses might have a good brand presence in their local market but they would still be freshers in the online business market. That being said, entrepreneurs eventually hesitate to get an App because of the huge development costs involved.
  • Lack Of Technology Background: Business owners with no tech background face a lot of difficulty in understanding the App based business model and how they can be benefited from the same.
  • Increasing Number Of Fraud Companies: At times, it is difficult to find out a genuine company that does not take advantage of one’s ignorance. Every other company claims to provide the best at cheap rates which is why some of the traditional businessmen end up making a fool out of themselves.

There can be other reasons too but the above mentioned reasons are common to every business vertical. One answer to everything is awareness. The more you research, read and explore; the more you will know about it. Take our Tech Brewery as an example; we target every industry, research on it, have the best tech teams to design and develop tech solutions and then share the experience explicitly with our audience.

Coming back to the topic, here are a few questions for you:

  1. Do you have a smartphone? (I guess, yes)
  2. How many Apps do you have? (I don’t know the exact number but a minimum of 20)
  3. How many Free Apps do you have?
  4. How many Paid Apps do you have?

The third and 4th questions might have variation in their answers. However, majority of you would be having free apps and a few would have one or two paid apps. Paid Apps normally charge a certain amount when you download which is not the case in Free Apps. That being said, Free Apps still earn more than Paid Apps. Wondering how? Let’s take a dig. A deep dig.

Invest In Making An App And Earn More

While downloading a free app, if you are not being charged, then how are they making money? As a matter of fact, free apps generate a total of 98% of the worldwide revenues. That is literally a lot. That justifies the large number of free apps on Play Store and App Store as compared to paid apps which make only 10% of the total count.

Tech publishers such as Techcrunch predict that revenues coming from Paid Apps will go down drastically in the coming years. Code Brew Labs has worked with clients across the globe. While helping entrepreneurs establish a strong foothold in the mobile industry, our business analysts made sure that all our tech solutions were sustainable. As a result, not just our Apps generated good revenue for our clients but also ranked in lists of top apps in various categories.

If you have made your mind about investing in the app development, it is time to know how the app will generate revenue you for other than your business sales.

How Free Apps Make Money?

With a mobile application, businesses can sell their services and products directly to the customers. This is the primary source of revenue for every business vertical. However, there are other app monetization methods that helps you earn extra bucks. Therefore, investing money in app development will never be a bad idea. Let us explore these methods to understand how you can leverage them for your business.

Advertisements

The easiest way to earn money through an app is by using a third-party ad network. It is very simple. You, the app owner has to display commercials in your application and the third party will pay you for it. You will get paid whenever the ad is displayed or whenever a user clicks on it or downloads from the given advertisement. To display the ads in your application, you can choose any of the 4 main types.

The easiest way to earn money through an app is by using a third-party ad network. It is very simple. You, the app owner has to display commercials in your application and the third party will pay you for it.

Interstitial Ads:

These are the full-screen pop up ads that are displayed when a user completes some action or at a specific time. The uninterested users can click the cross button to stop seeing this kind of ad.

Banner Ads:

Ads that are small strips, normally displayed on top or bottom of the app screen are called banner ads. These ads are preferred more because they don’t hinder the user experience.

In-app Video Ads:

Video ads are normally used as a reward to the user. For an instance, it can be video that user has to see when he/she completes a level in any game to unlock the next level.

Native ads:

Native Ads are different from other advertisements as they seem like a natural app element. User are not annoyed by these kind of ads which is why these are the most preferred ads. However, you must know that revenue through these ads is generally lower than the other ads.

Subscriptions

Users are becoming more and more dependent on the digital world for their daily dose of news, entertainment and connectivity. This has made subscription based model successful. Subscriptions is a common app monetization strategy used by app publishers at a large scale. Users subscribe to some kind of content on a monthly, quarterly or annual basis and pay certain amount of money. Many applications provide free content initially so that the user has enough time to decide whether he/she wants to pay for it in the long-term or not.

Subscriptions are generally used by cloud based services or apps that offer audio and video streaming. News apps also generate a lot of revenue out of subscriptions.

Merchandise

To earn those extra bucks, have an e-commerce addition to your app. You can sell merchandise through app while offering other services too. To make things easier for small businessmen, Amazon has come up with a service called Merch by Amazon that takes care of the payments and deliveries.

This method is not applicable to all business types but it can generate good revenue if implemented in the right way.

In-App Purchases

In-app purchase method is used to directly earn from within the app. There can be certain features that would become accessible to the users only after they purchase. In games, it can be powerups, lives or certain levels and in other apps it can be premium features that a user can buy. As per Forbes, in-app purchases generate the highest revenue for the app makers.

Most of the games prefer this method because of the virtual currency involved. Other apps adopt this method to transform their non-paying users into paying users without being too pushy. That being said, it is app owner’s responsibility to retain the users so that keep paying.  

Referral Marketing

In the past few years, digital marketing has introduced new methods for different platforms. Referral marketing is one of the primary app marketing method. App publishers promote other third-party products or services to maximize their ROI.

Here are the different types of referral models:

Cost Per Acquisition (CPA):

In CPA method, app publishers can promote other apps or use pop-up advertisements.

Cost Per Click (CPC):

CPC is a click-based app monetization method that requires the app publisher to join networks such as Adfonic or Google’s AdMob that offer text as well as display ads.

Cost Per View (CPV):

CPV model charges users based on the number of ad interactions or the video views.

Cost Per Install (CPI):

Cost per install is comparatively new. App publisher gets paid for each install that comes from the ads displayed in his app.

Sponsorship

Sponsorship is used by a few app publishers because everybody is not aware about this method. In this method, you need to create a community of your target audience around a particular niche. Once you have successfully built this community, you will get sponsors whose target audience would be same as the one of your app. Thus, you must have a list of organizations and entrepreneurs who can be your future sponsors.

Collect And Sell Data

Organizations are becoming data-driven with every single day. This has increased the demand of user data which can give insights like behavior, demographics, verticals etc. And this is how you can use your app for monetization.

App publishers get access to user details such as email addresses, social media and some personal interest details. First, you get to understand your user in a better way. Second, you can earn by selling all of the collected data to some company that needs it. The more relevant data you have for a company, the more profit you will earn out of it.

Bottomline

The mobile world has come a long way. From the beginning, people have been skeptical about its growth and how this would just pass as another phase of technology. Apparently, mobile industry is not limited and it is revolutionizing people’s’ lives with every passing day. For those who thought apps would become obsolete, including me, this industry has just started booming. Apps can take the entire world by storm. So, invest wisely.

Kirti Khanna is a Content Marketer at Code Brew Labs who loves exploring new possibilities in the world of technology and never hesitates to share her opinions.

By | 2018-04-12T12:37:39+00:00 10 Apr|Entrepreneurship Guide|0 Comments

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