Applications (Mobile Applications) make a lot of money. In the first half of 2019, spending on Google Play and the App Store reached an incredible $ 39.7 billion , according to Sensor Tower . This is an increase of 15.4 percent compared to the same period last year.
In addition, application usage is increasing. In the latest State of Mobile report, AppAnnie found that between 2016 and 2018, application time increased by 50% and downloads by 35%. This shows that there are many opportunities for people who want to create applications and earn money.
If you want to try to get a share of the mobile app market, you are in the right place to learn how to do it. In this article, we will first look at how to set up an application, and then explore 6 of the most popular application monetization methods.
How to create an application
The first step to making money from an application is to start creating one. This means that you will need a good idea that people will find useful and want to download. If you do not have a specific idea for the application, you can always think about the problems and how to solve them.
Alternatively, are there any popular apps that you like but think can be improved? If so, why not release an improved app?
The founders of Instagram partially released the app because they love Instamatic filters , but thought it would be easier to share photos. Now it is one of the most downloaded applications to date.
If you are planning to make money from your Mobile App , you should consider this at the beginning of the design process. For example, if you decide to make money from your application using advertising, you will need to build spaces to display banners when designing your application. Similarly, if you want to manage a subscription, in addition to the features available to all users, you will also need to consider features that will only be used by paying users.
In this article, we have divided this process into several stages:
You need to plan your application first.
If you already have an idea, this may be the easiest part of the process. Otherwise it can be the hardest part.
When planning your application, you need to have a clear idea of what it will do and what problems it will solve. You also need to think about your target audience and what will attract them. You can get good ideas about a successful application type by looking at competitors or non-competing applications with the same target audience .
This is also a good way to choose a money-making strategy . If you see that many applications of the type you want to create are free, you will have to fight for success if you want to make your application paid. On the other hand, it can offer monetization, ie making money , from the application you want to create through ads .
In the next step, choose how to set up your application.
Once you have planned your application, you need to start installing it. You have two choices here. The first is to go through the process of creating all the wireframes , graphical interfaces, and test the front end and back end processes for yourself. Alternatively, you can use an app builder to solve this process for you.
While the first option provides more customization, the second option is an easier way for those who do not have experience in application improvement.
If you choose to do it alone, you need to start with wireframing.
If you choose a special route, you will have to start with telframing. This will help build the structure of your application . There are many tulles that can help you in telframing, including Microsoft Visio and Axure . Be sure to test these telframs extensively.
Then Design Visual Elements for Your Application.
Here, you can start designing the visual elements of your application, including your logo, color scheme, and any graphics or animations you use.
Whether you choose to install it yourself or use a DIY application builder, you have to do it. If you do not have the required experience, you can hire a professional to solve the process for you. Sites like Upwork are great for this.
Solve the Front and Back Tips of Your Application
The next step is where things get harder. You must first set up the back end of your application. Fixing this will ensure that your application works as it should. If you have limited experience in software development, you can use the app builder to save time and get rid of stress.
You can then design the front end, which is the interface that the user will see.
Finally, Test Your Application
Although you should test while preparing your application, you should also test the final product in the final stage.
You should try the application on multiple devices and give it to people who are suitable for your target audience. This will allow you to gather different opinions about what works and what doesn’t.
If you see any problems, make sure you fix them before releasing your application.
How to make money from the application
Now that you know how to create an application, let’s take a look at how to make money. In this article, we have divided monetization methods into 6 categories:
- Paid applications
- In-app purchases
- Sales partnership
- Mixed earning methods
The best way to create an application and make money will depend on the type of application you create. Games often give good results in in-app purchases. On the other hand, many programs, such as service applications, make a lot of money through subscription programs. You can also use ads to make money from your application .
The good news is that there are many examples of successful applications, regardless of the method of earning money you choose.
Before you get started: How much of an application does market share?
The main factor you need to consider when determining the price of your application is how much the application market you choose to distribute your application will receive. Both Google Play and the App Store have very similar pricing structures. Let’s take a look at them.
- Google Play receives 30% of the cost of all applications and in-app products.
- Receives 30% of all subscriptions for the first 12 months of the customer’s subscriptions. After that, it only takes 15%.
- To create a Google Play Developer account, developers must pay a one-time fee of $ 25.
Apple App Store
- Apple accounts for 30% of all apps and in-app purchases.
- Like Google, it drops 15 percent after a customer subscribes for 12 months.
- Developers have to pay $ 99 a year to release apps in the App Store.
6 Ways to Make Money from Apps
Here are 6 ways you can monetize your application.
1. Buy your application
Creating a paid app is probably the simplest way to make money from your app. All you have to do is create an application and make money from the people who download it. Both Google Play and the App Store make it easy for users to pay for apps, and the result is a ready audience.
But it can still be difficult to succeed.
If you want to encourage people to download your paid app, you need to give them a value. This can help you sell your app if you have an existing audience, or if you have a budget that you can spend on promoting your app.
In addition, you will have to put a lot of effort to rise in the list of your application market, because you have to give people a good idea about the product without being able to practice your application.
There are many things to consider when evaluating your application.
Take a look at the average price of competing apps to see how much you can bet. If you want to use ads to encourage people to buy your app, you need to think about how much it will cost for someone to download the app.
As you can see from this screenshot , most paid apps are cheap. In the current list of the most paid apps in the UK, only two of the top 21, which cost £ 10 , should be less than £ 5 . These are Site Audit Pro and FL Studio Mobile.
Things to think about
Paid apps can be limited, although they are a good way to make money from your app. First, there is no way for people to try your service. This can act as a barrier to stopping downloading your product. This can happen more often if your brand is not well-known, and you may have to fight to convince people to pay for your app.
A simple solution might be to offer to download your application for free and then offer customers a one-time payment option to unlock all the features of the application. In both Google Play and the App Store, this is considered in-app purchase, as the user does not have to pay to download the application.
In general, you can see that other methods of making money are more effective. According to AppAnnie , the highest paying application in the US on July 3 was Minecraft. However, it was only the 29th most profitable application. The second most lucrative application is Heads Up, which is not even in the top 50.
If you’re looking for a way to increase mobile app revenue , using a subscription or in-app purchases may be a better option than attracting users to pay to download your app.
2. Use the subscription to get recurring payments
This is a subscription when developers involve users in a recurring fee for using the application. Although developers offer users the option to pay in advance for a longer period of time (for example, annual or quarterly) to make a discount, the payment is generally monthly.
This is a common type of monetization in applications such as service applications or media-enabled applications. Consider live streaming products like Spotify or Netflix, or productive apps like Microsoft Office or Dropbox.
Subscriptions are great for developers because they can consistently generate recurring revenue from people who use their apps. This is useful for users because the monthly payment expires quickly.
Unlike paid apps, subscription apps are usually free. This can be a good way for developers to gain a user base. More downloads will also look good on the App Store and Google Play .
To encourage people to use the service, developers often offer free trials. This will give them an idea of what the application is about and how it can benefit them. Alternatively, apps that use a subscription model can offer a basic level that provides some features for free, and then a paid level that offers a full service.
A good example of an application that does this is that Medium offers users a limited number of premium articles per month, in addition to the site’s free articles. Users must pay $ 5 per month or $ 50 per year if they want the full service.
This may be a good way to keep people interested who don’t want to subscribe now, but can be persuaded to do so in the future.
In addition, it is possible to offer several stages of assessment. For example, a free stage, a cheap stage with some additional features, and an all-inclusive premium stage.
Productivity application Airtable allows users to use this application for free. There’s also a $ 10-a-month plus version, a $ 20-a-month Pro version, and a special-priced enterprise version.
Another type of subscription you can consider is a non-renewable subscription. These subscriptions allow you to access content for a limited time. For example, an application can provide access to seasonal content during a global event.
What to look for when monetizing your application with a subscription
Subscriptions are a great way to generate consistent revenue from your app. However, your product must offer enough value to attract users to pay.
Unlike ad-based monetization methods, you do not create an application and do not make money from people who use your service for free. However, it is possible to show ads in the free version of your product and pick them up when users subscribe.
3. In-app purchases can be highly profitable
In-app purchases are one of the most effective ways for an app to make money. According to Apple, there are four types of in-app purchases:
- Consumables are items such as points used in the game or currencies that can be used within the application. These are common in games and can be used by players to acquire new items or take them to new levels. As the name suggests, these items can only be used once.
Pokemon Go is a game that uses consumer materials very successfully . In the game, users then receive Pokecoins, which can be used to purchase various in-game items. Reports earlier this year show that Niantic earned a total of $ 2.3 billion from the game.
- Non-consumable items are items that do not expire after the consumer has purchased them. An example of this is the additional options in the photo editing application. Once a user receives these items, they can use them as long as they have the application.
- The last two types of in-app purchases are automatically renewable and non-renewable subscriptions. As we have covered subscriptions above, we will not provide details about them here.
The good thing about in-app purchases is that there is basically no limit to how much people can spend. One-time paid applications or recurring paid subscriptions are very limited in terms of the total amount they can earn per user.
Games that use in-app purchases can be incredibly lucrative. In-game purchases in games are often used to allow users to purchase items in order to improve their gaming experience. This has led to free games such as PUBG, Clash of Clans and Pokemon Go being consistently ranked among the highest-earning apps.
However, games are not the only ones that can make effective use of in-app purchases. Other types of apps that successfully offer in-app purchases include photo editing apps that offer additional options or filters, or messaging apps that give users a chance to receive emojis or gifts.
For example, the messaging app Cocoa Talk is one of the most profitable apps globally. Although free to use, one way to make money is to sell emojis that people can use while chatting.
What to look for when monetizing your application with in-app purchases
The most important thing to consider is whether the in-app purchase of your app offers something attractive enough. If you can’t offer something interesting, useful, attractive, it is unlikely that someone will buy these things. In general, games are often successful with in-app purchases.
Another important issue to consider is the dispute over loot boxes. Loot boxes are products that users can buy and provide them with a random in-game items. Although they are an effective means of making money , many countries are debating whether this is a form of gambling.
Therefore, loot boxes are regulated by law and even illegal in some countries. If you want to offer such a product, you must make sure that you look at the laws of the country where you plan to operate.
4. Use an ad-based model
Mobile advertising is a big business. The Interactive Advertising Bureau (IAB) recently reported that in 2018, 65% of all digital advertising revenue came from mobile platforms. This includes browsers and text messages, as well as applications.
Advertising is generally used by applications that provide content to users for free. For example, news apps or games. In addition, it can be used by applications that offer in-app purchases or paid versions to monetize free customers.
The best part of advertising is that it is a good way for you to make money from your application without spending any money on your customer.
The easiest way to get started is to go through the pay-per-click advertising platform. Some of these include Google’s AdMob or AOL’s SSP. Registering in one of them will allow you to start placing ads on your applications.
Most come in the form of ads, banner ads, link ads or videos.
- Banner ads are displayed in your content. They are not sufficiently intrusive; there is an advantage here not to divide the user experience, but they are easy to ignore.
In the screenshot below, you can see how the BeyondPod podcast application uses a banner app inside the user’s podcast feed. It’s almost inconspicuous and easy to ignore.
YouTube, on the other hand, displays larger banner ads that match the content the user is watching. Yes, without the “Name” sign in the bottom corner, it would be difficult to know if the recommendation is an advertisement.
- Transition ads occupy the entire screen. They are usually displayed for a certain period of time or until the user clicks to close the ad. These ads are effective because the user is 100% likely to see them.
The downside is that they are quite intrusive. For this reason, you need to think carefully when placing link ads. This can be a good time when the user is editing a photo or is about to start a new level in the game.
A good example of this is the ad below from the video editing application PowerDirector . When the user clicks to exit the application, a pop-up showing the ad appears. It is not possible for a user to ignore an ad because they have to take another step to exit the application.
However, this is not very annoying, because this pop-up does not appear when the user is in the middle of the project, but only when he leaves the application.
- Video ads are often short ads or long ads that a user can submit after a certain period of time. Clicking on the attachment will take the user to the advertiser’s product. Video ads are useful for advertisers because they are a good way to convey a message about a product.
Video ads are often displayed when uploading another video or before a certain game level. Perhaps the application you know best with video ads is YouTube, which offers an ad before many videos are viewed.
Things to consider when monetizing your application with ads
While it’s easy to get started using mobile ads , there are some downsides. Because you need to have a large number of users to get the most out of it.
According to Businessofapps.com, the average CPM for banner ads (the amount paid by one advertiser per thousand people who see the ad) is $ 1, transition ads are $ 3.5, and video ads are $ 3.
This means that if you don’t have a lot of regular users in your app, it’s hard to create an app and make money from it.
Another thing to keep in mind is that when a user clicks on an ad in your app, it leaves your app. This will reduce the time they spend on your application and may even introduce them directly to a competitor.
5. Earn through Sales Partnerships
Although rarely found in applications, affiliate marketing is a common type of marketing that spreads on the Internet. With a sales partnership, app developers advertise products in their applications and receive a portion of the sales when a customer buys that advertised product.
Reservation or comparison applications are a common type of sales partnership. For example, Skyscanner makes it easy for people who want to buy a ticket to look at prices from a number of providers.
The company receives a percentage of the flight price after the user is redirected to the booking website via Skyscanner and makes a flight reservation. You can see how it works in the screenshot below.
Another example of how this can work is a fitness app that directs users to the website of a grocery store or sports equipment store, which gets its share without any subsequent purchases. Another example is a financial planning application that offers financial products to its users.
The advantage of monetizing applications in this way is the amount of information provided about users. For example, in the above example of a financial planning application, application developers can suggest the exact type of product that will be useful to the user based on the information they have about the user.
Things to consider when monetizing your application with a Sales Partner
The Sales Partnership suffers from many of the same topics as advertising. You will need a lot of users before you can make money . This can help if the product you are a sales partner is expensive or offers a large portion of the purchase price. This will be a good day for you when you buy 10% of your £ 1,000 flight ticket. However, earning 3% from a pair of running shoes worth £ 50 will not be an effective indicator for you.
6. Use a mixed strategy
Many of the most successful applications use different monetization methods . In this sense, developers should not rely on a strategy. Here are some examples of how mixed monetization strategies can work in practice:
- A common mixed money-making strategy is to ask users to pay in exchange for deleting ads. This is a good alternative to the paid app. This means that app developers are still able to monetize free users and at the same time offer more affordable options to those who can afford it. You can even choose to add some extras for those who pay to make the paid option more attractive. This can work for both lump sum payments and subscriptions.
- Some paid apps, especially games, charge a fee for the app and then offer in-app purchases at a higher price. Minecraft, NBA 2K19 and Moment Pro Camera are applications that successfully use this strategy.
- If you plan to rely on ads as your money-making strategy , it may be a good idea to experiment with both sales partnerships and regular ads. If you do this, you can see which type of advertising is the most profitable, and then you can focus on it.
This is the end of our guide to creating an app and making money from it. We hope you found it useful.
As you can see, there are many methods you can use to monetize your application. In-app purchases and subscriptions can be incredibly lucrative due to their recurring revenue potential. However, many mobile apps can successfully take advantage of other earning methods, such as advertising or attracting a user in advance .