You’ve just invested weeks, maybe months, developing an app and acquiring users. Now you need to earn revenue to keep going. But, with all the options available for monetization, which is the wisest choice for you?
From advertising to in-app purchases and subscription models, mobile app monetization has numerous ways of getting users to spend real money on the app.
It’s important to remember that monetizing an app “is a tricky business because most people expect to be able to download a new app for their phone without paying,” says Nathan Resnick, CEO of Sourcify.
While many developers allow ads to be placed within their app as a means of generating revenue, says Resnick, this strategy “often backfires when the proliferation of ads disrupts the user experience and causes them to delete the app altogether.”
Depending on the type of app, subscriptions are a great way to build up a consistent and reliable revenue stream. One VisionMobile study showed that subscription-based apps earned two-to-three times more per user than apps that relied on advertising or a pay-to-download model, while also earning nearly 50 percent more than apps relying on in-app purchases for revenue.
Both Google and Apple are actively promoting subscriptions, which bring in a couple of billion in revenue annually. And that’s after Apple lowered its cut of subscription revenue to 15 percent from the earlier 30 percent. Google also has reduced its revenue percentage cut.
Streaming apps like HBO NOW, Netflix, Pandora, and others are headlining this trend, says Ravin Lad, digital marketing strategist at MoveoApps. According to a Sensor Tower report, streaming apps earned the highest revenue in non-gaming apps in 2016, with Spotify bringing in the highest gross earnings on both Apple’s and Google’s app stores.
Brabble’s app, which uses the company’s trademarked *StarTags technology, merges social sharing and selling. Users can program a direct buy or sell link directly in their posts. According to founder Patrick Mackaronis, Brabble will roll out a subscription-based service in 2019 that will allow companies to use its *StarTags technology.
While subscription-based apps offer a powerful and reliable revenue stream, there are a few challenges to consider. For example, subscription buyers will expect to get their money’s worth, and they’ll want a decent level of service for their dollar.
For entertainment, the subscription model is “a sweet deal, with higher user acceptance rate” but whether app subscription service is worth it is debated in some circles. In “The Subscription App Paradox,” Alan Marsden argues that digital consumption has become an unnoticeable expense that quickly adds up.
Productivity apps like Todoist or Evernote can’t simply release a great service and then update the app occasionally, says Megan Marrs, a content strategist at Localytics. “You’ll need to make sure you can provide plenty of new features and/or fresh content over time, along with great support, to really make this model work for you.”
“The key to success with a subscription model is to keep content fresh,” agrees Marissa Bosche, the marketing communications manager at Apptentive. “Customers won’t see the value in paying to subscribe to your app if content isn’t updated frequently enough. Shortening your app’s update cycle can provide more value to customers, entice them to visit your app more frequently, and encourage them to spend more time in your app.”