The app market is massive and soaring to new heights, in 2017 there where 178.1 billion mobile apps downloaded and this figure is projected to grow to a massive 258.2 billion apps by 2022. The global app market is huge and is expected to reach $188.9 USD billion by 2020.

mobile app market size

In such a booming market it’s important to know the best ways to make money from your app. That’s not to say that all apps make money, in fact most will not make enough money to cover their development costs, so it’s a smart idea to consult with an app development company for proper advice before jumping in.

The smartest apps incorporate multiple monitisation methods leveraging off the variety of ways the individual app is used , market forces and the particularities of their target demographics.

We’ve developed this list to educate you on what options are available to make money from your app;

1. Banner Advertising

One of the most simple and obvious ways to monatise your app is by earning revenue through third party advertising. Through this method you will make money based on how many times adverts are shown and clicked through from your app.

best performing ad sizes

Whilst setting up banner adverts on your app is easy enough, you really need to consider the two methods in managing banner adverts, both with their pros and cons:

Third Party Advertising Network

The most popular advertising method for apps, is to use a mobile advertising network which serves the adverts and pays you for the privilege. Setting up this form of advertising is very simple, the mobile ad network you choose provides you with a snippet of code to place in your app. Essentially you place that code where you want the adverts displayed and the advertising network pushes the ads through.

The most popular global mobile advertising network is called AdMob, which is owned by Google. Whilst using this platform, you still maintain a level of control over your app banner real estate and have an interface where you can control the adverts which are delivered. You have the ability to block specific advertisers, whole categories or sub categories from advertising on your app, which helps keep the adverts relevant and competitors off your app.

AdMob app monatisationPros:

  • very easy to set up
  • minimal to no management time

Cons:

  • you need a large user base before making any substantial money

In house Advertising

This form of advertising effectively cuts out the middle man (mobile ad networks) and keeps you in complete control of your in app advertising. You can set your own CPM and charge as much as you want to companies that are willing to advertise on your app. This has advantages and disadvantages so you will need to weight them properly before deciding which fit is for you.

Double Click by Google (which is being consolidated into the new Google Marketing Suit)  is the most popular platform that helps manage your in house app marketing. The platform is very powerful and can easily handle a network of apps and websites you may own.

double click google

The beauty of this method is you can still incorporate a third party network to deliver adverts to your app, however you have the ability to overwrite them when you have a custom campaign for clients or partners. Once your campaign is finished, the third party network takes over the ad spots again, so you can have a continued revenue stream and maximsed revenue.

Pros:

  •  You can set the CPM, and charge however much you want
  • In depth segmentation and targeting of your audience allows you to charge more $$ to companies wanting to advertisers on your app
  • You have the ability to cross promote your other services or products at no cost
  • Ability to leverage third party ad networks and in house adverts
  • Best way to maximse revenue if you can generate in house management demand

Cons:

  • You will need to manage the advertising and targeting in house
  • Finding people willing to advertise directly on your app and not through a mobile ad network may be time consuming and difficult
  • This method is more technically demanding


2. Traditional app store sale

Selling your app for a once off payment is still a popular method for app monatisation, although the industry has been moving away from it for several years. The biggest reason for the shift is that there are on going costs with app hosting and keeping the code up to date and relevant, so once of payments for your app will fail to further monatise users or create a consistent revenue stream. This however can be offset with the right pricing structure and app popularity.

mobile app development
Apps that do not provide dynamic content, that are quite simple but useful or entertaining generally use this monatisation model the most. Niche apps that are first on market or that are far superior to competitors can charge a much higher purchase price for an app, as long as market forces are willing.

Pros:

  • Simple and easy to create
  • Can provide a high value per user by charging them a premium

Cons:

  •  A once of payment for your app will not provide a continuous revenue stream, which means you may need to support the app hosting environment and code even when purchases dry up


3. In app purchases and subscription models

The subscription model is one of the best ways to monatise your app because it provides a regular source of revenue and ultimately leverages more from each app user (not always). In this model you charge a reoccurring subscription fee to use your app, or a feature within your app. The period with which you choose to set the reoccurring subscription fee is up to you and can range from a yearly, monthly, weekly, daily or micro intervals such as minutes.  How you structure your subscription model will largely depend on the type of value your app provides to users, competitors, market forces and ultimately what users are willing to pay.
reoccuring in app purchase model
Before you jump up and down with joy at the holy grail of app revenue, your app must provide particular value and meet certain criteria before you can use a subscription model on the IOS store. Keep in mind that dynamic data is needed in order to charge a reoccurring fee, so there needs to be fresh, dynamic content to justify a reoccurring fee or subscription.
By allowing users to unlock sections or non dynamic functionalities within your app then these can be charged as a once off in app purchase (known as a non consumable purchase). These are typically charged for removing adverts, unlocking in game content such as levels, maps, unique characters or other fixed functionalities or data.
Remember that you can use a non consumable and reoccurring subscription model together, as well as combining with other models.

Pros:

  • Recurring subscription payments are an excellent way to generate reocurring revenue streams and get the most ROI from your app
  • Non consumable purchases put the user in control and let them pick what functionality or features they want to use and are willing to pay for

Cons:

  • If your app is not structured properly a user will feel as though they are not getting enough value from your app
  • Relying only on non consumable purchases will not provide a reoccurring revenue stream so try to combine models
  • Dynamic data tends to have higher development and upkeep costs so make sure there is a demand for what you are providing


4. In app transaction fees

Integrating third party booking systems can be an easy way to offer extra functionality to your app whilst further monatising your app users. Many third party systems offer open API integration which allows you to integrate their functionality into your app. By doing this, every time a user uses their service (through your app) you get a small fee for providing them with revenue. Examples of this are connecting the ability to book flights, accommodation, order food, or other services. Popular third party integration providers include:

  • airbnb
  • booking.com
  • sky scanner
  • uber
With a transactional fee monetisation strategy, you will need to carefully consider what type of third party integration  offers the most value to your user base and which brands you can align your app with, as well as which kind of fees they will be willing to pay to you.
Pros:
  • Adding third party integration can add useful functionality and an extra revenue stream
Cons:
  • Can dilute the core functionality of your app if the integrations are not well planned
  • API integration needs to be monitored and maintained as you are relying on third party API which will change and evolves over time


6. White labeling – sell your app to businesses

Selling your app to a company or third party can be a great way to get a positive ROI for your app development. In this method you are bypassing the need to invest in marketing and app promotion and selling your app directly to a company that can leverage of it’s own customers and provide value to them. Essentially you would  re-skin/re brand your app to fit in with your buyers branding and potentially offer integration options to their systems.

Pros:

  • Can be an excellence exit strategy with great ROI
  • No need to invest in marketing or app promotion
  • As you have developed the app, you can generate a revenue stream by maintaining and further developing the app for party its been sold to

Cons:

  •  Finding the right buyer may be difficult
  • With the pace of technology your window for white labeling may be limited


7. Partnerships

Partnering with an already established brand as a distribution partner can be an excellent way to leverage their customers as app users and reduce your app promotion costs.  The details of these type of partnerships are very individual and specific on the type of app, industry and individual business.
Pros:
  • Drive app usage  through your partners network
  • Reduce or eliminate app promotion costs
Cons:
  • When going into partnership your partner will often expect you to abandon other monatisation methods

So what is the best way to make money from your app?

There is not a one size fits all answer here due to the individual native of what each app does, it’s functionality, strategy and user demographics. We recommend the following:
  • Combine several monetisation models to maximise revenue
  • Focus on recurring app subscription model as a centerpiece if possible
  • Explore how you can further monetise your app through third party collaboration integration, partnership or exit strategy
App revenue model
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