How Do I Make Money From An App?

If you stay up to date with technology blogs, you’ll know that apps have the potential to make millions. The highest-grossing app in the world, for example, is Clash of Clans. The addictive games rakes in more than $1 million every single day. You may be surprised to discover that the app itself is free to download. It makes its money from in-app purchases, selling items to help make the game easier or better. Players can spend up to $100 on a single item! Of course, for every ‘Clash of Clans’, there is an app that garners just one or two downloads. Many apps out there never even make a penny, let alone turn a profit. Unfortunately, this is most common route. If you’re an app developer, you’ve got to come up with a great monetisation strategy. Here are some of the best.

Paid download

The first, and obvious choice is charging to download the app in the first place. You’ll be familiar with the two different app markets; the paid market, and the free market. They have separate categories on the App Store. Initially, most developers chose to charge for their apps. The trouble here is that people aren’t usually willing to pay for an app they’ve never heard of. For this reason, new app developers struggle to make any sales when they set a download price. As a result, mobile app developers tend to set the price to free, and find other ways to monetise.

In-app purchases

We touched upon this strategy in the introduction. It’s the technique used by the most profitable apps on the market. The key idea here is setting the download price at zero. That gets new customers through the door. It lets them try the app before they make any purchases. It gives you a small window of opportunity to get them hooked! Then, when you offer purchases, they’re much more likely to buy. Games do this by offering paid upgrades and items that make the game easier. Online stores also use this method to sell their wares through an app.

Free, but with adverts

You’ll probably be familiar with in-app adverts. Most of your favourite applications (especially games) have some form of advertising built in. There are a few options here, and there is plenty of money to be made. However, there are two crucial rules. First, don’t dilute the usability of the app. Don’t irritate or annoy your users with bad advert placement. Secondly, you need lots of users! In-app advertising only pays if they receive lots of impressions or click-throughs. With that in mind, concentrate on building a user base first.

Freemium

Finally, you can take the freemium route. This allows you to offer users a free version of your app with limited features. Once they’re hooked, you can entice them to upgrade to a premium version. Spotify do this very well by removing the adverts when you upgrade.

As you can see, there are plenty of ways to monetise your app. The trick is choosing the most profitable route for you. Of course, they only work if you find plenty of users, so concentrate on building demand first!

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