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Top 5 Business Models for Monetizing your App

June 10, 2015 - Written By Alexander Maxham

Monetizing your app is always a big question. How do you do it? What’s the best business model? How do I monetize an app and keep all my users? All valid questions. We’re talking about the best business models for monetizing your app, today, and a few you probably already know. But we’re going to break down each one and see which is the best for Android monetization.

Free with Ads

This is the most popular Android monetization model out there. The reason being is that it’s simple to put together. Build your app and throw in some ads. Or at least that’s what some developers do. We’ve already talked about how you should strategically place ads, and make sure they don’t hinder the performance of your app.

Having a free app is great, as it’ll get more users’ attention. But having ads is going to turn them away. Which is a big reason why it’s important to make sure those ads are in the perfect spot. With ads, you’ll continue to bring in revenue, even if you don’t get new users. And your revenue isn’t stagnant at a specific level.

Paid Apps

Many developers that do free with ads, also make a paid version of their app. Some will just have it without the ads, some will add a few extra features. While you are bringing in a few bucks for every download, that’s where the cash flow stops. Once the user buys your app, you won’t get any more money from them. Which means you’ll need to really take a look at marketing to new app users. You’ll also have to find a way to stand out from the hundreds of thousands of other apps in the Play Store that are paid apps as well.

Freemium

This model has become very popular with games lately. The game will be free to download, but if you want to get further along in the game or get more energy, you’ll need to spend a bit of money. Candy Crush pretty much perfected this, as they are making six figures a day from in-app purchases. That’s kinda insane, but many are addicted to it.

It’s a great business model, because it keeps the cash flowing, but you have to be careful with this. There is such a thing as too many in-app purchases for freemium games like that. And it’s a quick way to have a customer base that’s not too happy. Just ask Electronic Arts.

In-App Purchases

This is pretty similar to the freemium model, but slightly different. A good example of in-app purchases for an app that’s not a game is the new version of Falcon Pro 3 which is a Twitter client. Basically you have to pay for each Twitter account you want to add to the app. And there are in-app purchases for some other features as well. While this was done to get around Twitter’s API’s, it does serve as a great example of in-app purchases. With IAP, you can use them to sell goods, whether they are physical or virtual goods. A lot of games will sell items that you can use in the game, while in freemium land, they will sell things like energy to get you to keep playing.

Subscriptions

The subscription model you don’t see too often. Typically it’s with news apps and websites. This is to get around ads, by having users pay a certain amount every month or year to view their content. Because journalists need to get paid as well, and if everyone’s blocking ads, then subscriptions is how they are going to go.

The downside to doing subscriptions is that people will find a way around it. Rest assured of that. So it might be good for most of your users, there will be some that will bypass it somehow. You’ll also have less users using your services, which can also be a pretty big deal.