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Understanding App Monetization Is Key To Monetizing Success

June 5, 2015 - Written By John Anon

If you are to believe the latest figures then there are more apps in the Play Store then there are grains of sand on the planet. OK, that is an exaggeration but the sentiment is the same. There are so many apps in the Play Store that they may as well be grains of sand. Having your app stand out from all the other grains is where the real battle is. After all, you can have the absolute and definitive best app or game, but unless anyone knows about it, or more importantly, can find it, then it will remain the world’s greatest app without any downloads. The other downside to that status quo is that app developers cannot generate any revenue.

That said, if you can get your app to the forefront of the app market, then you face the challenge of convincing the user to actually download the app. After all, it is not views that equate to revenue, but downloads. However, downloads in themselves, do not automatically generate revenue and factors like the cost of your app are likely to be the most motivating triggers in convincing users to download your app. Therefore, choosing the right app monetization model is essential as developing a good app. Unlike other industries, there is no such thing as the definitive way to price your app. Therefore, knowing which way to best increase the chance of app monetization, is to understand the different models available.

The first one is straight forward enough, charge for your app. Just like you would expect in a store (after all, that is what the Play Store is), stick a price on the label and hope it sells. The emphasis here is hope. Users will use this sticker price to determine whether they think the app is worth the set price you have attached to the app. This can be a dangerous game as different users will place a different emphasis on what an app is worth. However, if they do download the app, then you can be assured that the download equates to revenue. The other issue though with sticker pricing apps (or what is known as a Premium Paid app) is that money upfront, as a rule, is a deterrent. For instance, if you look at the status of apps currently on the Play Store, then the current understanding is somewhere around the 90% marker are free apps. Of the remaining 10%, only roughly half of them are priced greater than the $0.99 marker. As such, premium paid apps are one of the most obvious but also one of the most obvious mistakes you can make.

Of course, the second option is just as simple. Offer the app for free. This will not exactly bring your app to the forefront of the Play Store. Remember, 90% of the apps currently available on the Play Store, employ the same ‘free’ status. However, what this will do is offer those who do find your app, more of a reason to download your app. That said, a free app is not going to offer you any revenue either. But what it will offer, is an increased likelihood of your number of downloads reaching a higher limit. The benefit here is that you can effectively ‘rent’ space in your app to a third party, otherwise known as in-app advertising. This model will mean that you take a smaller cut of the revenue generated from your app, but hopefully, with enough downloads, that cut increases. It is worth keeping in mind though, in-app advertising typically relies on the premise that users click-through the advertising. This is known as a paid-per-click approach and will be the most commonly employed for this type of app.

A third option which looks to utilize the best of both words is that of ‘in-app purchases’. This is certainly a better option for the apps that are more feature heavy and engage the user. By using the in-app purchase model, you can offer the app at the point of sale for free and therefore, engage the user to download the app to begin with. And you can even allow the user to play the app unconditionally – but to a point. These points are where you can sell tokens to further progress, to unlock further features, to buy power-ups and similar. This method is certainly becoming the norm for most develops as it effectively allows the users to gain familiarity with the app and also encourages them to engage more with the app. From this point onwards, the user is more likely (not guaranteed, of course) to want to pay for the richer experience.

It is lastly worth pointing out that although the clear majority of developers are moving towards a free download and in-app purchase or advertising model, that this is not always for everyone. In choosing the right method of android monetization it is important to relate this information to the content of your app. As this is more likely to dictate which method is best suited for your particular app. However, the overall takeaway which should be noted is that although there is no clear right way to choose how to generate app revenue, there are certainly some which could be considered wrong ways.