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Choosing The Right App Monetization Model Is Not Always Easy

July 23, 2015 - Written By John Anon

When it comes to trying to figure out the best way to monetize your app, things can get a little confusing. Gone are the days in which most developers adopt the add a price tag to the app and hope it sells route. Instead, the new landscape for app monetization is one in which there are clear and different revenue generating options. However, the more you delve into the options, the clearer it becomes that choosing the right monetization model is much more difficult than you would expect. For instance, it is commonly understood that the majority of app developers now adopt what is known as a ‘freemium’ app monetization model. To those new to this, freemium, is essentially the option to offer the app free at the point-of-sale and then look to capitalise on in-app revenues (IAPs). The in-app revenues on a freemium model, tend to come by charging the user to further unlock, progress or open new features. In short, allow the user to trial the app and then pay when they are happy with the quality and experience.

Freemium is by far the most popular, which does make you wonder why the other monetization models still even exist. Well, this is probably due to the fact that the rate of conversion (those buying IAPs) is significantly low compared to the overall number of freemium apps being downloaded. Therefore, to make any money from a freemium model, you do need to ensure that your app is downloaded enough times that the conversion rate is enough to justify the method. As the majority of downloaders are unlikely to purchase an IAP, the minority needs to be big enough to generate returns. However, this is where the idea of supplementing a freemium model with another app monetization can come into effect. The biggest of these is probably in-app advertising. In short, allowing the use of adverts within your app, which can independently generate revenues without the user incurring a fee. That said, the use of more than one monetization model seems to be quite low by developers. Instead, most app developers embark on one route or the other.

Of course, the ability to simply sell your app for a monetary fee does exist and can be quite financially successful. However, ensuring success is usually harder when the user has to pay for the app first and then experience it later. This is typically seen as an off-putting measure in this industry. Interestingly though, some app developers do try to make use of the two monetization model by charging users to download the app and then once again charging them within the app for IAPs. This is what is known as the ‘Paidmium’ approach and is quite likely to be the most off-putting for the end user. As such and although there are a number of ways in which you can look to monetize your app, the choices themselves can be sometimes be problematic. Not to mention, if you try to combine the models for a two-pronged monetization approach, then you have to make sure that you choose the right combination. While it seems adopting a freemium model is the best way to increase your user base, supplementing the lack of conversions with in-app advertising seems like the most logical way to grab users and make money without forcing the user to pay. So why does it seem that so many app developers and app monetization companies are still preferring to just go down the freemium route?