Last week’s first part of our mobile app monetization series focused on using mobile ad networks to monetize your app. This article will focus on charging the user through paid apps, in-app purchases or subscription fees.
Whether you decide to directly charge your user or monetize your app through advertisements can be a tough decision. With more than 50% of apps in Apple’s App Store being free, charging users can be a huge download barrier. This part of the guide will help you to make the best decision for your app by considering different factors.
Charging the user a fee for downloading your app is a standard approach to monetizing an app. Typical prices on the App Store and Google Play range from $0.99 to $2.99, with $0.99 being the most frequent one in the App Store.
When considering whether to charge for an app or not, put yourself in your consumers perspective and think about reasons why you would pay for an app:
You can summarize the reasons into 3 categories:
Different customers have different reasons to pay for an app directly. Try to find the most common ones for your target group. Every app is different and so is its pricing- and selling strategy. Especially the app category plays an important role. Is your app a game? Does your app offer a hotel booking service and make most profit from transaction fees? Think about it! There is no golden rule!
In-app purchases (IAP) are a nice way to directly charge users for additional features in a free app. When offering a free app with in-app purchases you circumvent the download barrier set by offering a paid app. Users are able to test your app and can decide whether to pay for some premium features or not. You can always monetize through advertisements, and in-app purchases are a nice way to generate additional revenue. I’ve listed a few examples below:
With most games offering some sort of currency to progress in them you can add a second, paid currency, for progressing faster. Although it’s not a rule set in stone, don’t offer your paying customers an overpowered advantage. Many gamers don’t like such “pay-to-win” games and will give you negative feedback and bad ratings.
Freemium is a well-established online business model that can also be applied to mobile apps. Offer a free app and let people unlock premium features such as additional levels for games or more exercises for a workout app.
Especially with online games, users want to personalize their appearance. Charge users for customization features like character skins or new colors for their car.
Depending on your app, subscriptions for newspapers, magazines or other content through In-App purchases can be a great way to create an additional income channel to your on- or offline business.
The examples listed above are obviously interconnected and can be mixed. For instance, you could charge users for custom features with your premium in-game currency. There are many possibilities and it’s up to you to find the best strategy for your app and target group.
It’s not easy to decide whether to monetize your app through directly charging the consumer or using advertisements. I would recommend to use a mixed approach because it will give you more channels to monetize your app. As I already pointed out, there is no golden rule and you have to do proper research before deciding which way is the most profitable for you.
In the next weeks I’ll tell you about more creative ways to monetize your app. Make sure to subscribe to our newsletter and social media channels to stay up-to-date!