Nowadays, as consumers become increasingly tech-savvy, meeting their needs would require more than just having a website and social media presence. To thrive in an ever-changing industry, businesses should be willing to adapt.
For instance, some companies use smart tools like AI technologies to improve their customer service. Others incorporate electronic accessories and brand merchandise into their marketing strategies.
Accordingly, one of the most effective and versatile marketing tools you should look into is mobile applications. An app can help you build a good customer base and, consequently, drive sales.
Below, we’ll walk you through several ways you can use apps to make money. But first, let us discuss why developing an app for your business can be a lucrative venture.
Mobile Apps = Cash Magnets
In 2021, the number of operating mobile phones in the world grew to almost 15 billion. This has led to huge income-generating opportunities for app developers. Moreover, this means you can reach a wider population of potential customers and expand your market.
Additionally, the global mobile app market revenue is predicted to reach a whopping $935 billion in 2023. Hence, if you want to increase your bottom line, you should take advantage of this growth and start creating your business mobile app.
How to Make Money from Apps
Most applications are downloadable for free. Thus, to earn cash, advertising banners commonly known as phone ads are embedded into them. Revenue is dependent on how users interact with the ads. This technique is regarded as the most profitable, generating a reasonable sum of money without requiring your customers to pay directly for the app’s features.
Here are two main types of ads embedded into applications:
- In-stream video advertisements
While the app is in use, in-stream video ads play automatically. These can last between 25 and 30 seconds, are often non-skippable, and include a clickable call-to-action that leads to a landing page.
Since these ads don’t appear until at least a minute into app use, people are already actively engaged and the ad simply acts as a commercial break. In-stream video ads are typically audience-based, so users of the same app may see different ads, depending on their browsing history and interests.
- Incentivized ads
Incentivized ads are those that encourage the user to interact with them, such as filling out a sponsored survey in exchange for a prize or reward. For example, they can gain access to locked features of the application. Users can also be rewarded for viewing a video in full.
Reward-based ads are best for shopping, entertainment, or gaming apps, where users typically spend plenty of time and the rewards are seen as beneficial and generous. Incentivized ads can be presented in a game format, as well, which many prefer for being interactive and engaging, unlike static ads.
Moreover, incentivized advertising works by building user loyalty. Most consumers who interact with such ads get more exposure and pay closer attention to the brand behind them.
Products with in-app purchases are believed to produce the most revenue for their owners. At least half of the top gaming apps contain in-app purchases. The concept involves the use of an integrated system that requires payment of fees to the business. The app store controls all transactions and keeps a certain percentage of commission on each.
Developers can sell a variety of virtual goods straight from an app, including:
- Consumable virtual products, such as power-ups, health points, and extra bonuses. These can be purchased and used only once within the app. Virtual currencies such as coins, gems, or gold are available in most games.
- Non-consumable items do not expire and can be used indefinitely. Game players can, for example, purchase stickers and icons, block advertisements, and unlock additional game levels. In an instructional app, users may pay to unlock more features or get exclusive tips. Subscriptions—which unlock premium functionality or content for a price—can be categorized as in-app purchases, but they are a separate monetization method that we will discuss later.
Premium App Versions
Users can download many applications for free, but the set of available features or the duration of free use could be limited. Hence, after a while, the program may request a payment for the user to unlock the premium version or certain parts of the application, which can be anything from ad blocking to gaming currency.
Subscriptions are frequently utilized by cloud services, video or audio streaming apps, and digital news platforms. The publisher provides a free version with restricted content or features, as well as a trial period. Customers who want to continue using the service or have full access can pay and sign up for an account.
What makes subscriptions different from premium versions is that they are charged on a monthly or annual basis, while the latter requires upfront payment. The fee is also usually fixed, depending on the subscription plan. Annual news subscriptions and limitless swipes on dating apps are both good examples.
Some applications need a price to be downloaded and used. These are designed only for users who are willing to provide a one-time payment to gain premium access from the get-go.
The developer typically comes up with a fixed fee that does not result in a loss, taking into account the cost per install (CPI) charges and third-party server expenses. They also consider the costs of keeping the application running and providing continual updates in the future.
Developing Apps to Make Money
If you’re planning to create an app, it’s crucial to make sure it provides relevant and useful services for your customer base while also generating profits for your business. This being said, among the many ways for apps to make money, the most common and most foolproof is still advertising.
Your monetization strategy should also be in line with the application’s overall goal. For example, if it’s a shopping app, the ads should contribute to enhancing the experience of shoppers, not interfere. Furthermore, it’s important to focus on advertising your app and establishing a following first.
Without an adequate customer base, only a scant number of users will engage with the app. Thus, make sure to widen your reach, so that small earnings from single users will turn into substantial overall revenue.