Monetization of an application is a way of generating revenue from an app. Figuring out how to generate income from your app can be difficult. There are several methods that you can use to generate revenue from an app.
1. Monetization by Ads
This is the simplest monetization method that can be seamless at its best but a burden at its worst. There are several ways to implement an advertisement revenue model:
- Native: Creates a highly integrated ad experience that synchronizes both the design and functionality of the app. Common in social media platforms.
- Banner: Takes up spaces within the interface of the product and remains on screen while the user interacts with the app.
- Interstitial: This is a full-screen advertisement that demands both attention and an action by the user.
- Value exchange ads: Unlocks the aspect of the product upon ad-viewing that is, Pandora recently switched to an ad in which users watch a 15-second video in exchange for uninterrupted streaming.
Every advertising model has its own advantages and disadvantages, so your choice is highly dependent on the type of product you are developing.
2. Monetization by E-commerce
Contrary to a common belief, you don’t have to be selling your own products to adopt e-commerce as your revenue strategy. Whether you own a store or generate affiliate revenue from product referrals, this ‘transactional model’ serves as a foundational block to monetization.
Shopper conversion rates on mobile apps are roughly three times greater than on traditional internet sales experiences, so integrating an e-commerce platform into your mobile app can greatly reduce user turnover.
3. Freemium and Subscriptions
This offers customers a free product or service, although it encourages the users to upgrade to a paid version in order to unlock features that improve their experience. On average, only 1% of users opt for the premium account, so making the paid features enticing is crucial to the success of this model.
Integrating a freemium or subscription system offers a natural way to make your app profitable, so long as you maintain high free-to-paid conversion rates by:
- Reducing disharmony in the sign-up process
- Creating an attractive and low-key
call-to-action - Offering free trials.
4. In-app Purchases
In-app purchases give companies an opportunity to provide a free product to their users while also offering paid features to generate profit. Mobile games have become successful with in-app purchases because of their addictive qualities. For example, instead of offering traditional upgrades, a creative profit-generating feature is allowing users to alter an avatar’s appearance, capitalizing upon a psychological need to look our best in the digital universe.
5. Paid Apps
Unfortunately, this model is difficult to execute successfully. You need to analyze your audience before selecting a paid app strategy. While regular customers will likely be immediately turned away by a price tag, this model has proven to be more successful in the B2B market.
6. Mixed Monetization
If you’re finding it difficult deciding on the best monetization strategy for your mobile app, a blend of different strategies can be easily achieved. For example, many apps have the option that offer users an ad-free experience on a rolling payment basis. The most important ingredient in a successful and profitable app is a good monetization method that generates a high conversion rate.
