Make money with developing apps! That’s the dream. App costs can add up quite quickly, so that has to be recouped. Fortunately, there are all kinds of options to find the right revenue model for your app and to earn your money back!
Today we discuss revenue models that generate $0.1 to $37.88 per user. We use validated data from app research agency Statista for this.
How Are You Going To Make Money With Your App?
- Used for: 49% of apps
- The average revenue per user yields: 1 cent
Ads are widely used in the app world, despite the opposition of being customer-friendly! But it often makes the least money.
Remember that ads are one of the main reasons people remove apps. If you want to give a nice experience to your users, the use of advertisements is not recommended. An ideal middle ground is to combine ads with a premium or subscription revenue model. In the free version, you place ads, but the premium version is ad-free.
2.) Sell Products With Your App:
- Used for: 2% of apps
- The average revenue per user yields: 4 cents
This way of generating turnover is on the rise, due to the increasing size of mobile e-commerce.
Most of the fitness and nutrition apps fall under this category, as they sell health products while giving free/premium fitness plans. Thanks to their apps, these companies are selling more and more products on mobile. If you want to sell a certain product in your app, estimate well in advance how much you have to sell to recoup your app. Check whether this is feasible, how great is the need for your product? Also, keep in mind that these apps spend a lot of money on marketing. This increases the success of the apps, so it is certainly advisable to spend extra on marketing during product sales. But don’t forget to include it in your costs!
3.) Paid Apps:
- Used for: 50% of apps
- The average revenue per user yields: 0.4 cents
A very clear revenue model: you ask for money in advance to download your app. Half of the apps are still using this, but this percentage is decreasing. It is debatable whether it is so tactical to choose this. Paid apps are less popular in the Google Play Store, plus: only a small proportion of people opt for instant purchase. Therefore, you earn little with this model.
With the advent of app subscriptions and premium versions, users are used to trying a product before making a purchase. If you immediately start asking for money before they know how well the app works, it scares the users. If you’re going to develop paid apps, make one for the Apple Appstore. Apple users buy percentage-wise more apps than Android users. In addition, this is an interesting model for well-known apps that people already buy.
4.) In-App Sales:
- Used for: 50% of apps
- The average revenue per user yields: 21 cents
Half of all apps use in-app sales, which is a fairly high percentage. There are 2 different ways you can do this; with consumables and premium versions.
Who does not know them? You play a game of Candy Crush or Farm Heroes and your lives are finished. For a small amount, you can just continue playing or buy extra attributes to pass the level. In order to progress in a game, many free apps allow you to make purchases. A smart way to make money; the app is downloaded a lot because it is free. The more users, the greater the percentage that makes another purchase.
“This is a tactical way to show the value of your app without giving away too much.”
Premium or Pro versions, you have probably seen them. Users then get the app for free (Free), and later pay a small amount to use more functions in the app (Premium). Due to the combination of Free and Premium, we also call this Freemium. A tactical way to show the value of your app, without giving everything away immediately. This overlaps with paid apps, which is sometimes also an upgrade from a free app.
So it is up to the user to decide if this feature is worthy enough to put money into it. In an app that is very useful to the user, the premium versions sell themselves. It’s up to you to find out what you are giving away for free and what is paying. In any case, do not give too little, because then users will not stay. Think for example of Tinder: you can use this dating app for free and swipe through potential partners. Did you accidentally swing a partner away? With the premium version, you can undo swipes.
- Used for: 19% of apps
- The average revenue per user yields: $37.88
Subscriptions to apps are slightly different than premium versions. Basically it works the same, users have to find the app so valuable that they want to pay money for it. The difference with app subscriptions is that you receive a certain amount every month. It often concerns so-called content apps, such as Spotify or Netflix, where you pay a monthly amount to listen to ad-free music or to watch series and films. You can also take out app subscriptions for magazines, newspapers, or even games.
Spotify itself does make a combination of the premium and subscription models. With the Spotify subscription, you can use the app ad-free. For many users, it has the added value of listening to music without annoying commercials in between. The value is then higher than the price, $9.99 per month in this case.
With subscriptions, it is important to realize that these are products that a user already knows. They know the Netflix or already watch HBO. The user knows the value of the product and switches to a subscription. So if your app is completely unknown or does not exude confidence, people will not subscribe to your app. Are you going to develop apps? Then the ideal position is that people already know your brand if you want to sell app subscriptions.
However, convincing a user to subscribe can be tricky. That is why it is smart to consider having a company or organization pay for the subscription. It takes a lot of effort to convince an average user. In a company that works relatively faster: you immediately convince many people to look at once and they make the purchase on the basis that they yield something. In other words: they can recoup the costs of the revenue model.
So there are all kinds of ways to make money with developing apps. Which tactics work best depends entirely on your app idea.