February 20, 2015

How to Monetise an App

Written By Rebecca Larkin

Monetise an appOk so you’ve decided to embark upon an app development project. Great, but what’s next? Commissioning an app can be an expensive undertaking and sometimes the immediate returns to yourself or your business may be hard to justify.

An app can be a great tool for increasing brand awareness or engagement with another part of your business, so sometimes generating returns from the app itself isn’t too pressing. One of our latest projects for Nottingham based business, The Flower Room, is a fun marketing app. The app allows users to create their own virtual bouquets and share them with friends and family via social media.

In other cases you may think it necessary to generate direct revenue from your creation through the user base. This blog will take you through the methods of doing so and help you work out the best method of monetising your app.

There are 3 key areas to consider, the level of success of all of which depends on your user base and the appeal of your app.

Paid app downloads

These can take 2 forms:

  • Either the user pays an initial one time fee to download and use the app. E.g. the apps for £0.79 in the app store.
  • Or it can take the form of “Freemium”. Here it’s free to download the basic app but the user must pay to upgrade for other features such as a “pro” version.

In-app purchases

  • In this method downloads are usually free and monetary returns take the form of purchases within the app
  • The purchases can take many forms e.g. in games can be upgrades, extra lives, currency etc.
  • This has been a particularly successful model Candy Crush; users are given a certain number of attempts to pass a level, if they can’t pass it at this point, they’re given the option to pay to move on.

In-app adverts

  • AdMob is a tool now owned by Google that lets you display third-party adverts within your app. It can also be used to advertise your other apps or services in your own application.
  • Having a free app removes many of the barriers to download for the user, generally creating a larger initial user base. This is advantageous, the higher the number of users the more sought-after the advertising space. Think Snapchat.
  • In-app adverts are displayed in various locations on the app screen and at different points in the user journey, allowing users to click through directly to the advertised item.
  • This method can be used alongside in-app purchase model as a method of generating extra venue but is generally not recommended in paid apps as it is felt adverts can disrupt the user experience

To generate the highest return for your app you must fully understand the app’s value proposition and your user base. Tools like Google Analytics can help you understand how your users interact with the app, enabling you to see data on drop-off points and most frequently viewed pages for example. This can help you begin to experiment with paid models.

The Minion Rush game, from Universal Picture’s Despicable Me is a good example of how you can use a combination of methods. It’s free to download and play, providing another platform for users to engage with the brand. However the app also features 2 monetisation methods: in-app adverts and in-app purchases for gaming coins.

To conclude, it is important to understand your user base to find the best beneficial strategy. But at the end of the day, the beauty of apps in this instance is that the strategy you use does not have to be set in stone, you’re free to tweak your monetisation methods as user data evolves.