Financial

How will I make money from my app?

The answer is not as straightforward as you may think.
6 min read

When looking at how to monetise your product you first need to decide whether it is an investment product or revenue earning product. If you see your app as an investment product then you should be looking to give your app away for free and to drive value in the large customer base.

If, however, you are after a steady stream of income then you are looking at a revenue product. So which revenue model do you choose? Use our handy guide to ensure you maximise your apps potential and ensure you get your monetisation strategy right the first time.


Single Payment

The most common model.

This is the most traditional payment model and works on the concept that people pay a single fee to download your app. Users are not able to download the app without payment and so this is often combined with a free version of the product with a limited feature set. Many people will tell you this is an unviable payment model however it is still one of the most effective; produce a great product, combine with clear screenshots and app store copy and you can make significant revenues.

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Free With Unlock

In-App upgrade.

This model combines both a paid and free version of the app into a single limited product for free download, subsequently allowing users to make a single in-app purchase (IAP) to unlock extended features. This model is one of the most commonly used monetisation stragegies and is a way in which you can create a single product for both zero purchase cost but still drive revenue.  You cannot leave any visual clues as to the paid features in place without incurring the wrath of Apple inspectors. You CAN up-sell within your app by advertising the features however you will need to remove any non-functioning buttons and elements from the free version before submission. This often leads to a confusing experience for your users and also makes you life more difficult when trying to decide what features should be free or paid.

Ad-Supported

Lots of ad networks.

This model works on the basis of providing the app for free and deriving revenues from showing targeted ads for which the developer will receive a payment. This model is regularly used in conjunction with the FWU model to allow users to make a single payment to remove the advertising. Whilst it is possible to generate decent revenues from advertising (if you have a LARGE daily impression count, Flappy Bird for example), it is also one you should exclude for a number of key factors. When you integrate ads into your product you compromise the visual experience for your user. You can spend a large amount of money on your branding only to ruin the aesthetics of your app by giving up a valuable chunk of the screen for a third party to place content into.

Pay-To-Play

Common for games.

Most commonly found in games, the PTP model allows you to use the product but at a reduced rate, normally there will be some kind of value in the product which depletes during activity, you can wait for this to recharge over a period of time or pay to recharge immediately and continue playing. An example of this is in games such as CSR Racing whereby you expend fuel each time you race. The fuel automatically refills over a long period of time however those of us who are impatient can make a payment to continue playing immediately. This can lead to large amounts of revenue as it is a recurring payment and not a single one-off. You will need to work out a suitable mechanic for the refill so as not to fall into the Pay To Win category.

Pay-To-Win

A darker variation.

This is a slightly darker variation on the PTP model however with PTW, it isn’t feasible to advance through the game without making a payment. To comply with Apples rules it IS technically possible but the chances of you doing so are so low that you can consider it impossible. This type of model should be excluded from your thinking otherwise your brand will suffer a negative backlash from an app which appears unfair to your customers.

Donation-ware

Rare but can be effective.

This model is rarely used but is the model by which you offer your product free to your users and ask them for a voluntary donation for using it. Usually they can set the amount they wish to pay, however this is a grey area with regards to what Apple will class as an in-app payment and what they won’t, which is primarily why you won’t see it all that often.If you are looking to drive revenue but in a ecological and fair way then you can opt for this model however it makes a very big assumption about the generosity of our human nature, and that assumption isn’t always correct.

What’s it worth to you?

Choose wisely.

Choosing the actual revenue model for your project is simple, given the list above you should be able to see which category your product falls under. A bigger question is how much to charge!? This is the one area people regularly get wrong and the key to understanding the best approach is actually to look at the end result you desire. Unless you are doing this for fun you will want to make money from it. If you start by valuing your end product, you are doing it wrong. You must put your perceived value of the product to the back of your mind and instead focus on getting as many people to buy it as possible.

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