The answer is not as straightforward as you may think.
How do Single Payment Apps Make Money?
The most common model
This is the most traditional payment model for making money from apps 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 model for how to make money from an app. However, it is still one of the most effective; produce a great product, combined with clear screenshots and app store copy and you can make significant revenues.
Create an App for Free and Make Money With Unlock
This model for how to create an app and make money combines both a paid and free version of the app into a single limited product for free download. This subsequently allows users to make a single in-app purchase (IAP) to unlock extended features. This model is one of the most commonly used strategies for how free apps make money. It 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. Though this is a way to make money with apps, it often leads to a confusing experience for your users and also makes your life more difficult when trying to decide what features should be free or paid.
How Much Do Ad-Supported Apps Make?
Lots of ad networks
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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. But how much money do apps make that utilise this strategy? 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.
Making Money From Pay-To-Play Apps
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 is one of the most profitable apps because it can lead to large amounts of revenue in the form of 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.
Avoid Creating a Pay-To-Win App to Make Money
A darker variation
This is a slightly darker variation on the PTP model. However, in order to make money with PTW apps, it isn’t feasible to advance through the game without making a payment. To comply with Apple’s rules it IS technically possible to create a PTW app for free and make money, 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 Can Be the Most Profitable App
Rare but can be effective
This model for making money from apps 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. It is primarily why you won’t see it all that often for iOS apps. How much do apps like this make? Well, If you are looking to drive revenue but in an ecological and fairway 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.
How Much Your App Makes is Up to You
Choosing the actual model for how to make money from your app is simple. Given the list above, you should be able to see which category your product falls under. A bigger question that helps determine how much money you can make from an app is how much to charge!? This is the one area people regularly get wrong. 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 your apps. 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.