How do you make revenue with mobile apps? How do ads work? What are in-app purchases? Why should I list my apps for free?
…And a lot of similar questions that I’m asked on a daily basis. In this article, I’m going to explain the different strategies of monetizing a mobile app, and their pros and cons.
There are four main strategies: Advertisements, paid listing, in-app purchases, and subscriptions.
1. Advertisements
Monetizing mobile apps through ads is one of the most known practices. We all deal with apps or games that contain several ads within. You too can monetize your app with ads. You get paid for each click or view depending on the ad network you implement.
I suggest AdMob to start with, it complies with Google Play and Apple App Store Policies. AdMob is easy to implement following their documentation. With AdMob, you make revenue when a user clicks on your ad. Several ad formats are available:
Banner ads are banners that usually appear on top or bottom of the screen. You can place banner ads on any screen where other formats don’t fit.
Interstitial ads are full-screen ads that appear between pages of content. Show these ads when a user navigates from a page to another, but do not overuse them. For example, you can show these ads every 3 pages.
Native ads are customizable to match your app’s design. They usually appear inline with other content. The best use of these ads is when you have scrollable content.
Rewarded ads are full-screen ads that reward users after watching or playing and interacting with the ad. These ads suit games, a player can continue a level after watching an ad if he loses. Or they can get some coins while you gain some cash 😛
You can implement multiple ad formats in your app, depending on its size and context. Make sure to not overuse ads, they can be very annoying and encourage users to uninstall your app.
When monetizing your app through ads it’s preferable to list your app for free. First, you get a larger user base, thus more chances to get clicks, thus more revenue. Second, no one wants ads in a paid app, right?
However, ads can be combined with other models like in-app purchases and subscriptions for additional revenue.
Pros:
- Free app, thus gain a larger user base
- Compatible with other monetization strategies
- Multiple ad formats to fit your app
Cons:
- Ads can be annoying for users
- Users should return frequently to make good revenue
2. Paid Listing
Charging users for downloading your app is another way to monetize it. It’s direct and processed by the app store owner (Apple or Google). You can charge as much as you want.
Listing your app as paid has some drawbacks. First, users pull back when they see a paid app. They’re afraid if they don’t like it after purchasing. So unless you provide a big value and show some convincing demo, other strategies may work better. Also, it’s common that paid apps have no ads, so you’re losing some potential revenue here.
Pros:
- More revenue per user
- Direct, no implementation required
Cons:
- Users may pull back
- Lost potential revenue form ads
- Smaller user base
3. In-app purchases
In-app purchases are a powerful strategy for monetizing mobile apps. You have multiple possibilities on how to implement them. There are two main types of products, consumable and non-consumable.
Consumable products can be purchased again after consumed. Some examples are coins, gems, or lives in a game. Users purchase them, and once consumed, they can purchase them again.
Non-consumable products are permanent and they don’t expire. They are also restored for free when a user reinstalls the app. You can use these in-app purchases to unlock premium features and remove ads.
So with in-app purchases, you can provide your app for free with ads enabled. And offer to remove ads with an in-app purchase, so users can choose to pay or live with ads. It’s a win-win situation. Also, you can make some features of your app exclusive for the pro users who do in-app purchases.
With this strategy, you get the big user base, since you list your app for free, charge the users who are willing to pay for full features and make money with ads from the rest.
Implementing in-app purchases in your app takes some time and effort, but it’s definitely worth it.
Pros:
- Users can try the app for free before upgrading
- Larger user base
- Can offer multiple in-app purchases
- Compatible with ads strategy
Cons:
- Takes more time to implement and test
- Some users leave bad reviews because it’s not completely free 🤦🏻♂️
4. Subscriptions
Subscriptions are the trend now. From music and movies to games, subscriptions are everywhere. You can use the subscription model to monetize your app if it suits it. Subscriptions should be used when your app is used frequently and provides a continuous value for the user.
As in-app purchases, you can list your app for free and provide full features for subscribers, and also implement ads for non-subscribers. You can also make multiple plans with different features. Also, you can offer discounts to those who subscribe for a year or so.
But don’t use the subscription model to only join the trend! Your app should really fit this model or no one will subscribe!
Pros:
- Users can try the app for free before subscribing
- Multiple subscription plans
- Can offer discounts
- Reoccurring revenue
- Compatible with ads strategy
Cons:
- Users may not like the idea of paying regularly
- You need to continuously provide new features and content