How to Make Money Through App Development
The mobile application development services industry offers businesses the opportunity to earn millions of dollars. However, not every business mobile application earns an equal share of the Android and iOS market revenue.
Despite the similar mobile application development process for money making apps, not every business receives billions of dollars transferred to their accounts. This is causing startups that have yet to enter the mobile industry to ask questions such as, "How do apps make money?", “How do you make money from an app?" "What are some successful business app monetization strategies?" and so on. These concerns will be addressed in this article.
Current App Monetization Market Statistics You Should Be Aware Of
According to the July 2022 survey, there are over 2.65 million apps in the Google Play store. It is also predicted that gaming android apps will dominate by 2024, accounting for more than 70% of total app revenue in the Google Play Store.
In the second quarter of 2022, the number of apps available on the App Store for iOS-based applications was over 2.18 million. When compared to the previous quarter, total app revenue has increased by 5%.
The combined Apple Store and Google Play Store app downloads in the first quarter of 2022 are expected to total 36.8 billion. This represents a 2% increase over the previous quarter.
According to app monetization statistics, paid apps account for 8% of US app revenue, while ads account for 25% of US app revenue (video ads, popup ads, display ads etc.).
Revenue generated by in-app advertising is expected to grow by 4% between 2021 and 2022. Furthermore, in-app purchases are expected to rise by 8.4% between 2021 and 2022.
The figures above show that earning money from apps is a highly competitive market. In such a case, you will undoubtedly want to avoid having your business app fail in the market. This is most likely why you should prioritize focusing on the right considerations before developing your business application.
Considerations Before Developing Money-Making Apps
Before you invest in designing and developing your app, you should conduct research and make a list of important factors. While you can conduct your own research, it is best to seek technical advice from a reputable mobile app development company or an industry expert who is well-versed in money-making app development.
Before developing your app, make sure to include the top four considerations listed below when looking for these factors.
Function of the app
Before deciding on a monetization model, you must first understand the nature of your application. What and how does your application address any problem?
When considering how apps make money, the app purpose is critical. Answer these questions to gain a thorough understanding of the purpose of your app.
- What problem is your app attempting to solve?
- What software development services will you require to create a successful app?
- What is the market impact of your app monetization likely to be?
- And how will the app be useful in meeting the needs of customers?
When you have a reasonable answer to the purpose question, you will be able to select an appropriate monetization strategy for your application, such as subscription models for service and content applications.
The target audience
The target audience is another factor that influences how apps make money. If you are creating a mobile application for business people, it is critical that you use a monetization strategy that does not waste their time. Similarly, when developing an app for children, it is a good idea to provide a few solutions and features for free.
To effectively earn an online income from app monetization strategies, you must first examine your target audience. What is the intended audience? What do they require? What will they pay? Simply put, your users should be aware of the true value before making a purchase.
Examine your competitors
Performing a competitive analysis for your mobile app idea also helps you decide how to make money from an app. The insights help in determining what strategies similar applications in the market prefer and how much profit they have earned. This eventually aids decision making.
The market is cutthroat, and competitor analysis isn't just for highlights, functionalities, and design of an application. You can easily discover the monetization business plan for your application with proper research and knowledge of the competitors. All you have to do is ask yourself questions like, "How much do competitors make?" How dependable are their models? Is there any gap that could be turned into an opportunity for you? A solid marketing strategy for your mobile app development can also help you accelerate marketing and sales.
Technology
The set of technologies you incorporate into your application not only improves the user experience and distinguishes it from the competition, but it also contributes to the revenue generated by mobile apps.
For example, a traditional business mobile app monetization platform model pays developers only 70% of the amount paid for a mobile application. A blockchain-based application model, on the other hand, delivers 85% of the total app profit share.
With that out of the way, let's get right to finding different models to investigate how to make money from apps.
Consider These Six Mobile App Monetization Models
The pricing app strategy you choose for your app also has an impact on the money making apps. As a result, it is critical to be familiar with all of the bankable mobile app monetization strategies available.
In-app advertising
While the application is free to download and use, you can still earn money by interacting with the advertisements displayed within your application. The in-app advertising revenue model has been thoroughly researched and proven to be profitable.
This model includes a variety of formats such as interstitial ads, banner ads, video ads, native ads, text ads, native ads, and so on. How much do app ads earn? Depending on the type of ad, the average revenue per ad impression can range between $0.10 and $10.
The Benefits of In-App Advertising
- creates a target audience
- quicker outcomes
- Excellent extension for the intended audience
Cons of in-app advertising
- More competitor market share
- Audience involvement is low.
In-app purchases and the freemium business model
When considering how to make money with an app without ads, the first monetization strategy to consider is freemium.
The application is free to use in this location. However, users would have to pay a fee to purchase a wide range of virtual elements from the mobile application. This includes additional lives, ad blocking, premium app content, game currency, and other benefits.
Advantages of in-app purchases
- Users have a larger user base because they can try the app before purchasing it.
- If properly planned, the app provides maximum profits and higher returns.
The advantages of in-app purchases
- Within the in-app purchases, the app must pay the fee charged by the App Store (i.e. 30%).
Model of subscription (Software-as-a-Service)
The subscription model is another strategy that has been proposed as a solution to the question of how to monetize an app.
In this case, users are asked to pay a weekly, monthly, or annual fee in exchange for a specific service provided by the mobile app development company. This business and monetization model is frequently recommended in the case of cloud-based services, audio and video content-based apps, and Netflix.
Advantages of Subscription Model
- A large number of free users
- You can keep free users in the app with limited features even if they cancel their subscription.
Cons of Subscription Model
- It takes strategy to determine how much content you can offer for free.
Sponsorship
Another way to profit from a mobile app is through sponsorship. This model is typically used with applications that already have a large number of regular users, and it is appropriate for connecting with brands in the same market niche.
When discussing in depth how apps make money using this monetization strategy, there are two options -
- Divide revenue generated by the mobile app equally.
- Set a monthly sponsorship fee.
Advantages of the sponsorship model
- Increases awareness of your business app concept.
- Consolidates your position as an expert
- exposes your app to the right audience
Cons of the sponsorship model
- If not done correctly, it causes controversies.
- To gain sponsors, you must have strong networking and marketing skills.
Crowdsourcing
Crowdfunding, an alternative funding model to consider in 2022, is also a profitable method of monetizing mobile apps.
To raise funds and do the necessary marketing, you exchange your app idea or publish an MVP version on platforms such as KickStarter, CrowdFunder, Indiegogo, and Fundable.
The Benefits of the Crowdfunding Model
- The simplest way to finance your app with no upfront costs.
- You will be able to gauge your audience's reaction.
- Your investors may become your customers as a result of the process.
Cons of the Crowdfunding Model
- It's not an easy process; it takes a lot of time and effort to build and pitch your project.
- Failed projects can harm a company's reputation.
Affiliate hyperlinks
This is a different type of sponsorship in which, instead of granting sole advertising rights to one organization, you negotiate with a few interested parties and include their reference links in your application. If you don't have a wealthy player on the market willing to cover your costs, this is a good way to supplement your app income.
Now that you understand how apps make money and what factors to consider when determining how much an app makes, let's wrap things up by learning how to choose the best app monetization strategy for your business and gaining insights into future trends in the mobile app market.
How Do You Select the Most Effective App Monetization Method for Your App?
Finding the right combination of monetization strategies for your app to make money is a critical piece of the puzzle that determines the success of your business. But don't worry, here's a viewpoint to help you through your decision-making process.
Creating a funnel that leads your audience to your monetization model
Once you've identified your target audience and user personas, you can build a funnel to convert your traffic into revenue for your app. For a language learning app, for example, gaming features, mini challenges, and daily quizzes can be a huge hit. Once your users are hooked, you can increase the complexity of these features and engage them monetarily.
Selecting the best platforms for your app
An experienced mobile app development company will recommend an app domain where your target users work best. Having said that, when deciding on a platform, keep the cost of Android app development and iOS app development in mind.
Most businesses create money-making apps for both platforms to ensure they reach their entire target audience.
Making use of native extensions
You can use native strategies if you can extend your application, such as adding levels to your gaming app or more audio lessons to your learning app. This means that the basic version of your app can be free and accessible to everyone. You can also provide advanced features through in-app purchases or subscriptions.
Taking into account local factors when pricing
Consider local factors that make a significant difference in your app revenue when finalizing your pricing structure via in-app purchase, subscription, or funding. Factors such as cost of living differences, the cost of competing apps, and your competitors' local pricing models can all have a significant impact on your app's monetization model.
Using statistics to validate your model
Tracking app metrics and analyzing user statistics are also important considerations. To make sound and long-term decisions, you must first understand their purchasing habits, average revenue per user, new and returning customers, and so on.
In some way, your app monetization strategy will affect the user experience. Because app monetization is calculated based on the number of active users, keep your app's user experience at the highest level possible. What else is there?
The Future of Business Mobile App Development and App Monetization
You should be familiar with the future of mobile app development now that you understand how apps make money. Business mobile apps have made a lot of money over the years, and this trend will undoubtedly continue in the coming years. Every year, gaming apps make billions of dollars, but generic apps continue to make millions and do well in the industry. Augmented Reality, Artificial Intelligence/Machine Learning, and Virtual Reality are the technology trends that every company must incorporate into their apps to stay competitive.
Finally, the amount of money an app can earn when it is submitted to stores is limitless. All you have to do is sort through your options and choose the best one.
How Can Omninos Assist You With Mobile App Development?
Omninos is a leading mobile app development company that helps its customers and clients leverage the latest technologies to maximize ROI. We kickstart disruption by assisting you in creating exceptional experiences through your business apps. We have delivered over 1000 business apps for every industry vertical and can help you turn your vision into a reality.
Get in touch with our industry experts today to learn more about how we can assist your company in achieving its goals.