Many of us think that a free app is the best way to generate value and revenue. When you are advising your clients who intend to make money from the mobile app, I recommend they don’t charge for the app. I think the price of an app often becomes a hurdle for people to download it. That’s why people like Free apps. Let’s take a look at a few effective ways to generate revenue from a “free” app:
In-App Purchase: One of the most effective ways to generate revenue from a free app is – In-App purchase. It is also called as the “freemium” model. If a user gets an app for free then there are chances that they could purchase additional services along-with the app. If we talk in terms of generating revenue from the App store, then this is the biggie. The top 20 grossing apps on the Apple’s App Store are free and most of them use Apple’s In-App purchase mechanism. Few examples of In-App purchases are:
- Unlocking “Pro” Version of an App: This model is similar to try it before you buy it model and it includes several variations:
- Unlocking top-notch features of the app
- Allowing the app to work after the trial period
- Prohibiting or Disabling ads
- And, some are the combination of the above
- Purchase of virtual goods: One of the popular places where you can buy virtual goods with hard currency. However, typically it is used for games.
- Content: The app includes additional content like a song, video, story, game level, etc.
- Subscriptions: Subscriptions can typically be used in the content app like Zinio or magazine apps in Apple’s Newsstand. When the user buys an app, usually there’s some sample content and the user gets the option of subscribing additional content for some certain amount of time.
Mobile Advertising: This year only, the Mobile Ad Market is anticipated to reach $31.5 Billion. Consequently, many mobile ad companies have also sprouted with numerous revenue models. Today mobile Advertising can be used in conjunction with mobile apps that include in-app purchase and thus allowing a free app, which help to generate revenue and value even if the user doesn’t make any in-app purchases.
Delivering Service or Product: Apps that are providing services to cater needs of the specific genre:
- Taxi Apps: This category of app helps user in requesting and paying for a ride or car pooling services.
- mhealth Apps: This app allows users to fix an appointments and get a consultation from a licensed physician and doctors through a video conference.
- m-Commerce: This category of app helps users in doing purchasing and selling of the products.
- For purchasing goods and services through Apple’s store, you can’t use Apple’s in-app purchase mechanism. You need to use another mobile commerce vendor like PayPal or Authorized.net.
User Acquisition: Whatsapp is the best example of User acquisition model. Being acquired by Facebook for a staggering $19 Billion, Whatsapp has no revenue model. They really don’t have a subscription revenue model nor do they have mobile ads for marketing. So, you must be thinking what model do they use for their revenue. Basically 500 million users does the 18 billion transactions a day. Even Snapchat is also following the user acquisition model that too with no apparent revenue. They have a reported that 30 million users are available there with a valuation of $10 Billion. Their model seems as if – Get the users, Monetize later; Be it big data, Advertising or something else.