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Mobile app usage is on the rise. And, the business of app development has become one of the most fascinating areas. But, developing an app is one thing and getting it downloaded is another. So, how to measure the success of your app? – You need to ensure high-performance development, captivating UI/UX designing and right marketing strategies and tactics. Do you know over 100 billion apps are downloaded in the app store annually? What make them getting downloaded? – High-performance development or user-engaging designs? – The fascinating world of application development does not end when the app is well-developed or well-designed – it should be well-marketed too. It’s high time to focus on the complementary nature of developers’ business models and monetization strategy. However, we’ve have discussed about # How to harness your Mobile App Marketing Strategy to Make More Money in our previous article. In this article tet’s take a look on some app monetization models that publishers and marketers choose for their apps:

In-App Advertising Model

A very popular Free, but with Ads, model you’ve probably seen commonly in the apps on your smartphone. In this business model, the cost-barrier on purchase of app is removed and free downloads are allowed. As this app works on the goal of accumulating a sizeable user base and collect information on the users interaction with your app. Many developers sell this information to app publishers who pay them to place targeted ads in their apps.

Example:

Facebook does this well. Its huge pool of users doesn’t pay directly to Facebook to download or use its mobile platform. But, Facebook leverages its vast amount of data to run targeted ads. And, definitely this monetization strategy has proven quite effective for Facebook. According to the social behemoth, a 151% increase in Facebook’s mobile advertising revenue is seen during the second-quarter of 2013.

Paid Apps

The paid app business model simply means users need to pay for downloading your app. That means if users want to have your app they must first buy it from the app store. Mostly, paid apps cost between $0.99 to $999.99, and brands directly make money through their app with every new user. However, this business model is one of the most difficult medium of earning through your app. Because when user pay, their expectation become high. And, to entice users for downloading your paid app, you need to highlight its key points be it reviews, brand, designs or features, basically anything or everything that differentiates it from similar free or paid apps.

Example:

Calendars 5 is a paid productivity app that costs $4.99 in Apple’s app store. Do you know why this app is worth monetary investment? – Because it has emerged as a “smart calendar” that includes tasks, human language, and reminders in a structured and alluring layout. The app’s listing page incorporates fascinating screenshots that showcase its sleek design and high-rated reviews about its great functionalities to entice users.

Paywalls

Like Freemium model, the paywall business model (basically used for subscriptions) allows users to view preset amount of content. But unlike freemium model it focuses on content, not features. Paywalls allows an app user to view a fixed amount of content for free and then entices them by prompting messages of ‘sign up’ for a paid subscription to view or read more content. It’s this offering makes Paywalls best suitable for service focused apps and allows brands to earn revenue on a frequent basis.

Example

Umamo, an app that transforms news stories to podcast is a good example of this business model. By incorporating this business model, Umano allows users to listen to a limited number of stories until they sign up for a premium subscription. With this strategy, Umamo utilizes its marketing strategy to use all of Umano’s best features for a fixed amount of time, which in turn, entice users to avail its premium services for unlimited use and content.

In-App Purchases

In-app purchases that lets users sell physical or virtual goods in app. In a nutshell, this app monetization strategy involves selling physical or virtual goods within your app, and then retaining the profits. Retaining profit through this business model is not so popular and include a wide range of consumer products such as clothes, shoes and accessories. However, in-app purchases can also be virtual goods like extra lives or in-game currency.

Example:

MeetMe, a popular social app has incorporated in-app purchases in their app. It’s free to download and let users browse profiles, connect with people through chatting. To enhance their visibility and gain new ways to interact with people, users can purchase credits that is incorporated through in-app purchase business model. The app’s purchase model is profitable because the app is able to clearly highlight the benefits of in-app currency.

Freemium Model

Similar to in-app advertising, in freemium model too the app offered free to users. But certain features are incentivized and charge money to be unlocked. That means, users can download app for free and gets access to app’s basic functionalities, but need to pay for getting advance features. The goal of this model is to give users preview of your app and engage them through your basic features so that they willingly pick your app’s additional premium features.

Example:

Angry Birds is a suitable example of this business model. The app keeps certain features hidden like being able to juice up your bird, additional levels, etc. and can unlock those features by paying a small fee. However, the success of this model depends on the user engagement with the app. Once app becomes successful in engaging users, then users will pay initial price for premium features without any hesitation.

Sponsorship

One of the newest entrant in the mobile space is Sponsorship business model for incentivized advertising. Through this business model, you make brands and agencies pay and become part of an incentive system. In other words, you integrate advertising into your app to augment your app’s ability to engage users. Sponsorship model requires partnering with other advertisers, who reward your users for completing certain in-app actions. As your app earns money by taking a share of the revenue from redeemed rewards.

Example:

RunKeeper is an early adopter of this business model. RunKeeper uses this business model to encourage its users to keep track of their running activity so that they can unlock exclusive rewards and promotions. Through this incentivized advertising, RunKeeper monetize without disturbing its app’s experience with banner ads.

To choose a right monetization business model you don’t need to follow what others have done before. In the above discussed monetization models, we have highlighted the standard business models that brands are using to generate revenue and value from their app. But, it’s always recommended to adapt and iterate app monetization strategy as per your app requirement to make it correctly work for your app.

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Anisha is a Blogger at Parangat Technologies. She just focuses on key technology and topics which can help people succeed in business.