This is a guest post by our fan & follower, Mohit Maheshwari, Chief Strategist at IT company NMG Technologies. These are his personal observations/views/opinions & this Website may or may not agree with them.
There is no business model bigger than mobile apps to make you & your company money & help your company grow.
Because mobile app development has evolved as a pinnacle in development due to the massive increase in mobile device usage such as smartphones & Tablets, stats say that more than 60% of the adults use a smartphone, & that doesn’t cover the kid’s underage. Out of this 60%, more than 40% use their phones as their primary way of going Online & connecting on social media & many other apps like a game or business apps.
Source: Statista
In the statistic above you can see the mobile app revenue in US from 2014 to 2023
From a time-killing game to a photo-editing app, mobile marketing is huge; it does everything you could ask for & provide solutions in real life.
Use of smartphones & apps have significantly increased, surpassing the beloved television, which was the favorite time passing activity for over half a century. People are spending time with their smartphones for at least an average of 4 hours a day, & we don’t see the numbers going down, as the mobile app development companies coming up with new & brighter ideas to make their users glued on to their phones.
But if you have a business idea of developing or investing in an app, you’re already on the right path.
Regardless of your unique app idea, however, you need to have a revenue stream. The most awesome app will eventually crumble if there is no proper monetization model to back it up & support it.
But there are ideas on the Internet that suggest you should be monetizing your app. We will pick a few who will help you.
But what the app business comes down to is what type of app you would want to build or have, who is this app developed, & the demographics it is marketed.
Do checkout “Top 15 Cross-platform Frameworks for Mobile Development in 2020”. This will help you in selecting the right framework for mobile app development.
Let us look at some of the app development business models which might make a difference to you.
Freemium
This is probably the most recommended & the most popular business model from the beginning; offer you an app for free; who doesn’t love things for free.
But you need to restrict some features or options that could be a critical function, & it would not let the user even think of uninstalling the app. Also, make sure it is a one-time purchase to receive all the benefits of your app.
I’m sure you could’ve seen these kinds of strategies used in the apps you are already using. Apps like Spotify to Hotstar use these freemium models. They offer the app for free with a few options & features which demonstrate how useful the app is; you need to give them a chance to find out if they like it.
If they frequently use the app, they are more likely to use your app’s premium features.
Freemium apps with multiple purchases
This business model is somewhat like the basic freemium model; freemium apps allow users to purchase different features continuously.
If you ever played games like Candy Crush or Clash of Clans, yes, this business model is generally seen as mobile games where you can buy different features, which will help you move ahead of your game & make it easy.
Source: ResearchGate
This model goes well with the games; other types of apps could use this. Music apps like Soundcloud let you purchase songs to add them to your playlist forever but do not give access to all the songs like Spotify.
Users spend some real money on these apps because it boosts their addiction to your app; remember how popular Candy crush was or is.
Allowing ads on your Freemium app
App development business models includes advertising, which has always a good strategy & a win-win for all the app publishers.
This model offers the app for free, yes, another freemium model, but if you allow ads, make sure you mention it in the app store.
We are sure you might’ve downloaded apps that say, “This App contains ads.”
But if the user does not want the ads to pop out now & then and still in love with your app, he/she needs to subscribe for a premium version that blocks all the ads. Don’t forget to add this option too.
You monetize with the ads & without the ads.
But many apps drive crazy with popping ads on every move the user makes, make sure you work with your developer to not annoy & lead the user to uninstall the app.
Advertising
With the help of a mediation platform, publishers can make money through ad revenue on their app while still offering the entirety of your app for free.
You can use a distinct mobile ad network to accomplish this, or you could go for software that partners with multiple ad networks under their umbrella.
Platforms like AdtoApp that use multiple networks can improve return rates on clicks, all thanks to higher fill rates & better target advertising, regardless of country or target demographic.
These platforms improve the return rate with a self-learning algorithm that can adjust accurately to 280 countries & virtually any target demographic. They can be easily implemented in your app because of their shortcode.
Social media marketing
Marketing your app well in advance of its launch is something which new companies need to follow. Get on social media platforms like Instagram, Facebook, & YouTube if you have the time to make a video.
Source: Statista
Social media brings awareness about your app, & makes people anticipate your app, builds up the hype.
But what should you do on social media? Talk about what your app could do, what it can solve, & how good is your app compared to other apps in the same league.
And most importantly, do not create false hype, because if users expect more & end up getting something not up to their expectations, you know what could happen.
Also, provide links to your app on Play Store or App store on every post you publish. Try to come up with creative strategies, which makes your app viral & gets your attention.
We all know how viral Pokémon Go was before its launch & flappy bird if you remember? It has a crazy hype, & it lived up to its expectation.
Paid apps
This is the essential app model; paid apps need an upfront purchase to use the app; I’ve seen the iOS platform promoting this a lot because they get a cut of their own on every purchase.
You wouldn’t see much of these Android apps, though; even if they are on Android, they are slowly losing momentum both on Android & iOS.
Many apps, which were paid apps, are not freemium apps on iOS, which shows the change has finally come.
But if you still wish to choose this method, you either need a recognized product or brand with a dedicated user group or a promotional service to show your app to a large subset of interested parties.
You could also become a sponsor for another popular app, which means that their users will see your ad and app exclusively.
Now that you know the different types of business models choosing the right business model is a critical task.
There is no shortage of business models & different options, from which you could choose one, which could be incredibly crucial to the success of your business or social media or a game app.
Let’s learn a bit more, which could help you decide which business model is most appropriate for your app.
- First step: Display what’s best for your Content ahead of what’s best for your monetization. At this point in the app economy, consumers are well versed in the various models used to making money from your app.
If your model does not fit the Content, you’ll confuse consumers leading to low retention & revenue.
So Content is the king again!
- Second step: Makeup your mind on how you’re going to monetize your app early in the development process.
The worst thing you could do is force a business model on the app after the app is complete.
Decide which model you are using at the beginning, & then build your app accordingly.
If you’re going to use banner advertising, you need to build space for the banner into the app UI. But if you’re utilizing interstitial or video advertising, you must design natural breaks in-game play to display interstitials like videos, rich media, & stuff like that.
If you’re going to use IAPs, the game design must incorporate purchases items and allow users to purchase the items at appropriate times & levels.
What are the considerations when choosing a business model?
Every business model has its pros & cons. Each method represents a unique way to monetize your app. It would help if you kept in mind some things, regardless of which business model you utilize for your app.
- Build social & viral hooks into your app, make it as easy as possible for your users to share Content with your friends. If you develop a news app, your users should share that article on their social media accounts or send it as a message to someone. And, make sure you are available on all the social media platforms & ask your users to like & share the page, don’t forget to reward them.
- Be aware of which metrics matter & make sure you are tracking them. There are a variety of services that provide app analytics, so make sure you use them. Know the features your users like in your app, & what they don’t, know what the features which users do not use at all are. If you don’t utilize analytics, you don’t know the answers to the above questions, & you might not be successful in optimizing your app.
- You should always be prepared to spend more money to acquire users; stats say that only about 3-5% of the freemium users spend money on your app for purchase, so you would need many users to make some substantial revenue. The average cost to acquire an iPhone user in the United States is just over USD 1.5. iPad user acquisition is approaching close to $3 per user. Android user acquisition cost is hovering over $1.25. That can add up to a lot of money, so be prepared to spend it.
- Completing your app development is a relief, but it is also important to begin marketing your game well ahead of your app launch or during the development process. You could add approximately 50% more time to your development schedule for marketing & optimization tasks before development is finalized. Spending additional time on marketing & optimization will give you a shot at success in the market.
When a client approaches us, they have a ton of questions, which could be like what you have in your mind too.
Starting with the most basic of them all
“I’m thinking of developing my mobile application; what are the main business models I can use to make money, and how do I select the right one for my idea?’’
Before you start planning your app, you should ask yourself these questions yourself.
- What problems will I be solving?
- How will I solve this problem?
If your app does not have a purpose and a solution that is different from others, you cannot survive in the mobile app competition. Because there are at least a thousand apps with the same concept, but only a few come on top because the way they deal with the problem is different.
If you could answer these questions, you could get your answer on which business model to choose.
What’s more difficult building an app or marketing it?
To be honest, if you know what your app should do &if you could communicate the same to a mobile app developer, you would not have any hiccups in building an app, but the pain is marketing.
Marketing your app could be a daunting experience, especially if it’s your first app because you could be doing paid or organic marketing, but marketing to the right person will only save your efforts, which involves time & money.
Following the proper guidelines will help your app generate more revenue than an app with better features than yours; marketing at the right time at the right place is the key.
What are the best ways to market my app & gain users or downloads?
The best ways to market your apps are
· Early & extended marketing plan
· Paid promotions
· Social media presence
· Sponsoring
Early & extended-term marketing plans are more recommended, how early? When you start building your app & plan your marketing strategy from building your app to the point where it reaches a significant momentum.
Paid promotions are always a great platform to promote your app, but you should know where to invest & reach your target audience instead of throwing your money through the drain where you don’t get any results.
Social media presence is a must; hire a social media marketer who could do the job for you, or if you are someone who has a lot of witty answers to give & could engage in user conversations, get started. Platforms like Facebook, Instagram, & Twitter are great platforms for your app’s promotion.
Sponsoring a well-established app which is already doing great could help you a lot. I’m sure you must’ve noticed apps promoting other apps and ask you to install & get some additional features or points in case of a game app; yep, sponsoring works!
What are the pros & cons of business models?
Pros
Business models are great for monetizing your app, & here are some of the most important pros of them.
- Business models give you the kick-start your app needs, but choosing the right business model for your app is the key.
- They help you identify the best practices which could help you understand what works and what doesn’t for your app, by which you could determine what needs to be upgraded & what your app doesn’t need anymore.
- Business models will help you get into the momentum & help you pull yourself up when your app isn’t doing good at times.
- They allow you to gain users in the fastest way possible. What else can you ask for!
Cons
No matter how good a business model sounds, they always have cons to them; we are generalizing a few of them, which may not apply to all the business models.
- Some business models promote ads that could be annoying even if it’s your app; work with your developer & try to put ads at a modest rate.
- Some freemium apps only allow few features & block out the features which could keep the user interested; don’t do that. Keep your freemium app exciting & don’t be too generous because you need to do your business.
- Paid app business model is always the main disadvantage; if you choose this business model, make sure your app is worth it!
Conclusion
Business models are created for your app’s growth & development, but the plot twist is you need to choose the right one. Spend time analyzing what your app should do & who would be using your app, answer all the questions mentioned above.
Recreating a concept or idea of an app is not a crime, but make sure you develop better solutions, & your business model should do the rest for you.
Discuss with us while choosing your business model for mobile app development. We will help you in shorting all your queries related to business model.
Don’t forget to leave you valuable feedbacks & suggestion.
Image credit: Jack Moreh, Pixelmob
Author’s Bio
Mohit Maheshwari is Chief Strategist at NMG Technologies, a full service IT Company offering mobile app design & development services for Android & iOS. He has been in the industry since 2000 & focuses on long-term strategies, intuitive user experience & successful customer acquisition. You will find Mohit on Twitter & LinkedIn.
