Monetization: Show Me the Money!
Welcome to Lesson 7, monetization. You may have noticed that at the beginning of the course, I made sure the reason for your embarkment on this app creation journey was to solve a real problem, either experienced by yourself or someone you know—and not to make money. Why, you ask? The feeling of satisfaction you get from your app making some money pales in comparison to how you feel when you see your app solving a real problem for a group of people. In this way, you will still be motivated to keep solving that problem for your users. That being said, it’s definitely a sign of success if your app is making money, so let’s discuss how to prep for that!
While the generation of money from your app might not come until much later, you should ensure as early as possible that 1) you have some sort of monetization strategy and 2) you (or your developer) have had some experience with building some (if not all) of the different monetization features into apps.
The type of business model you opt for and your approach to implementing it could greatly impact the success of your app, so it is worth doing some research to see how the top apps on your competitor list are making money and potential areas for improving on your app’s user experience.
How Do I Price My App?
The first thing to consider is your pricing strategy—that is, will your app be free or paid? I’ve already mentioned about how the platform you opt for can influence the pricing of your app. Note that if you want to charge for your app, the aim is to strike a balance so as not to give the impression of a low-quality product if the price is set too low or scare away potential buyers (making fewer or no sales) because it’s too expensive. In addition to this, Apple takes approximately 30% of the revenue from paid apps.
Business Models You Can Implement
If you would like to offer a “lite” version of your app (a version of your app with limited features), which is an example of the freemium model, the balance will be between what features you allow free access to versus the ones you hold back for the full version of the app.
On the other hand, if you want to make your app free, you will have to consider which of the other business models would work best for your app.
One of the most popular business models is known as in-app purchases (IAPs), which involves selling a variety of items, such as premium content, virtual goods, and subscriptions (paywalls), directly within your app. Although Apple will take a similar cut here, the benefit of this model is that it usually leads to higher levels of engagement.
Finally, you have the in-app advertising model, in which data-driven advertising space is sold in your app directly or liaising with a mobile ad partner. While this can be effective if targeted ads are used in moderation, ads can easily repel users, which may lead to app user churn.
Depending on your app and what you think users will be willing to pay for, you could also opt for a blended business model—for example, starting out free with ads but then offering a paid upgrade to an ad-free version (freemium). You might even consider initially forgoing revenue in order to first build a strong user base. Remember, you can always adapt your app’s monetization strategy with each iteration.
That’s all for today. Tomorrow, we’ll introduce prototyping.
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