Checklist of Monetization Strategies

Here we go again with the topic of app monetization. I write about it because it quickly evolves and has many opportunities for app owners. And maybe because I like to think it is useful to know ?? The topic is one of broader knowledge and businesses, users, developers, consultants and other parties involved can be interested in how any software or app can monetize and bring revenue.

Monetization Strategies with +/-

Free and Paid Versions

The free app usually just offers a limited set of features, allowing users to try it out before buying. It is extremely popular and among its benefits are:

??gaining customer’s interest and trust

??gathering user base for future monetization

??combining with other strategies, e.g., in-app purchases

As good as it sounds, this strategy has some drawbacks too:

??if the app isn’t popular or doesn’t have enough features to get users engaged, the paid version won’t be popular. That means functionality in both versions has to be mulled over. ??not all business decisions are suitable for this strategy. It mostly benefits the game industry and organizational apps.

Freemium Model

The idea here is that the core of the product is free (with some ads maybe) but if you want additional services, you need to pay. The best example is Spotify, where you can listen with ads, shuffle and have a limit for skipping songs. In the premium version, you have more freedom and convenient features.

??app won’t have too much competition on the market as it has everything the user might need, high download rates

??a good starting point for start-ups with fresh ideas that can “blow up”. If the app provides something valuable to the audience, it might quickly go viral and get profits from increased attention.

??user engagement might be temporary and not stable. Such a model needs time to get better results; if you don’t want to wait for money, it is not the one.

??ads and limited features can annoy users. Of course, it’s not good for businesses to give away things for free but the app can get bad reviews if people find it too much to handle.

Free App with In-app Purchases Model

IAP or in-app purchases seem to be less popular but shouldn’t be overlooked. The app itself is free and has all the necessary features. However, you can make in-app purchases if you need accelerations or want to scale up. It is popular in games and social apps.

??more spot-on offers for app users. A wide variety of in-app purchases allows and more targeted individual approach.

??high download rate, as in the previous freemium model. Sometimes, it also means fewer bad reviews as expectations for free apps are lower.

??needs additional work on the back end. The in-game storefront requires a huge amount of coding to ensure that the systems run smoothly.

??customer support needs more attention in case of app reinstallations, the purchases have to be saved.

Paid App Model

Sometimes, apps only have paid versions and although it is less popular, it has some good points to consider. In case the app offers some unique features and has less competition in the niche, paid version might be the best choice.

??guaranteed return of investment. The more downloads the app gets, the more income the owner gets, and development costs get paid off.

??better engagement and honest feedback. Users that pay upfront, usually want to get the best value for money so they write about bugs or inconveniences.

??limited monetization options. Users pay once when they download and it doesn’t make sense to add in-app purchases or subscriptions, etc. So, carefully consider price for app markets.

??higher expectations and more risks involved.

Of course, there are many more, but they are rather hybrids of the abovementioned ones. Before choosing the model suitable for the app on the market, consider how soon you want your investment back, what is the target audience, how unique your app is, and what value it brings to users.