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You can use an application to help you market your products or services. It can also help you promote a destination or your services so as to improve customer loyalty. This could just as well be a game designed to raise your profile. Whatever the model, you may be eager to monetize your app in order to maximize your investment.

 

There are 5 classic monetization models :

Purchase

You can charge for your app to be downloaded. Before doing so, bear in mind that users download just under 9 apps per month and use 6 apps on a daily basis. The risk is being overlooked by your prospective customers. In order to charge for your mobile app, you must be certain that :

  • The service offered merits payment,
  • The features offered are unique and set you apart from the competition,
  • The ergonomics and design are impeccable.

Even if these 3 criteria are met, you will need to do a significant amount of promotional and communications work for your App. You need to have a clear understanding of how app stores work. You also need strong selling points to convince users to choose your app instead of a free, competing app.

This model has the advantage of immediately bringing in revenue… provided the app generates it: the competition in app stores is fierce. Your app’s overall cost must include a large marketing and communications budget.

In-App Purchases

In-app purchases generated €41 billion in revenue across the Apple and Android stores in 2015. Users download your app at no cost and can start using the service, but they must buy additional content or services to go further. This is the dominant model used in games.

Freemium

Freemium is based on a principle similar to that of in-app purchases. Users enjoy a “lite” version of your app and must pay for additional services. This requires a clear distinction between the features that are supposed to be free of charge and those that are not. The free version offered should be tempting. The app must also provide a much higher level of service in the Freemium version so as to persuade users to buy it. It’s a difficult balance to strike at times. You will also need to define your target conversion rate, the percentage of users who will switch to the paid version.

Here again, balancing the two versions isn’t easy. It requires maintaining and developing two apps instead of one.

Advertising

Free apps often make a living from advertising, in the form of banners, images, and videos. In order for these advertisements to be profitable, a certain volume of traffic and a high retention rate must be generated. Your app’s advertising affiliation depends on the data you have collected on your app’s users. In a context where users are focusing on a few essential apps, advertising can quickly lead to an app being uninstalled. It is also difficult to make a living on this model when the targeted audience represents a niche.

Subscriptions

This model works the same way as Freemium, but it is more centered on selling additional content, rather than services or features. For example, it involves publications that charge for reading their articles as well as messaging and entertainment apps.

Which model should you choose?

There is no perfect model, and it is extremely difficult to estimate the average monthly revenue generated per user in advance. Your choice of monetization naturally depends on your target, your business, your budget, and your goals. Mobile video games are a great laboratory of ideas and tricks with the potential to inspire other industries. If your app is geared towards professionals, monetization is probably not your primary objective. The subscription model could nonetheless generate substantial revenues if the service or paid content is valuable to your users’ business.

Before drawing up your medium-term strategy, you should bear in mind that your customer acquisition cost will always be higher than your customer retention cost. You want to know more about your mobile strategy in tourism, read here. About mobile strategy, read here.