As oversaturated as the market seemingly is, you can still create an app and make money from it. You just need to exercise a bit of cunning and creativity.
Mobile applications can be a pivotal part of any business. Whether they’re being used for sales/content management or just a way to keep in touch with customers.
However, apps can generate enough income to be considered as independent businesses. This is what makes them such ideal side-hustles. If you market and monetize them just right, you can amass an income lucrative enough to convince you to quit your day job.
But how? In this guide, we’ll be discussing the best ways to create apps that actually make money.
How To Monetize Your Mobile Application
“Knowing is half the battle”
From this article, you’ll learn how to make money from your apps after you build them. We’ll also discuss what you can realistically expect to make from your apps and when you can expect them to start making a profit.
However, before you can pick an effective mode of monetization, you’ll need to ascertain if the type of app you’re building can make enough money for you to invest time in...
Pick The Right App Category For Effective Monetization
The best way to go about creating a profitable application is by looking at the current market and which apps make the most money. Sure, you could venture out and try to create something so paradigm-shifting that it turns a profit regardless.
However, if this is your first incursion into making profitable apps, then your best bet is to pick an app-type that is already shown to make money.
According to Statista, the top ten most popular app categories in the Apple App Store are as follows:
Top 10 Most Popular Apple App Categories
- Food and Drink
- Health and Fitness
Developing a new mobile game may not be ideal for you, especially considering how much time and effort it may take you to come up with an original idea and nurture it. You also have to worry about all the other games you’ll be competing against.
However, there are a lot of good low code platforms out there to help design and build your mobile game as quickly as possible. Additionally, if you market your game well enough, it’s quite possible to get into the top 500 earners within a year.
As of March 2020, Candy Crush Saga, the most successful application in this category grosses an average daily revenue of 2,3 million dollars. It should be noted that games like Candy Crush Saga have been around since 2012 and are created by experienced developers.
If you manage to make it into the bottom fifth of the top 200 highest-grossing games, you can expect to see a daily revenue between $1,500 and $9000 (roughly). You will obviously make much more if you have Microsoft Windows and Android ports of your game that have the same relative amount of success as your iOS iteration.
It’s important to manage your expectations. You can start to see your gaming app make money within a week of its release if you employ the right monetization strategy and market it well enough. However, you need to remember that competition is stiff. Near the end of 2019, Apple’s App Store housed around 903,489 games (according to Statistica).
Nevertheless, let’s look at the rest of the top 5. The business category probably has the most diverse set of apps. They intersect with productivity apps. Under this category, you’ll find apps that help you manage your business, like Slack and ZOOM Cloud Meetings, or are business portals like Shopify and Amazon Seller.
Business apps won’t rake in as much money as games have the potential to. If you manage to break into the bottom of the top 200, you can expect to rake in an estimated revenue of 6-7K dollars per month (maximum).
Once again, if you break into the top 200 apps, you can expect to see revenues of $6000 and over (monthly). Find a way to produce an app as popular as Duolingo, you’ll be seeing revenues of over $5 million per month.
Utilities are apps that help you run your phone. These include calculator apps, web browsers, and portals to search engines. Relatively speaking, these are some of the easiest apps to create. Roku, an app that sits at the bottom of the top 200 most popular utility app, makes an average global revenue of $7000 per month.
The entertainment category consists primarily of video streaming apps like Netflix and HBO GO. The revenue generated from these apps isn’t generated from the intrinsic quality or capability of the app but because of how they connect you to subscription services. They’re basically portals.
From an app design and marketing standpoint, you can still use them as great examples of how to create an app and make money from it.
The list of the top 10 most popular Android app categories is quite similar to the iOS list. According to Statista, the top ten most popular app categories by the number of downloaded apps are as follows:
Top 10 Most Popular Android App Categories
- Tools (utilities)
- Music and Audio
- Books and Reference
- Health and Fitness
The highest-grossing Android app (as of March 2020) is Coin Master with 91.28 million dollars per month. In second place is Candy Crush Saga with 44.43 million dollars. The rest of the categories follow a similar pattern to the iOS app categories.
Despite Apple charging higher developer fees ($99 per year), developers have the potential to make more money through Apple’s App Store. According to Sensor Tower’s forecast, users spent $55.3 billion iOS apps in 2019, while users spent nearly half that with $29.8 billion.
Using this data, we can ascertain that Android users are 10% less likely to make in-app purchases. iPhone users are also more likely to make online purchases through apps. It’s also easier to build and test iOS applications because of the limited number of iPhone and iPad versions.
For Android, you’ll be building apps for a multitude of devices, with different processor types, screen resolutions, ROMs, etc. Which means your app may take longer to test and be bug-prone.
Therefore, you can’t be blamed for focusing your efforts on building your app for Apple devices first and then later diversifying.
Using App Categories to Conduct Market Research
Scanning through the above statistics, you may be tempted to simply build an app based on the most popular category. You need to understand that while a vast majority of the apps in the most popular categories make the most money, the competition is stiffer.
Nevertheless, whatever you choose, you need to pay careful attention to the most popular apps in your potential app’s future category. These are your main competitors and the benchmark you need to achieve and surpass.
Some developers go as far as ripping-off more popular and successful apps. This is particularly rampant in the games category. For instance, games like Clash of Lords 2 are a carbon copy of Clash of Clans. This is not a strategy we would advise using, especially if you plan on building a brand rooted in integrity.
But by observing your competitors you can learn who your audience and potential customers are. You can use these examples to extract a greater understanding of your prospective app’s use cases. If you conduct your market research effectively, you’ll be able to apply and improve upon your rivals’ monetization strategies.
From a design and user experience standpoint, pay attention to your competitor's strengths and weaknesses. What can you improve upon? What fresh ideas are you injecting into the market? These are questions you need to answer before you go into the design and development phase of your app.
Business Models and Monetization Strategies
The business model you decide to go with will influence your application’s design. For instance, if you decide to go with in-app advertising, you’ll have to integrate it with as little intrusion as possible.
In this section of the guide, we’ll be covering all the monetization strategies available to you.
Free Business Model
As the name implies, in this business model you allow users to download your application without charging them. But how do you make money if you’re giving away your app for free?
Some developers (with deep pockets) host a paid(premium) and a free version of their app on the app store. The free version can act as an advertisement for the paid version. It’s a casual form of brand building. A good example of this is MediaMonkey (free) and MediaMonkey Pro (costs $4.99/€4.99).
What’s striking about the free version of MediaMonkey is it doesn’t use banner advertising. It’s basically the pro version of MediaMonkey with a few features missing. If it’s your first time using MediaMonkey, you’ll be able to use its pro features on a limited trial period. Once it reaches the end of the trial period it will inform you and ask if you’d like to pay for its premium features. This brings us to our next point...
Some apps have all their features hidden behind a paywall but allow you to access them on a trial-period. This is common for apps that provide a subscription service. For instance, 1Password allows you to try their service for 30-days before subscribing for their full service, which will cost $2.99 per month for a single account.
If you don’t want to strong-arm users into purchasing the full version of your app or lock features behind a paywall, you can use ads and a pay per click model to monetize your application. Tools like Google AdMob make it even easier to integrate advertising into your Android and iOS apps.
It’s incredibly flexible. All you have to do is create spaces for ads in your app with AdMob’s ad units. AdMob then shows the highest paid ads on your app and then you get paid. This is a common monetization strategy for most free apps.
It’s a key reason as to why adblocking apps have been banned from the Google Playstore. It’s impossible to be a smart app user without encountering a banner ad or two. Most users should be familiar with how this works.
Finally, depending on your apps intended usage case(s) and its design, you can make money through affiliate programs. You can partner up with retailers like Amazon or services such as Fivver and make money through commissions or on a per-click basis. This strategy is common with shopping apps such as Slickdeals.
Freemium Business Model
Just like the free-to-play model in gaming, there are quite a few strategies you can employ to monetize your free app. For instance, in-app purchases. You can allow your app to be downloaded for free with its base features made available to all users.
You can then charge a fee for additional features. Whether they are advanced tools or simple cosmetic elements like theme packs and skins. Free apps that offer any in-app purchases or subscription services can also be considered as Freemium.
We briefly touched on this underneath the Free Business Model section. A good example of a freemium service (not just a freemium application) is Spotify. In fact, it’s a good illustration of multiple business models meeting.
Spotify allows you to download their app for free. They then allow you to use their premium features on a thirty-day trial period. At the end of the trial period, you are then prompted to choose a subscription package, Free or Premium.
This business model will require you to ensure that your application’s paid features are enticing enough to encourage users to spend on them. Your app’s free features need to be engaging enough to build trust between you and your potential customer.
Subscription Business Model
In this model, users only have access to your app or some of its features for a limited duration of time. Once again, this model intersects with the free and freemium models. While falling under this business model, your app may implement introductory offers such as a trial period or discounted subscription price.
There are three main types of introductory offers:
- Pay As You Go: Under this offer, new subscribers pay a discounted introductory price for a limited number of billing cycles. eg. $0.99 for three months.
- Pay Up Front: This offer describes a discounted price for upfront payments. For instance, 30% off if a user pays upfront for a one-year subscription.
- Free Trial: New users are given the chance to try out the app's premium features for free during a limited period of time.
Both Google and Apple supply developers with tools to verify validity as well as display introductory offers as neatly as possible.
Apple makes it even easier for you to create a subscription app and make money from it. They have an entire section in the App Store dedicated to subscription-based apps with trial periods. As a matter of fact, Apple has just recently started encouraging developers to incorporate auto-renewable subscription business models into their apps.
Paid Business Model
You can always take the old school approach and allow users to download your application for a once-off fee. If you host more than one application on the iOS store, Apple gives you the option to sell up to ten of your apps as a bundle.
This app revenue model isn’t conducive to making money in the long term. A good example of this is Mediamonkey, which we’ve previously discussed. Once you purchase MediaMonkey Pro, you’ll have no reason to spend on it again. In most cases, even their updates are free.
This Business model is suited more to development houses who plan on releasing different versions of their app or produce and market a plethora of apps in the app store.
Paymium Business Model
The Paymium business model is an amalgamation of the paid business model and the freemium business model. Users have to pay to download your app but can only gain access to certain advanced features by purchasing them.
What this means is that you’ll be able to make money from initial purchases and future in-app purchases.
This gives your app the potential to have some long term profitability. Admittedly, this revenue model isn’t very popular at the moment. The best way to integrate it is into a game like Kingdom Rush Origins from Ironhide S.A.
The game can be purchased for $4.99 and then you are given an opportunity to purchase in-game items that are primarily cosmetic. It’s important that whenever a developer integrates microtransactions or in-game purchases, they do it in a way that doesn’t give the player an advantage or mess with the core gameplay.
Again, deciding what business model you’ll go with early in your app’s design cycle can influence how successful it will be. Look over the options carefully before making a decision. Not only will the business model influence how you will make money from an app but how you will create it too. We hope you’ve found this article to be useful. Thank you for reading.