There’s an app for everything, right? Mobile apps are one of the best ways companies have to engage their customers, bring revenue, and enhance brand recognition. When you build an app, your first question is how to make money from it? Here are 8 tips to follow.

Why Build a Mobile App?

Consumers demand convenience and simplicity. Companies looking for ways to engage their users are adapting their strategy to reach their users where they are, on their phones.

Here are some mind-blowing statistics on mobile app usage that prove that making an app is a great marketing strategy:

1. There were 218 billion apps downloaded by the end of 2020, according to Statista.

Apps downloaded by the end of 2020

2. 55% of website traffic worldwide comes from mobile as of the first quarter of 2021.

3. Mobile app revenues can reach $935 billion by 2023.

A mobile app can give your users a convenient way to use your services. Companies can have several reasons to build a mobile app:

  • To generate revenue
  • To save money 
  • Because of FOMO

Source

The main reasons companies would like to build an app are: 

  • Increase sales: many apps, for instance, e-commerce apps, can generate direct profits.
  • Improve customer experience: a mobile app can enhance the communication between users and your company, improving customer service and the user experience.
  • Have a competitive advantage: mobile apps can optimize your operations, saving costs.

It is true that building an app enhances the relationship with your customers, but ultimately, the main effect of adding a mobile app to your strategy is to improve your revenue. How do apps improve your ROI? It’s easy to understand, considering your customers are browsing products on their mobiles more than via a computer.

Let’s see the impact of mobile apps on user buying habits

4. Half of the customers prefer to shop from their mobile phones

By the end of 2021 it is expected that 53% of all e-commerce will be m-commerce.

US Mobile Retail Customer Sales Data

5. App conversions are 3x higher than mobile site conversion rates

According to a report by Criteo, Shopping apps generate conversion rates more than 3 times higher than on the mobile web.

6. The number of smartphone subscriptions worldwide is over 6 billion.

It is expected to reach 7.5 billion by 2026.

Number of Smartphone Subscription

How much money can you make from an app?

We have seen the number of apps ballooning in the last few years. But, when you look at how much money they actually make, the numbers are not so great. In fact, 90% of apps are free.

From the apps in the App Store and Google Play, not all make money, and there is a big drop from the top-performing apps to the next-in-line. 

The top 200 apps on the App store make on average $82.500 a day

Those in the top 800 make $3.500 a day, which is not a bad number. However, choosing the right monetization option for your mobile app is key to getting a nice revenue.

8 Proven Strategies to Make Money from Your Mobile App

  1. In-app advertising

This is the most common monetization model for mobile apps. The term in-app advertising refers to including ads when the app is in use. It is one of the easiest ways to make money from a mobile app and it only requires the developers to sign the app with an ad network. The ad network then displays relevant ads that show when a user is using the application. 

According to Statista, the amount of advertising spending is growing from $234 billion in 2019 to reach $495 billion by 2024. Mobile in-app advertising revenues reached over $100 billion in 2020.  

How do you get paid? 

  • Per impression: every time the ad is displayed to the user. According to Google, the ad needs to show for a second or display at least one pixel to count as an impression. Usually the impressions are counted in increments of a thousand.
  • Per click: every time a user clicks in the ad, you get paid.
  • Per install: if you display ads for complementary applications, and the user installs the advertised app, you get paid.

What types of ads can you display? 

Interstitial

These ads appear at set intervals, during the usage of the application.  Often in the form of full-screen pop-ups, these ads appear at specific times. For instance, when a user opens the app or finishes a particular stage. Users can close it in the top corner. 

Native

They blend seamlessly with the app content, enhancing the experience instead of interrupting. Native ads are designed to appear as part of the app while promoting a product or other application. The advantage of native ads is that they get more engagement than other types of ads. 

Banners

You can find these common ads at the top or bottom of the application screen. While they are very popular, the small screen of a phone makes them hard to view. So, banner ads often get a lower conversion on mobile.

In-app video 

Videos engage, entertain and provide extra information that doesn’t fit in a static ad. However, sometimes they can disrupt the experience of the app. Gaming apps often use rewards to get the user to watch the video. For instance, users can unlock additional levels or get the game currency.

Pros
It increases the application’s income via click-through-rate
You can measure user engagement via your apps.
Targeted in-app advertising is better for reaching your audience.
Cons
When the ads are not relevant, they can annoy users and hurt your brand.
This model works best if your app has a large base of users.
It can be done in an interruptive way, disturbing the user experience.

2. One-time payment

In this model, developers and app publishers charge users for downloading the product. Sometimes publishers combine this method with a free trial or ads. This strategy is not that popular since most users don’t want to pay to download applications.

You should take into account that in order to get users to pay per download your app needs to offer a high value, something that they cannot get from anywhere. Niche apps with premium features work best for this method.

Pros
Can increase your revenue right away.
You can combine it with a free trial period.
It can work best with apps that offer a high value.
Cons
It may attract fewer users since a paid app has to compete with many free apps in the app store.
Not suitable for all types of apps.

3. In-app purchases

This method enables publishers to earn money by providing special content or features users can buy from within the application. Publishers can then sell virtual items from the app. Gaming companies like Angry Birds or Clash of Clans sell upgrade packages, gaming currency, and additional features.

According to a report, In-app purchase is one of the most profitable methods for app publishers, accounting for almost half of mobile app earnings.

Pros
It can generate a high profit even when your application is free.
This model works best for gaming apps.
This can open the way to provide advanced services through your app.
Cons
Too many in-app offers can annoy users and get bad reviews.
User expectations are higher when using an app with in-app purchases.
Designing and developing an app with in-app purchases can be more expensive than simple apps.

4. Crowdfunding

Another way to monetize free apps is via crowdfunding. This method is becoming quickly popular with startups. They can share their projects on platforms like Patreon, Indiegogo, or Kickstarter. There, potential users can collaborate to fund the development and marketing of the application.

There is a caveat, though, in crowdfunding platforms, gaming apps are not very popular. Non-gaming apps raise more funds compared to mobile games.

Let’s check what are the advantages and disadvantages of crowdfunding:

Pros
Gives the project exposure
Access to multiple investors
You can get pre-funding
Cons
The fundraising can take longer than expected.
There are no guarantees that you will raise the money you need.
You need to invest in promoting the project with videos and prototypes before you can ask for any money.

5. Subscription

Many applications choose to go the subscription route since it is a way to have recurring income. App publishers can choose to offer the app for free for a limited amount of time and then charge a subscription fee. Other publishers will offer the app for a subscription right away, but it is best to give some trial period. Subscriptions can be monthly or annually and they allow users to access all the content in the app without restrictions.

Pros
It is a good model for applications that provide recurring services, like health monitoring apps.
Generates a more engaged audience to use the functionality of the app.
It generates a reliable income.
Cons
You need to continuously innovate the app content to keep your users engaged.
If you currently offer your app for a fixed price, changing your payment terms to a monthly charge can annoy users.

6. Sponsorship

It is not a very common method, but it can bring a nice income. App publishers can look for companies that will sponsor the app. A good example is the Marriot’s credit card sponsoring the Gayot.com mobile application that reviews restaurants. There, the Marriott chain can target the audience of Gayot, people interested in professional restaurant reviews.

Now, let’s take a look at the pros and cons of using sponsorship for your app.

Pros
You can offer advertising space in your app for brands that target the same audience.
Brands can increase their exposure to the app.
There is no disruption of the user experience.
Cons
To get sponsors your brand needs to be strong, with sophisticated ads and users.
It is important to use performance tracking so you can measure success.

7. Freemium

Freemium apps usually are free to download but have paid or premium features. Users can access these paid features from inside the app.

Users can try the application for free with basic features, and if they like it, get full access to all features by purchasing a subscription. This method allows application publishers to get new users easily. This strategy is common for educational, wellness, or sports apps that users can top up.

What are the advantages and disadvantages of freemiums?

Pros
No interruption of the user experience with ads.
You can combine this model with the other approaches
It requires low maintenance
It is widely used because it gives users a free taste.
Cons
There can be fluctuations in the income as a number of users may not want to go forward with the premium features.
Since the application is free, they may combine it with other methods to make money.

8. Referral marketing

This strategy involves promoting another company’s product or service from within the app. App publishers can promote affiliate products or services and get paid when a user clicks on the link or install the promoted app. App publishers often use pop-up ads to carry the affiliate link.

Pros
It is a great way to promote the application or product inside the application.
Referral customers tend to have a higher intent of purchase.
Cons
It can be time-consuming to set up a profitable referral program.
You have to be careful with the referral links you install in your app.
Tracking a referral campaign can be complicated.
You cannot carry multiple referral programs.

Pricing models

Companies using app monetization strategies  may choose to get paid according to different pricing models:

  • Cost-per-Click (CPC):  you get paid when a user clicks on the pop-up ad or link to go to the affiliate store.
  • Cost per action (CPA):  you get paid when a user performs an already set action, it can be clicking on the application or making a purchase.
  • Cost per view (CPV):  you get paid based on the number of people that view the ad or video.
  • Cost per install (CPI): you get paid according to the number of people that download the application.

How do free apps make money without ads?

If you will offer the app for free, you can find other revenue avenues. Look at the most popular monetization ways in this chart from Statista:

How do free apps make money without ads

Free apps don’t charge for installing the application. Therefore, there are other methods they use to generate revenue. These include in-app advertising, in-app purchasing, and the other methods mentioned above.

How much money do apps make per download?

The average revenue per app download varies greatly according to the app and the category. But a broad range of rates goes from $0.60 to $1.20. Paid ad ranges decreased to 37% in 2021 from 75.9% in 2019.

Free apps don’t make money from downloads, and Amazon underground is the only platform where you get users that pay to download your app.

Who’s Worth More – Free Apps vs. Paid Apps

Maybe you are not sure if you should offer your app via paid download or launch it for free with other monetization options. Will your choice will depend on your app type and audience, here are some statistics and points to consider:

Free apps are considered more popular

In the Google Play Store, as of March 2021, 96.7% of apps were free.

Distribution of free and paid android apps

Source:Statista

So, what are the reasons to choose to develop a paid vs a free app?

Paid vs Free Apps

Pros
Has fewer downloads so it should be more targeted.
The user has higher expectations since they are paying for the app.
These apps need to provide very high quality in design, usability and give value. Because of that, the design and development can be more expensive.
The monetization options are limited to the payment options, like monthly or yearly fees.
Cons
Provide more exposure because of attracting more users.
They are less expensive to build because most of them don’t offer complex features.
They can use several monetization options and even combine them.

Tips to build an app that makes money

Building an app and choosing a monetization method doesn’t guarantee that you will make money from it. In fact, many applications in the Play Store don’t make any revenue. Here are some tips to avoid common mistakes when building and promoting an application.

Grow your audience to grow your income

To have success with your app, you should start to grow your user base. After all, the more users your app has, the more chances your income will grow.
The more people know about your app, the more they want to download and use it. Therefore, promoting your application is critical even before you launch the application. To be successful in promoting your app, there are a few key steps to consider:

  1. Target your audience carefully: invest time and effort in finding who is the audience for your app and what problem your app solves. The more you know your audience, the better you can target and adjust your application to their needs.
  2. Release a beta version: this will give you the opportunity to interact with your potential customers and make changes to your app before the launch.
  3. Engage social media: use social media to spread the news about your application. Ask questions to your potential users, promote the app, plan a giveaway or perks for sharing the news.

Increase your user engagement.

In our previous article on app monetization, we talked about the importance of enhancing user engagement. Give returning users discounts, freebies, special features, or perks to increase their loyalty.

When promoting your app on social media, use ads that link from sponsored social media posts (like Facebook posts) to your application. Also, don’t forget to promote your application on any platform your potential users may be. This involves listing both in Google Play and Apple Store but also in other app stores in markets like India, Europe, or even China.

How to avoid common app monetization mistakes

Choose the monetization method before developing the app

If you don’t do so, you may end up having to rewrite the app because the ad format is not available on the chosen platform. If you want to build both Android and iOS versions, take the time and choose the most appropriate monetization methods for each version.

Heed the Stats

Analytics is like gold for app publishers. You can have all the information about how many people are installing your app, who is actually using it, and the demographic details of your actual users. This gives you a clear indication of where to direct your monetization efforts.

Price it right

Sometimes developers are disconnected from market rates and they’ll follow the need to cover costs and make a profit when pricing. This can lead to apps that are too expensive (on in-app purchases or freemium models). The opposite is also true, with apps so low priced that they don’t bring enough income. Take the time to check market rates and how your competitors are monetizing their applications.

Best Niches to Make Money Fast From Apps

When you build an application, you want to be where the money is. Therefore, choosing a profitable niche is key. The goal is to choose a market that is established and has longevity, not necessarily trendy markets. Here is our list of the top 5 niches to make the most revenue:

1. Investment

Make money from Investment related apps

Image source

Managing your finances is one of the most common problems humans have. Understanding investments may appear like unintelligible jargon for non-finance professionals. Therefore, investment and financial management apps are very popular in helping people take control of their budgets and investments.

2. On-demand Service

On-Demand Services monetization

Image source

On-demand service applications are apps that collect several activities into a single app. For instance, instead of booking each hotel on its one application, you have a hotel booking app that provides information on thousands of hotels worldwide. The same happens with other services, such as bill payments, transportation services, or even grocery shopping.

3. Fitness and Health

Make money from Fitness and Health related apps

Image source

This is one of the top online business niches, so it is not surprising that the popularity extends to applications. People around the world are increasingly more concerned with health and fitness.

Achievements that were once reserved for professional athletes (like running 5 or 10 miles run) are now possible thanks to apps that train virtually everybody. With the appearance of training wearables, these types of health monitoring apps, that track from the number of steps to the amount of oxygen in the blood, can be on anybody’s wrist.

4. Online shopping

Image source

Online shopping is steadily transforming into mobile shopping. Many users prefer to purchase from their phones, through mobile e-commerce platforms.

Companies are also choosing to invest in mobile sales since they are less expensive than opening a new store. Also, the company can expand its reach through an app that can work globally.

5. Gaming

Gaming Monetization

Image source

Gaming is one of the most popular uses for mobile apps (and phones). Not only for young users anymore, but people of all ages also search in the Play Store for games to play during downtime. There are games for every taste. From people looking for entertainment to gamified educational apps (like Duolingo, the language learning app).

How Much Does it Cost to Build an App?

The cost will depend on how complex the application is. Developing an app can go from a few thousand dollars to hundreds of thousands. Highly complex applications, such as banking and finance ones can be the most expensive. Some features, like payment integration and PI use, can easily ramp up the price.

Marketing the application is another cost you should take into account. It is common to spend up to 15% of the budget on marketing.

FAQ’s

  • Should every business have an app?

    Building an app can feel like the ultimate solution for generating revenue and creating a great user experience. While the figures of app revenue may be tempting, not every business is suitable to have an app.

    The golden rule should be: if your app solves a problem for your audience, then build it, if not, don’t.

    There are many apps out there that are attempting to solve problems not relevant to the company’s audience. For an app to be really useful for your users, it needs to meet the needs and give value. If your customers don’t find it practical and useful they won’t use the application for long.

  • How much money can an app make per ad?

    Most app publishers using an advertising model follow the cost-per-click (CPC) model. When a user clicks on an ad, the app publisher gets paid. With in-app advertising, the average revenue per impression per banner is just $0.10. Interstitial ads pay better, at $1-$3. Video ads are the ones that pay most, at $5 to $10 per view.

  • How much money can you make with a free app?

    Free apps can monetize with in-app advertising, getting paid per display, per click, or per install. The range of revenue can go from a few thousand dollars a month to $50,000 or more per day.

How CodeFuel makes it simple to monetize your app.

CodeFuel offers a complete solution to monetize applications. You can find typical monetization features like working with several ad networks to provide optimal in-app advertising. You can also leverage different types of ads like search and shopping and even news to maximize your app revenue potential.

Ready to monetize your application? Learn more.