At the bottom of it all, there are 3 key monetization strategies for mobile apps (for apps that are not associated with a business), and they are:
PPD (Pay-Per-Download)
IAP (In-App Purchases)
CPC & CPM (Cost-Per-Click & Cost-Per-Mille advertisements) - Free with ads
They all work incredibly well depending on your overall strategy and your app concept, but the way you apply each strategy makes a noticeable difference to your bottom-line. And truth be told, another 20-30% revenue justifies reading the rest of this article, right?
What Not To Do ... Ever ...
Charging users an upfront payment (PPD) for the use of a social media application is bad business. Just take a look at the 5 most successful social media apps (bar dating apps), none of which use the PPD strategy.
From memory, Facebook already tried this and nearly lost a 25% of their user base a few years ago.
Bad Piggy
A social media app can be monetized by establish a loyal user-base and adding an online website (PC) to your system on which you run an 'Ads' strategy to generate revenue. This is not a get-rich-quick scheme so I would not hold my breath to see that return on investment. Other monetization strategies can be added on later with future updates.
Linkedin is a great example of a Social Media app that is being monetized using a couple of these strategies.
I mean, this clever group of people developed an app / website where industry professionals like you and me can jump online and build our network of connections with other professionals from all over the world. And this is how they make their ends-meet, using two core revenue streams:
An 'IAP' strategy where users subscribe to a premium services hidden within the system, and;
An advanced CPC / CPM strategy allows any business to sign up as a user and advertise their services to their own specific target market with side-bar ads.
LinkedIn is one of the fastest growing social media apps in the world with over 200+ million active users in less than 3 years. So they're doing something right.
Effective Use Of The PPD Strategy
Pay-Per-Download strategies are best deployed with apps like games, education, utilities and fitness, etc. However, if you're using this strategy, it's important that you offer something that people really want to have and can not get anywhere else to incentivise the download. People rarely spend money on something they are not sure that they need or want.
Once you've built a fleet of well-known apps, people will become more inclined to download your apps on a PPD basis.
Let's Get Jiggy With It ...
So how do we apply these strategies and start making some cash? Let me share with you a really simple strategy that I learn from successful app developers like Rovio, @angrybirds and how they monetize their applications? Check this out ...
3 Steps
Step 1: Launch the app and charge your nominated fee (average app fee on app store is $ 0.99).
Step 2: Launch a second version of your app (a free version) which uses a CPC / CPM strategy that pushes people into paying to download the ads-free version of your app.
Step 3: The app will also allow users to make purchases (extras, unlock levels, hints, etc.) that improves the users' experience. Costs for these can range from anywhere between $ 0.99 and upwards.
There are an endless amount of ways each of these strategies can be used and combined, it just really comes down to getting creative with it. If you feel that a particular strategy is not working well for you then rethink your approach and try something new.
Key Take-Aways:
Be careful of the strategies you use to monetize your mobile application because not every monetization strategy works for every application.
Monetisation rule of thumb: grow your user base, and then find a way to monetize it without putting off your users.
PPD apps get less downloads than Free apps.
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How To Make Money From Mobile Apps
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