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5 Ways to Make Money with Your Free Mobile App

Vadim Peskov
Vadim Peskov
5 Ways to Make Money with Your Free Mobile App

Don’t forget that you are actually trying to build a business, not just a beautifully designed product! If you are planning to launch your mobile app sometime soon, consider these smart monetization strategies as part of your plan.

Are you dreaming about creating the next Tinder, Snapchat, or Periscope and the riches it will bring you? Apps are still a very hot market, however, developers have quickly discovered that it takes a great level of brand awareness in the ocean of offerings to have customers pay even $0.99 for their mobile app. Many are going for the free or freemium model to grow their customer base and introduce paid options later. However, analysts like Gartner still predict that “less than 0.01 percent of apps will be considered a financial success by their developers through 2018.”

You’d think any mobile app creator is envisioning their app in that 0.01 group, right? Would be crazy not to! However, while working with many different startups on creating their apps we’ve seen too many founders obsessing mostly over their app’s features and design. Don’t get me wrong — looks and functionality are of top importance when you are trying to seduce and keep your new customers. Nevertheless, it’s also key to understand from the very beginning how your app will pay for itself and start bringing you some actual revenue soon after launch. Once you figure out how your mobile app is going to make customers’ lives easier and which problem it’s solving, ask yourself a question: “What would my customers be willing to pay for?” Here are a few smart monetization strategies to consider:

1) Superusers paying for upgrades or super features

The Freemium model continues to be a great way to have customers try your mobile app. You are offering them a stripped version with some key basic features and paid upgrades if they want more. You want to be very strategic and carefully evaluate the gated features that are competing with the free version. Too many or too few free features can both damage the conversion rate and the experience. You need to make sure people have enough to try to get the first great impression, but at the same time propose an attractive enough offering later if you expect them to vote for it with their dollars.

Selling some cool and critical features separately in various sections of the app may be a good move in this case! Say, users of corporate productivity apps are often ready to pay for additional security layers like cryptography or passwords that can be installed in certain confidential app parts. Be careful with introducing internal app currency for in-app purchases which are way overused now and aren’t always relevant to the nature of the app. We’ve seen it work well in games and apps that are heavy on gamification, but the regular currency is much more natural in lifestyle, productivity, or business apps.

2) Partnerships

Getting a relevant partner’s offer inside your app can score you some good revenue. The key here is to find a really good fit for your user profile so that the partner’s offering is a logical extension to your app’s functionality. For example, any offerings from hotels, restaurants, and gas stations are complementary to the road trip planning app and don’t lead your customer away from your own app’s features. Restaurant reservations work great in the Yelp app and very useful for customers. Integrating such partner offers creates a better user experience and is definitely not the same as placing a completely irrelevant partner ad banner somewhere in the settings.

3) Switching it up with a variety of different packages and options

So, you’ve decided on those additional perks your users may be willing to pay for, but your conversion rates are still low? Make sure you have several offerings for a variety of budgets and tastes. The optimal and non-confusing number is 3–4 paid options. For example, 3 different levels of usage with clear distinctive features + a VIP level with everything included and maybe even 1 special golden nugget that isn’t sold separately (maybe your profile will be shown to more users in a dating app or you get an extra special messaging template). This “one more thing” should certainly be a great addition to the VIP package, but not the top choice that’s canceling the interest to all of the starter/middle options.

In addition, consider the following smart strategy that we’ve seen work really well, say, in business and education apps:

+ Customer gets a free limited trial with all of the bells and whistles (for example, 30 days)

+ Once the trial is over, the customer can still continue to use a free version, but only with the basic functionality. Full features become available with a paid subscription or as in-app purchases.

This is so much better than to offer simply a limited day trial! Even 30 days are often not enough to start appreciating the app features and get used to it. Once the free trial expires, many customers just forget about the app they never really found the time to try and move on. However, now you are offering them to continue exploring your app for free after they have already got a taste of a good life with its full functionality. When/if they start missing some great features they are likely to go for either a paid upgrade or a subscription. You might even want to offer a second chance and another free 1-week trial. If your paid offerings are well-targeted and diverse you might score a paying customer this time around.

4) Licensing your technology

This business model may work for you if you have a niche technology that is really easy to integrate into different APIs and SDKs. When your idea is scalable. Take the MSQRD app with its unique video technology and live filters recently. If they weren’t purchased by Facebook, they could probably license their technology not just to them, but also to many others.

5) Advertising and Promotions

Advertisements continue to stay a logical revenue source for any free app creators. Users dislike banners and ads for a reason — they are indeed often distracting and annoying, especially if you are, for example, working on a to-do list in a productivity app. So, simply adding automatic advertising banners via Apple’s iAd or Google’s AdMob may not be the best option for you, and the stats aren’t showing much traction from these services anyway. So, your goal is to think which ads can actually enhance the experience rather than damage it. Product placements and special projects targeting the same user interests work well not just in movies and on media portals, but also in apps. Once again you should consider non-competing products that compliment your service and preferably don’t lead your users outside of your app experience/

Finally, evaluate which blend of a few monetizing strategies might work for your app to amplify the chances for success and analyze what’s working on a daily basis. If you do have the traffic then your most important thing is to understand what your users are trying to do, where they spend their time, and get the information that will help your business decisions. Analytics tools should be part of your code, so make sure your developer is working on adding as many sources of insights for you as possible.