Table of content
Anyone interested in building a mobile app needs to be prepared for a large amount of capital required to get the job done right. It might surprise most people, but mobile apps can cost anywhere from $5,000 to $150,000+ to develop — not to mention the amount of maintenance involved once the app is released.
One of the biggest struggles of owning a mobile app — which can also be one of the biggest rewards — is finding a way to monetize an app. With the right strategy or strategies in place, the costs of app development and maintenance will be much easier to stomach. In fact, you could find yourself turning a profit every month.
If this is your goal, you’ll have plenty of opportunities to achieve it. Not only are there a wide variety of ways to monetize an app, but many mobile apps will find success with more than one strategy and maximize their revenue.
Despite all the strategies available, one of them has become widely popular in today’s mobile app industry — the freemium app model.
What is the freemium app model?
Most mobile app owners think there are only two ways to make your app available on the app store: make it available for free or make it available with purchase. What if we were to tell you there was a way to get the best of both worlds?
A freemium app will be free to download but will come with add-on features and services that users can pay for. It’s simply a cross between a free app and a premium app. The user gets a free test run (who doesn’t like free stuff?), while you get an opportunity to sell the premium service to them.
Truly, marketing at its finest. You can compare it to the samples being handed to people passing by a restaurant or in the grocery store. Give the customer a sample, incentivize them to buy more, then watch them buy more.
They often say the easiest way to get one million paying users is by getting one billion downloads. The freemium app model allows you to reach maximum exposure around the world. At that point, it’s up to you to provide features worth paying for.
Why is the freemium strategy so effective?
The freemium app model has seen so much success in recent years for several reasons. First and foremost, it’s becoming clear that app users are more interested in trying an app before investing in it.
With nearly 5 million mobile apps available on all the leading app stores, people aren’t willing to risk spending money for something that’s not worth it — especially since they know their chances of getting stuck with something mediocre.
Furthermore, freemium apps allow you to spend less money on advertising and marketing since your app basically does it for you. If your app is truly that good, people won’t hesitate to spread it through word of mouth — after all, it’s free to try!
This is a large reason why freemium apps will often see more success than other apps and will even outperform one-month free trials in terms of conversion.
Want to start your own startup?
How can you make money with a freemium app?
What makes freemium apps so beautiful is how versatile they are. You’ll have plenty of ways to monetize your app and can offer users a variety of packages, services, features, and more. Just because the download is free doesn’t mean the actual use of the app needs to be free.
Let’s take a look at some of the most popular ways to make money with a freemium app:
- Advertising – as much as we hate having to navigate through ads when opening and using an app, studies show that many users would rather download the free version if it only means they have to watch ads. Of course, this means the money in your pocket!
- In-App Purchases – if you have extra features, upgrades, consumables, or non-consumables that you’d like to offer inside the app, you’d be surprised at how many people will buy them. Unlocking a new level in a game could be an example of an in-app purchase.
- Subscriptions – if you feel your app deserves more than a one-time payment in order to unlock certain features, subscriptions allow you to charge a weekly, monthly, or yearly subscription to the user’s account. Spotify is a good example of this.
If you’re having difficulty figuring out which one is best for your app, don’t worry! You can use a combination of different strategies if you think they’ll pay off.
For example, many freemium apps today will offer a free app with ads, but allow users to pay a one-time or monthly fee to remove the ads. This way they’re getting paid no matter what.
Is freemium the only way?
Although the freemium mobile app model is the most popular strategy we see implemented today, that doesn’t mean it’s meant for every app. Some businesses and brands that already have a loyal following may be able to bypass the need for free features.
Instead, they can require a one-time payment up-front or a subscription right off the bat in order to utilize the app.
If you’re having trouble finding the right monetization strategy for your new app — or app idea — we can help! We understand not every app is created equal and each one will take a unique approach.
Don’t hesitate to contact us today if you’d like to learn more about the app development process and how we can help you find success with your project.
—
Photo by Daniel Korpai on Unsplash