Here is a brief overview of the various methods of making money with apps on your iPhone. There are already hundreds of thousands of iPhone Apps available on the App Store. This has occurred incredibly quickly due to the pervasiveness of smartphones and the opportunity for entrepreneurs to monetize their usage. Some Apps have been known to produce revenue in the millions each month, but many struggle just to recoup their initial costs.
1. Charge for App – Directly Makes Money!
Apps usually cost between $0.99 and $9.99, but bear in mind that Apple receives 30% of this revenue. This is the most direct way of creating income with a mobile app. Basic economics here: higher the cost, the fewer the downloads. Make sure your prices are competitive with similar offerings.
2. Sliding Scale Fees
The ratings (and reviews) by Users of your App (and its positioning in the App Store) equates to more downloads. Many Apps are initially sold at a price of $0.99 and then bumped up to $2.99 or 4.99 after a certain number of downloads to improve profitability. Users rate apps between 1 and 5 stars so you want your first release of your app to be impressive both visually and functionally. It’s quite difficult to overcome bad ratings once there are a hundred or so … better to create a great app right out of the gate!
3. Apps with Two Versions
Many Apps have two versions: “Paid” and “Lite”. The “Lite” version of the App is free and usually has simplified or restricted features. The idea is to attract new users and then encourage them to upgrade to the fee based version. This approach is particularly popular among gaming Apps where a great “Lite” experience leaves the user wanting more … and willing to pay good money for it. Apple does require all “Lite” Apps to have useful functionality. The “Paid” version would provide even more capabilities, hence the price.
4. New App Versions
Another great approach, particularly in game applications, is to regularly release new or revised versions of an existing App where the initially released version (which was really popular) is available at one price while the second release, with upgraded features (or adventures) is available for a few dollars more.
5. Advertising – Makes Money Indirectly
The placement of ads within your App is another way to generate revenue. But there is one thing to consider, many time users expect the App to be free if it includes advertising. Pay Per Click (paid for each Ad click) and Pay Per Impression (paid for each 1000 display views) are two options of this approach. If you do not charge directly for your app, you will need a lot of users (in the thousands) to make any money.
6. In-App Purchases
Give the user a fully functional App but offer fee-based additional content, add-on features, or upgrades. Examples: Ten sets of ring tones, each set of ten sells for $6.99; or in a game setting, an additional level which must be mastered in order to reach the next level of challenge.
7. App Subscriptions to Make Money
Web Apps that are based on a subscriptions like magazines are more effective these days if they also have a Mobile version. Many users will not consider a Web subscription unless it has a Mobile App available as well.
8. Free Apps that Don’t Make Money
Yes, free … the purpose for many Apps is that it serves to improve the branding of your business. Apps can simply provide information to encourage the traditional purchasing methods and positive word of mouth.
Do you need more advice on building your app or making money with your existing apps? We are hear to help! Feel free to shoot us an email at [email protected] and we’ll do everything we can to get you on the right track.
