This hackpad (a collaborative list composed by 150 people) has an impressive list of web and mobile revenue models, ranging from the classic ad-driven models and pay-per-download to intermediaries and commerce models.
For Your Inspiration.
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Many of the most engaging and popular apps connect to cloud services which either regularly deliver new content, enable users to interact with one another or both. Unlike a standalone application, such apps can incur ongoing hosting costs throughout their active usage life. Ideally your revenue model should mirror the cost structure. Using a Backend-as-a-Service (BaaS) reduces execution risk and time to market as well as removing server maintenance and scaling headaches, however, it typically increases the ongoing service costs making the revenue model fit even more important. Obviously the technical requirements of the app constrain the selection of service and for basic backend features Cloudspring has a good overview article. The variation in pricing of backend services is even greater than the diversity of their technical capabilities but this post will provide some generally applicable advice.
There’s a lot of buzz about Lean Startups in the software community in general and amongst mobile developers in particular. How lean a startup can be is strongly influenced by the tools and processes available on their chosen platform. Which platforms enable the leanest product development processes? How and why does lean framework matter?
Bryson Meunier from Search Engine Land compiled a list of the 100 most searched for keywords in both Apple’s App Store and Google’s Play Store, for new apps. The data was gathered in June using Google’s keyword tool, so it isn’t exactly perfect, but it’s good enough to have a discussion about what works and what doesn’t. Surprisingly, only 22 keyboards appear on both lists, which suggests that Google and Apple uses different algorithms to display apps. It also implies that Android users and iOS users look for different things. Take the search query “games” for example: it’s the 5th most popular term for Apple’s App Store, but on the Google Play Store it’s 15th. The top result in both stores is, unsurprisingly, Facebook.
It goes without saying that people like to try things before buying them. Take magazines for example. No-one expects you to buy a year subscription to The Economist just so you can read it. You can check out a couple of their articles for free on their website, you might even buy an issue from your local newsstand. Then, once you’ve decided that their content is valuable, you buy a subscription.With apps and user trial subscriptions it’s a little bit tricker
SwiftKey, makers of a third party keyboard for Android, joined up with two technology publications to survey over 17,000 smartphones users about the number of paid applications they have on their devices. Back in 2011, 12% of Android owners said they had zero paid apps on their phone. Only 10% had 20 or more paid apps. This year, those figures are now 7% and 19% respectively. Translation: Android users are slowly becoming more willing to pay for apps, but if any serious money is to be made here then you’re going to have to make free apps that are ad supported.
Developers have a range of options to choose from when it comes to generating revenue. This choice is, to some extent, dependent on business model, scale and target market. Which revenue models are most popular, and which are most profitable?
Key insights and recommendations:
- Selling your app B2B (commissioned apps or pre-loaded on a handset) is typically much more lucrative than selling the app directly to users through app stores.
- Models with recurring revenue from users (subscriptions, in-app purchases) come out ahead of the ‘traditional’ models like pay-per-download, freemium or ad-supported. Despite this, they’re less popular with developers, although in-app purchases are on the rise across platforms.
- You can use multiple revenue models concurrently. It’s not an either-or decision. On average, app makers use 2 models concurrently.
- Your choice of revenue model should be tuned to the category you’re in and the platform you’re using.
- For iOS, an opportunity exists to produce expensive niche apps. Also, in-app purchases are more popular on iOS than on other platforms.
- It’s more difficult to make money on Android. Your best bet is commissioned apps or a subscription model.
- The viability of revenue models changes extremely fast. Keep a constant eye out for trends in your category.
Related tools: In-app purchasing and virtual goods | Ad networks and mediation engines