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.
Tag: Business models
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.
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
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Planning your development costs
The bar for successful apps is high: if you want your app to stick out among a million others, it needs to be well designed, user friendly and working flawlessly, all of this comes with significant development costs. In this article, we give an indication of the types of costs you need to take into account when planning your app.
Costs can differ wildly depending on your platform and type of app. A mobile game with 3D graphics will have a radically different cost structure than a weather app. The range goes from $5,000 for very simple apps to hundreds of thousands for extensive apps. Often cited, Twitterific estimated their development costs as high as $250,000 back in 2010. Use common sense when thinking about your costs, be realistic and plan for cost overruns.
Here are some costs you need to take into account.
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
Most app makers are not primarily in the game to make money. The primary reason for developer platform selection is not app monetisation, but reach; irrespective of platform, 54% of developers adopt a platform because of reach, while 43% cite low cost and 30% cite revenue potential. Moreover, out of the eight types of app developers we identified, only three segments (Explorers, Hunters and Guns for Hire) are directly motivated by money when committing resources to a new platform.
Among those of you that are in it for the bling, developer profitability is a hotly debated topic. Apple’s iOS is generally thought to support greater revenues per application, compared to Android, but the evidence is mostly anecdotal. Many stories of overnight successes circulate the internet, but it’s not clear if they are replicable.
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To stay above the app poverty line you need to make a sensible budget plan for your app. This requires that you have realistic expectations about the costs and revenues that you can expect. Based on VisionMobile’s Developer Economics 2012 survey, we can now offer you an informed opinion.