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How to
Create an App

Chapter 7

Ways to Earn Money
from Your App
Sell a digital service through your app. The ideal business model is to establish a direct-to-consumer service that enables you to bill the customer directly. You provide the free app in the App Store that gives subscribers mobile access to your service. After this connection, you need not share the 30% of all revenue collected by the store platform.
- Marty Zwilling -
CEO & Founder of Startup Professional Musing,
and Advisory Board Member for multiple startups

For some, this is where it starts
getting serious. Making money.
For many of you, this will be the number one reason why you’ve invested so much time, effort, and money in creating an app.

There are several different monetisation models you can apply to your app. Deciding which one is for you

will be a case of balancing your preferences, the nature of your app, your target demographics’ preferences, and what’s possible.

But it’s absolutely crucial that you choose the right model. Make the wrong decision here and the whole project could be a complete waste of time and effort. Make the right choice, and you will start to see the money pouring in quickly and steadily.

— models —

There are six main monetisation models for apps: »

Of course, not all of these models are mutually exclusive, and you’re free to mix and match until you settle on the perfect model for you.



The paid model is probably the most simple monetisation model. Users pay a one off fee so that they’re able to use your app indefinitely. The amount charged is entirely up to you (however, most app stores have a cap of $999.99).

As of June 2015, the average app cost $1.13. Such a low price reflects the high levels of competition in app stores. This means that, in order to cover your development costs and make profit you have to:

  • Charge more, confident that users will be willing to pay more for the great functions your app offers
  • Charge a similar amount, confident that your app will be so popular that enough consumers purchase it to make a profit
You also have to be aware of
what you’re competition is doing.

If there’s a free alternative to your app, then it’s likely that that app is going to attract the vast majority of consumers.

In fact, in 2015, the 68.8 percent of all Android apps downloaded were free. And, by 2017, it is projected that free apps will account for 253.91 billion downloads compared to 14.78 billion paid downloads. »
The trend is clear: consumers prefer free apps. However, don’t be too disheartened if you really want to pursue the paid route – 14.78 billion downloads is still a lot of downloads! To make sure your app gets its fair share of them, you need to make it offer something really special.

Ridiculous Fishing Case Study:
Success with Paid Apps

Vlambeer, a Dutch development studio consisting of just two people, created Ridiculous Fishing in 2013. The game is completely unique, with interesting artwork and unusual gameplay. Players take control of a fisherman who, after catching fish, blasts them out of the sky as they come out of the water. It’s a strange concept, but the game has near-perfect scores from almost all well-respected reviewing websites, with Metacritic describing its reception as “universal acclaim”. The game justifies its $2.99 price tag with its beautiful design, enthralling gameplay, and unique approach. It has a 4.5 star rating on the Apple App Store from over 8596 reviews.


Free Download and In-App Subscription

The subscription model bodes well for apps whose value does not diminish over time. Even the most addictive games can get boring, and dating apps are only effective for as long as their users are single.

Because of this, subscription is a fairly unpopular monetisation. In 2014 (the most recent statistics gathered) the subscription model was only used by 6.8 percent of developers.
Barry Nolan, who led and scaled operations, marketing and products for numerous startups, explains in his

post here about the three different subscription options for developers:

  • Auto-renewable subscriptions, where users are continually charged until they manually cancel
  • Non-renewing subscriptions, where users subscribe for a set period of time, after which access to the service or content expires and they must re-subscribe
  • Free subscriptions, where content or services are delivered with no charge

Apps which use one of these subscription models are free to download, with users paying a subscription to use or view additional features or content.

The model is particularly popular with newsstand and media publications, as well as some software packages (especially those aimed at businesses).

Free subscriptions can be used as a way to gather important data, such as emails, names, and addresses, and as such is strictly not a monetisation model.

SiriusXM Case Study: Success with
In-App Subscription

SiriusXM is a satellite radio provider. Their App, the eponymously named SiriusXM, allows you to take their programmes with you wherever you go.

Because, by the very nature of radio, the content broadcast will change from day-to-day, the app justifies its subscription fee with the promise of fresh programmes ad shows.
The SiriusXM app currently has a 4 star rating from 2790 reviews on the Apple App Store, proving that people are willing to pay in an ongoing fashion for quality content.


In-app purchases

The in-app purchases monetisation model charges users to use specific functions or to buy certain digital or physical goods.

Games make use of this model very effectively, often charging addicted players to purchase power-ups or boosters that will give them a competitive advantage, or extra levels to keep them occupied.

But the practice has bled into other app genres – even popular dating app Tinder now gives users the option to pay for a “super like” (a feature which tells other users that someone has liked them).

Retailers, too, make use of in-app purchases. However, they sell physical rather than digital items – such as clothes or homeware – with the app simply functioning as another place for people to make a purchase. In fact, in-app purchases are
so popular that 49.7 percent of
developers made use of them in 2014.
The popularity of in-app purchases has a lot to do with how easily they can combine with other monetisation models; paid and free apps can each be loaded up with additional in-app purchasable features and goods. For this reason, in-app purchases are a great way of bolstering your app’s revenue, even if it’s not your primary monetisation model.

Curiosity — What’s Inside the Cube?
Case Study: Success with In-App Purchases

Peter Molyneux, the game designer famous for his experimental and wayward ideas, created Curiosity – What’s Inside the Cube as “test about the psychology of monetisation”.
Players had to click pixels on the surface of a black cube with the aim of reaching the core. At the centre was a secret prize – which turned out to be a chance for the winner to feature as a god figure in Molyneux’s next game.

Players lined up to get in on the action, and there were plenty of in-app purchases to help them get on their way, as Wired covered in their post here. The diamond chisel was the most expensive, costing £47,000, and increasing a player’s tapping strength by a factor of 100,000!



The freemium model is very similar to the in-app purchases model, with users paying for extra benefit(s).
However, rather than making one-off purchases, the

freemium model encourages users to pay to upgrade the entire app.

Often this includes removing adverts, adding additional functionalities, as well as access to numerous other benefits (even real-world rewards).

Generally, those seeking to use the freemium model actually create two versions of their app: the free version and a paid version. The free version is obviously inferior and limited, and this encourages users to purchase the paid version. In effect, the free version advertises and sells the paid version. The key is getting users
hooked and wanting more.

Threes! Case Study: Success with Freemium

Threes! is an indie puzzle game developed by Sirvo. Players slide numbered tiles on a grid to combine addends and multiples of three. The game is incredibly addictive and has a 92 percent rating on Metacritic.

The game reached the top position on the Apple App Store’s paid chart days after it was released, and the free version (released shortly after) largely replicated this success.



Marketing has attained different colors with mobility and mobile advertising has opened new opportunities for business.

Advertising is the most popular app monetisation model. Users download and use an app (usually for free) and advertisers pay to display adverts to them.

There are a few different
forms adverts can take within apps:

(Percentage of developers using this form of advert) »

Advertisers will have their own preferences when it comes to the types of Ads you display. And this means that you have to enable your app to display different types of ads. For example, in the last year alone, video advertising have jumped by a factor of five, so it’s important that you offer that capability if you want to attract the most lucrative advertising deals.

At the same time, advertisers will only pay to advertise on popular apps. And too many ads will affect your

apps usability and, in turn, its popularity; users prefer free apps, but that doesn’t mean they like ads.

For both of these reasons, in order to retain users and please advertisers, it is often a good idea to diversify ad products with multiple units of different sizes. This should stop users getting disgruntled at seeing too many ads of the same type.

Polar Bowler 1st Frame Case Study:
Interstitial Ad Success

Polar Bowler 1st Frame is a bowling game in which you knock down the pins with, well, a polar bear. The game has a 4.5 rating from 744 reviews on the Apple App Store, and is free to download.

The app generates money using interstitial ads. One of the game’s objectives is to collect crates, and the app developers give players the chance to collect bonus crates from sponsors. After clicking the “Bonus Crate from Sponsor” the player views an interstitial ad before receiving their reward. It’s a great example of using optional interstitials where the player receives a benefit from viewing the ad, thereby keeping users happy (without them actually spending any money) and advertisers sweet.

The player receives an invitation for a free crate from a sponsor.

If they decide to click it, they are notified who the sponsor is.

A 30 second advert then plays…and the player receives their prize.

Flashlight Case Study:
Success with Banner Ads

Flashlight turns your device into a torch. It’s an incredibly handy feature, and an incredibly popular one. The app has a 5 star rating from a whopping 128,493 reviews. That’s pretty good going.

And the app makes its money by displaying ads. Just one unobtrusive banner ad at the top of the display which doesn’t interfere with the app’s usability at all. But, since it’s so popular, there’s no doubt Flashlight are charging a premium for it.



The commission model works on the principle that, if your app facilitates a transaction, you take home a share of the money generated by that transaction.

The commission model is most popular with (indeed only really appropriate for) marketplaces – apps that allow third-parties to offer their services or goods through the app.

For example, Just Eat, the fast-food ordering app, allows users to place orders at any signed-up local takeaways. The app then takes a cut of any orders processed through the site.

We've tested endless business models related to premium content and found that a freemium model always generated the higher revenue. One advantage of having a partially free offering is that users who will never pay for your content/service can still become brand advocates and recommend your app to other people, helping to increase virality.
- George Burgess -
Founder & CEO, Gojimo (the UK's most popular exam preparation app)
— in summary —

Monetising your app should be the most satisfying part of your journey. Identifying the most appropriate model (or combinations of models) will enable you to achieve the typical end goals: to generate revenues and, ultimately, profit. There are six main monetisation models to consider, which are detailed in this chapter; with

each possessing their own merits depending on the type of app you are taking to market. This chapter has helped you understand their pros and cons so that you can make your decision – it’s a big decision, so read the chapter again if you’re not sure, and do some research on how your competitors are making money too.

But we couldn’t put it any better than Hillel Fuld:

App monetization is a tricky topic. People as a whole don’t pay for apps in the consumer world and that, sad or not, is the reality. Mobile advertising is set to explode, but that has been the case for years now, so that isn’t a great option either. In-app purchases? Might work for some, but for most apps, that can get annoying. Subscription models? Ditto. The bottom line is, to monetize mobile, you need serious traction and you don’t gain traction by polluting your app with ads. So focus on product first, monetization second!
- Hillel Fuld -
CMO Zula, Tech Blogger, Startup Advisor, Steak Lover
— key takeaways —
Consider several different factors when looking at the monetisation options available to you – your target audience demographics, the type of app you’re developing, what in-app bonuses or extras you may offer, and so on.
You can opt for one, two or a combination of different monetisation models – get the balance right for you, your app and your market. One model alone may prevent you from reaching a broader market, while too many could confuse your audience.
Although consumers naturally prefer free apps, the paid model will account for 14,78 billion downloads in 2017 – so don’t rule it out just because everyone likes a freebie!
It must reflect the type of app and its longevity – even a super addictive game will have a shelf-life, whereas a news or content-based app that is regularly updated over time with exciting new stories or articles has a potentially indefinite lifecycle (only determined by how long you keep publishing your “app magazine” or similar).
Also pay attention to the sub-models that some of these six offer – for example, free download and in-app subscription has three such options to choose from.

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