Q&A: Should You Charge for Your App or Use Another Model to Generate Income?

As I speak at a variety of mobile conferences across the globe, and teach my training classes (iOS App Development for Non-Programmers) I get this question a lot. I’d like to share what has been a successful strategy for our company and has worked great for others too.

The Revenue Options
Usually, if you’re creating an App, you’re
hoping to make some money from it. Here are the models you can choose from:

  • Charge up front for the App
  • Make the App free, but include ads from which you generate revenue
  • Create a free App that includes ads, but offer a paid version without ads
  • Include in-App purchases or offer a subscription

For those who aren’t familiar with the mobile advertising model, when you opt to include ads in your App, you are basically creating an empty billboard on which Apple (or Google on Android) places advertisements. When a user taps the ad, you make money, Apple makes money, and the advertiser gets a potential buyer.

With the in-App purchase model, Apps are usually free to download, but the user is prompted to purchase additional functionality as they use the App. The subscription model can also be used for Apps that provide content such as magazines or streaming music.

Choosing the Right Model For Your App
One of the big factors in choosing a model is
the type of App you have created. There are two questions you need to answer:

  1. How often will the App be used?
  2. How long will the App be used over time?

Apps that are used over a long period of time are great candidates for generating revenue with in-App ads, subscriptions or in-App purchases. Obviously, the more frequently your App is used, the more potential for earning revenue through ads.

Apps that are used over a short period of time are
good candidates for up-front, one-time-only fees. They aren’t used long enough
or frequently enough to generate much in the way of ad income.

Using Statistics to Make a Smart Choice
So, how can you tell how frequently or how long
your Apps are used? There are several companies that offer free services you
can integrate with your App to capture these metrics. Two of the most popular
are Google Analytics and Flurry Analytics.

Even if you don’t include these analytic tools
in your own Apps, you can take advantage of the information gathered by these
services for other Apps. For example, the following image shows “Loyalty by
Application Category” statistics provided by Flurry Analytics (which is used in
over 230,000 Apps):

This matrix breaks out Apps by category, graphing
how frequently and for how long Apps in a particular category are used. The
vertical axis shows on a scale of 1 to 9 how often an App is used in a given
week, and the horizontal access shows the retention, or how long an App is used
over a 90-day period.

The App categories on the right side of the
matrix are used over a longer period of time and are usually better suited for
in-App advertisements, subscriptions or in-App purchases. The Apps on the left
side of the matrix are used for a shorter period of time and are usually better
suited for one-time download fees.

These statistics don’t provide a hard and fast
rule, but are a great tool in helping you decide how best to earn money on the
hard work you have put into your Apps!

Kevin McNeish
Author: iOS Apps For Non-Programmers Book Series
Twitter: @kjmcneish 

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