WEEK 8: HOW TO MONETIZE AN APP
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So we are building an app. Yes, it will have all these cool functions and will solve consumer problems, but ultimately we will need to make money. What could be a better validation of our product solution than customers willing to pay to use it? This is a benchmark of success.
So what are our options for building revenue? An article from Entrepreneur spells the most common pricing models out.
1. Freemium
You essentially give your app away for free and offer a premium version or additional features at a cost. Of all the pricing models, the freemium model brings in 71 percent of all paid app revenues. It works great because it reduces friction for users to sign up and once they are hooked and have built trust with you, they will (hopefully) be willing to pay for more. This can be a scary model for a start up business however because without putting your product through the test of "will customers pay for this", you run the risk of building a product that no one wants or needs.
2. One-time paid apps
Your users pay to download your app and all additional updates and features are expected to be free. It may be more difficult to sell an app without at least letting your users sample it first. However, it is a good way to prove that your product has value that customers are willing to pay for.
3. Paid apps with paid features
This revenue model is a hybrid between the freemium and the one-time paid apps: it is both. You pay an initial fee to download the app and pay to add features. This can be a tricky pricing model to implement because users may feel it is unfair to pay twice for their app. However, there has been some indication that this model has been taking off recently.
4. Free apps with advertising
The opportunities are out there. You just need to find the best fit for your app.
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