- 08
- February
What is the best way to monetize your mobile app?
2010 showed some fascinating tendencies in terms of mobile app distribution, monetization and popularity by category. Taking in account these trends, let’s look at what are the best ways to monetize your application.
Distimo released a comprehensive report on app trends in 2010, covering App Store, Android Market, Blackberry App World and other platforms. In this article I’m particularly interested in Apple. App Store grew the most in terms of number of applications (300,000 now), while Android showed most growth, multiplying number of applications by 6 as compared to 2009 (total of 130,000 apps).
More interesting to me was paid vs. free apps download trends, monetization opportunities, etc. This was especially significant to me since my company made and submitted a small application for Christmas to the App Store as an experiment, hoping for a good download rate due to holiday hype. Hype didn’t happen, and now I’m analyzing why. According to the report, top free 300 applications on the App Store generated about 3 million downloads a day, while only 350,000 paid applications are downloaded daily. On the whole, free apps are downloaded in higher volumes than paid across all the platforms, which is a clear indicator that directly selling apps is not the best strategy.
What is interesting about monetization is that paid apps in the App Store have decreased 64% (June 2010) to 51% (December 2010), while free apps with in-app purchase grew from 14% to 34% in the same period.
That’s where I think the money is: free applications with in-app purchase, my prediction that this segment will grow and eventually take over paid apps at least in the App Store. This model is especially attractive because the application and some basic features are free in majority of such apps, so are downloaded without much hesitation. Later, users want more features because the app has integrated into their daily routine, so purchase additional items. In this way, you can give them a free preview of what it can do and offer additional features/items later.
The “free app with in-app purchase” model is also easily expandable. While in paid applications, you only get paid once (at the time of purchase), with in-app purchase you can always add new features and/or items to sell. That way you can keep a stream of revenue from one instance of the app.
Conclusion.
In such market conditions, I would advice to monetize your apps with in-app purchase. It’s a beautiful model that allows users to evaluate the app’s functionality hands-on (instead of images in the App Store in case of direct sale) and developers to generate a revenue stream from one instance of the app.