Home Business Insights & Advice What remuneration model should you use for your app?

What remuneration model should you use for your app?

by Sponsored Content
8th Oct 20 4:22 pm

In many ways, app development is to the twenty-first century what prospecting for gold was to the 19th. The barrier to entry is relatively low, but the rewards for success are high indeed; and as in prospecting, the difference between winners and losers in the world of app development often has as much to do with planning as it does with luck.

Most apps begin with an idea for something that would be useful to people — in the pandemic, for example, the alcohol delivery app Boozer become incredibly popular as a way of purchasing beer, wine, and spirits in a safe and responsible way.

But in addition to having a good idea, you also have to know how exactly you’re going to make money off it, and this isn’t always a straightforward question.

Knowing which remuneration model to use is one of the most important decisions you’ll make, which is why most companies developing commercial apps work with a mobile app developer who can advise them about the right model to use before the actual design stage, so the other app features can be optimised accordingly.

If you want to learn more about the best options for monetising an app, here are a few of the most popular remuneration models currently used, with some of their pros and cons.

1. Freemium

One of the biggest problems developers run into when trying to decide how to monetise their apps is the paradox of popularity: in order to make money, an app needs a large user base — but in order to get a large user base, an app needs to be accessible.

The freemium model splits the difference by giving users access to some app features for free while charging for others. This gives people a chance to keep using the app for free if they want to, but incentivises them to unlock better features for a small fee.

Unsurprisingly, this brilliant mix of free and paid content has quickly become one of the most popular approaches to app monetisation available.

2. Pay to download

Pay to download is a popular way to monetise an app that users are confident they will get value from. Because they need to pay for the app before having a chance to see how it feels, users tend not to take a risk on such apps unless they have a reason too — either because the app fulfills a concrete need (like WhatsApp when it first launched), or because of advertising or word-of-mouth.

3. Advertising

While advertising isn’t as big in the app world as it is in other parts of the online space, advertising is still a tried-and-true way to make money. But it can be hard to strike the right balance around number of ads to show and how to target them, which is why you should consult with an app development company to determine whether this approach is right for you.

4. Paymium

The paymium model mixes elements of paid to download and freemium apps: users pay to download the app, and they pay for extra features within the app itself. While it is a relatively new approach, for some types of app paymium seems to be an extremely lucrative model.

A good example of this is games, many of which have an up-front charge but also give users a range of options for buying in-game add-ons. Some versions of Angry Birds are designed on as paymium downloads, as is Kingdom Rush Origins HD.

One of the most common mistakes in app design is coming up with the concept first, and trying to figure out how to monetise it later. Not only does this create a situation where you waste a lot of time exploring unworkable ideas and then having to re-imagine the entire platform, it can also get in the way of understand the actual point of the product.

Instead, you should work with mobile app development companies who can help you make monetization part of the design process from the beginning. This help ensure the app can turn a profit, but it will also help you have a clearer sense about who and what the app is for.

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