How to Make Money by Creating an App
For a lot of people in the 21st century, the class of tech moguls sounds like something fairy-tale-like. It provides one with vast riches that they can earn overnight, much like asking a genie for a wish. Still, in order to get there, you need to possess enough technical prowess.
While inventing something new, like the brilliant Netgear Wi-Fi extender, is one of the ways to make money in the tech industry, the most common way is to create an app.
Now, making an app that people are willing to pay for is one thing but you can make quite a bit of money even with a free app. Here are several tips and tricks you should know about all of this.
The simplest way to make money by creating an app is to hide it (or at least its premium plan) behind a paywall. We’re, of course, talking about a subscription system. The reason why this is such a great idea is that it creates a stream of revenue instead of a single payment.
One problem with this strategy lies in the fact that your competition might not allow it. How can you charge for the use of an app if there’s a competitor offering an app with the same (or similar) set of features for free? So, your best choice is to find a way to offer more. At the very least, you could spice up your unique proposition a bit.
Other than this, you might want to offer a free sample. This can either come in the form of a free plan (with limited features) or a trial version (full features for a limited period of time). Either way, you’re allowing your audience to check out your app in hopes that you will persuade them to commit harder.
If you can find a sponsor, this could turn out to be quite a lucrative way of turning your app into a money-making vessel. The problem is that in this field (app market) this isn’t all that common method of financing.
This process always starts with outreach. First, you need to figure out who exactly is your target demographic (in terms of potential sponsors). Then, you need to make a list of suitable organizations and look for their personal contacts. Once you’re done, you can start sending out emails with your proposition. The contract between you and the sponsor also needs to be well-made. According to experts behind IP Guardian, this is also the right time for you to protect your intellectual property.
Keep in mind that you need to make sure that your sponsor has the reputation that you approve of. The last thing you want is to get entangled in a controversy that could damage your brand. At the same time, a positive reputation could turn into one of your PR’s biggest assets. The biggest challenge lies in balancing between being too choosy and having enough viable options to actually choose from.
The way the majority of free apps make money is through advertising. The advantages of advertising are numerous. First of all, you have the privilege of making money while handing out your app and all of its features completely free of charge. This drastically expands your target audience and ensures that people are more willing to give it a try.
This way, you are paid by engagement. This means that every time a user clicks on an ad, you get paid. Alternatively, whenever a visitor to your app completes the installation via the advertisement, you might get a monetary reward. The latter is less likely and harder to achieve but might provide a heftier reward.
Due to the simple nature of this stream of revenue, about 8 out of 10 free apps rely on this money-making model as their primary source of income. Some apps provide in-app bonuses for interacting with these ads. This, however, can be quite hard to implement (especially if you aim to make it feel organic).
4. Selling merchandise
Selling merchandise via an app gives you a direct and a more traditional money-making method. After all, your revenue depends on sales, it’s that easy. Developing an app in order to sell your product directly may sound like a complex matter but, in the end, it will probably be worth your while (and your money).
Remember that this is not such a simple matter and, from a technical standpoint, you have a lot of work to do. You should definitely start with a market analysis, invest some time in app development vendor search, as well as settle on the best e-commerce app design. Even after you’re done, there’s quite a bit of testing and QA to do.
Remember that the success of your app in this field might develop in equal part on the quality of your app and the appeal of your products. It’s a slippery slope and you need to understand full-well what you’re getting into.
5. In-app purchases
Have you ever played a game app? If you did, chances are that you’ve noticed a special in-game currency that you get either by completing special (usually weekly or daily) tasks. Another way to get this currency (far heftier sums) is to buy it via in-app purchase. You would be surprised at just how lucrative this can actually be.
Sometimes, these in-app purchases provide you with an extra feature. A similar thing you can see on the Upwork platform when buying extra connections. On the other hand, there are a lot of instances where these purchases are strictly cosmetic. A special badge or, in the scenario where we’re talking about the game, a special skin for the playable character.
Just remember that while you might be tempted to try and make as much money as you can this way, the trick is to avoid being seen as too greedy. If your app gets labeled as pay-to-win, people might quickly lose interest in it. So, make sure that your app is still usable without these in-app purchases.
6. Referral marketing
On the surface, this looks quite similar to traditional in-app advertising. The way it works is fairly simple, you promote a third-party product and every time you are successful, you get royalty payment.
You can be paid per action (CPA), per click (CPC), per view (CPV), per install (CPI), and so on. The key thing is that you negotiate the terms that you see the most fitting. It is also quite clear that while CPC and CPV are the simplest, they probably pay the least (per interaction). As you can see, the choice is not nearly as simple as it appeared at first.
Just keep in mind that this opens up a chance for a deeper collaboration with a successful brand, platform, or app. The downside is that you can’t efficiently run several referral programs at the same time.
This list is actually far from complete. You can also make money by collecting and selling data, charging transaction fees, and going for crowdfunding as an option. The above-listed six methods, however, are the simplest and are universally available. They require the least legal paperwork and provide you with a quick and reliable income. Nonetheless, how much money you are able to make depends on how good your monetization program is and (of course) how good your app actually is.