App Revenue Model

TIS3001 | Keteknowiraan | INSTITUT TEKNOLOGI DEL

Devis Simanjuntak
Semester Gasal 2020/2021
UTLINE

•  Monetization Business Models

•  Freemium
•  Virtual Goods with In-App Purchases
•  Advertising and Sponsorship
•  Paid Apps
•  In-App Affiliate Marketing
•  Lead Generation
Monetization
Business Model
What is the monetization business model and
why developers need them?
The Basics
 Basic Notions

1.  There is no need to reinvent the wheel.

2.  When launching an app startup, a large base of users alone
won’t sustain your business in long term.
3.  Use the MVP to go into testing state.

 Basic Notions

Ideally, you want to implement a business model that is

profitable without thousands of users; one that is scalable
as your business expands; and one that provides the
opportunity to monetize a significant portion of active
users.
1. Freemium
Why “free” app model is the most powerful?
reemium Conversion Rate: Spotify
Why Spotify Freemium Model is better than
others?
Why Spotify Freemium Model is better than
others?
Why Spotify Freemium Model is better than
others?
 Why Spotify Freemium Model is better than
others?
•  Reduce friction and increase virality with Facebook
sign-ups
•  Optimized playlists to have specific appeal
•  Spotify empathizes with you.
•  You make an investment in the app by customizing it to
suit your tastes
•  CTA aren‘t too intrusive.
 A number ways of the Freemium model
can be used

•  Feature-led Freemium : provide a free version of your

app but limit it‘s functions.
•  Capacity Limited Freemium : The user can access your
application for free until they reach their alloted
capacity.
•  Limited Time Offer Freemium : Offer a free version of
your app for a limited amount of time, under a free trial.
2. Virtual Goods with In-App Purchases
Basic Notions of In-App Purchases
•  Addictive app that allows users to advance their value with some type
of in-app virtual goods.
•  Virtual goods can be anything from extra levels, playable characthers
on game, or the ability to buy credits to see when another user has
viewed your profile on a dating app.
•  The key to making this business model work is to avoid over
complicating your app. Start with one in-app purchase option that
rewards the user for making a purchase and see how users respond.
3. Advertising and Sponsorship
Basic Notions of In-App Purchases
•  For those ambitious app entrepreneurs or those with over 125,000
monthly active users (MAUs), monetizing apps through advertising
and sponsorships can be extremely profitable.
•  Scaling directly tied to how large you can grow your audience and how
well you engage them with your app’s offering.
•  Risk of alienating or overwhelming your users. Modern mobile users
are particularly hostile to ads and often feel as if they are intrusive
and that they ruin the user experience.
4. Paid Apps
Basic Notions of Paid Apps
•  Simplest monetization model available for app startups in terms of
implementation.
•  One time payment, users are given access to the app forever.
•  Revenue directly tied to the number of individuals you can convince to
pay for and download the application.
•  The caveat is you need high number of users to make a substantial
profit, and will need to continue bringing in new users to sustain the
business in the future.
5. In-App Affiliate Marketing
Basic Notions of In-App Affiliate Marketing
•  Affiliate marketing allows you to advertise and sell third-party
products to your audience.
•  Since you already have a specific user base, this method allows you to
earn commissions by promoting products on behalf of another
company. There are many apps that operate under this model, some
of the most popular including Podcast Addict and Clash of Clans.
6. Lead Generation
Basic Notions of Lead Generation
•  As you scale your app to reach a larger audience, you will have access
to a ton of user data – from names and e-mails to demographic
features.
•  Depending on your app, your demographic and the size of your
audience, providing this data to third party entities can be fairly
lucrative. Demographic and usage data can be key to helping other
businesses understand user behavior, and can help them improve the
buying process for their own products and services.
What monetization model should I choose?