{"id":494,"date":"2014-08-01T00:17:05","date_gmt":"2014-08-01T00:17:05","guid":{"rendered":"http:\/\/buildblog.wpengine.com\/?p=494"},"modified":"2015-09-04T10:23:30","modified_gmt":"2015-09-04T17:23:30","slug":"monetize-apps-paid-apps-vs-app-purchases-vs-freemium-vs-subscription","status":"publish","type":"post","link":"https:\/\/thinkapps.com\/blog\/post-launch\/monetize-apps-paid-apps-vs-app-purchases-vs-freemium-vs-subscription\/","title":{"rendered":"App Monetization: Freemium vs Premium, In-App Purchase vs Paid"},"content":{"rendered":"

In this post, we provide a beginner’s guide to all of the top\u00a0app monetization strategies, including comparing\u00a0freemium vs premium, in-app purchase vs paid apps, and subscriptions.<\/em><\/p>\n

Many eager entrepreneurs and developers choose to create mobile apps because they believe they can make “easy money.”<\/p>\n

Although there is plenty of money to be made from mobile apps, it doesn’t\u00a0come easy. You must have a solid app monetization model\u00a0in place in order to become\u00a0profitable. And this\u00a0revenue strategy should be integral to the app design and development process, not an afterthought.<\/p>\n

Here are the pros and cons of some of the most\u00a0common app monetization methods:<\/h3>\n

Premium\/Paid Apps<\/h2>\n

The most familiar method to monetize apps\u00a0is the premium model (a.k.a. paid apps).\u00a0Under this strategy, the user purchases your app directly from an\u00a0app store for a one-time fee.<\/p>\n

Though this strategy\u00a0results in a higher average revenue per download, premium\u00a0is not the most profitable model.<\/p>\n

[For more information on which revenue\u00a0strategies are the most profitable, check out our post\u00a0on app monetization statistics<\/a>.]<\/em><\/p>\n

One problem with paid apps is that, even with plenty of positive reviews, users\u00a0are unlikely to purchase an app that they can’t try or preview before paying. There is such an abundance of free apps available, why purchase?<\/p>\n

Of course, the likelihood users will take the leap and pull the trigger on a paid app depends on your product and audience. The more compelling the content or service\u00a0you’re offering, the more likely they are to give in to\u00a0premium apps.<\/p>\n

Freemium and Free-to-Play<\/h2>\n

The freemium strategy\u00a0(and more recently free-to-play model)\u00a0has been proven to be the most way effective way to\u00a0monetize apps.<\/p>\n

In the freemium model,\u00a0users can download an app for free, but they cannot access the full set of features without upgrading to the paid\u00a0version.<\/p>\n

Freemium apps typically make more money than paid\u00a0apps, but it may take more\u00a0time to build profits. If users choose to keep using the free app version, you can still earn some revenue\u00a0by offering\u00a0upgrades and premium content.<\/p>\n

In-App Purchases<\/h2>\n

Although offering in-app purchases\u00a0(IAP) is\u00a0not a stand-alone model to monetize apps, it\u00a0can be combined with free or paid apps to generate increased revenue. In fact, the dominant business model in the mobile space is currently free apps with\u00a0in-app purchases.<\/p>\n

Keep in mind, however, that in-app purchases\u00a0are not a guaranteed money-maker. If implemented\u00a0poorly, they\u00a0can lead to bad reviews, frustrated users, and customer service nightmares. Consider these potential drawbacks before pursuing\u00a0this app monetization strategy.<\/p>\n

Advertising<\/h2>\n

Some entrepreneurs choose to make their mobile app completely free by using advertisements to generate\u00a0revenue.<\/p>\n

Like in-app purchases, advertising is a\u00a0monetization model that is often\u00a0combined with freemium or free-to-play apps.\u00a0In general, users are willing to deal with ads in exchange for accessing your service or content at no cost. But this is usually\u00a0contingent upon the way ads are integrated into the app.<\/p>\n

Subscriptions<\/h2>\n

Subscription apps offer users access to a particular service or content for a weekly, monthly, or annual fee.<\/p>\n

Subscription apps haven’t gained the same popularity as other options, but they do\u00a0offer significant revenue potential. Subscriptions offer the benefit of a steady stream of income, but this model only works well for apps that continually offer\u00a0fresh content.<\/p>\n

Concluding Thoughts<\/h2>\n

Which method is the best fit for your product?\u00a0Before choosing an app\u00a0monetization strategy, make sure you do your homework!<\/p>\n

Savvy developers and entrepreneurs design mobile applications\u00a0after<\/em>\u00a0deciding how to monetize\u00a0in order to build the app to match the\u00a0revenue model.<\/p>\n

Users are not very forgiving when it comes to mobile apps, and you won’t get a second chance to make a first impression. But with a carefully chosen revenue model and an awesome developer, your app could be the next big success story.<\/p>\n

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