Revenue Model Development

Due to the all-time-low barrier to developing and publishing a native mobile app, it’s perfectly possible to build a mobile app and achieve impressive user growth without ever trying to generate revenue from it.  However, for all but the most simple standalone apps, a publisher will face escalating costs in the form of engineering, maintenance, support, servers, 3rd party tools licensing, etc. as app usage increases.  VC funded startups often focus on growing active users and engagement before attempting to monetize and often have a significant runway to nail product-market fit, but at some point the product must demonstrate tangible value if the investment is to be recouped.  Bootstrapped startups or lone developers do not have the luxury of months or even years and typically monetize their apps and games from launch day.

Typical monetization strategies include:

  • Paid apps (user pays upfront to download in the app store, or a one-off fee to create an account on the service)
  • Freemium with in-app purchase (basic product is available and usable for free, but upgrades or special items can be purchased as in-app purchases, sometimes intermediated with virtual currency)
  • Subscription apps (typically monthly or yearly fee for access to some or all of the features)
    • Often used in conjunction with the Freemium model, but possibly require subscription from the outset.
  • Ad-Funded (the app serves adverts, usually in the form of banners, full-screen interstitials or videos, which generate revenue from click-throughs to advertiser sites)
  • Affiliate (the app features products or services from 3rd party vendors and takes a cut from purchases, which may happen within the app or via the vendor website/app)
  • Offer Walls (often used in conjunction with other payment methods in freemium apps and games: the user completes ‘offers’ from brands or advertisers and is rewarded within the host app, usually with virtual goods/currency or other in-app/in-game upgrades)

A publisher may experiment with different revenue models over time, combine multiple models (e.g. ad-funded free tier, premium tier as pay-as-you go with in-app purchases or subscribe to get full unlimited access), or use different models for different platforms.

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