How Much Money Can You Earn Through An App?

The mobile application development services industry serves a huge potential to businesses to earn millions of dollars. However, not every business mobile application earns an equal share of Android and iOS market revenue.

Despite the similar mobile application development process for money making apps, not every business gets to earn billions of dollars being transferred to their accounts. This is making startups who are yet to enter the mobile industry, encounter questions like, “How do apps make money?”, “how do you make money from an app?”, “What are some successful app monetization strategies for business” etc.. We are going to tackle these questions in this article.

But before we dig out our answers to these questions, here are a few statistics you would want to know about app development and money making apps:

Current Market Statistics on App Monetization You Must Know 

• As per the survey for July 2022, there are over 2.65 million apps placed in Google Play store. It is also studied that gaming android apps are most likely to dominate by 2024, accounting for over 70% of the total app revenue in Google Play Store. 
• As for the App Store for iOS based applications, the number of apps available on the platform are over 2.18 million recorded in the second quarter of 2022. There is a 5% increase in the total app revenue compared to the previous quarter. 
• In the first quarter of 2022, the combined Apple Store and Google Play Store app downloads amounted to an estimation of 36.8 billion. This shows an increase of 2% as compared to its previous quarter. 
• Coming to app monetization stats, 8% of apps from the US are monetized by paid apps while 25% of the US generated app revenue includes Ads (video ads, popup ads, display ads etc.). 
• Revenue generated via in-app advertising is expected to increase by approximately 4% between 2021-2022. Moreover, the in-app purchases are also expected to increase by 8.4% between 2021-2022 

Looking at the above figures demonstrates that there is tough competition in the marketplace for earning from apps.Under such circumstances, you would definitely want to prevent your business app from failing in the market. This is probably why your priority should be focusing on the right considerations before building your business application.

So, let’s uncover what things you must consider before making any effort into money making apps development.

Things to Consider Before Developing Money Making Apps 

Before you invest into designing and developing your app, it is important to take time out to research and list down a few factors. While you can conduct your own research, it would be best to seek technical guidance from a reliable mobile app development company or industry expert that has the in and out insights on money making app development. 

When looking out for these factors, make sure you include the top four considerations listed below before actually developing your app. 

1. App purpose

Prior to choosing any of the monetization models, you need to understand the type of your application. What and how does your application tackle any issue?

When focusing on how do apps make money, the app purpose plays a pivotal role. Answer these questions to get a detailed understanding of your app purpose. 

• What problem does your app target?
• What software development services do you need to build a successful app?
• What could be the probable impact of your app monetization on the market? 
• And how will the app be useful in serving the customers and their needs?

When you have a reasonable answer regarding the purpose, you will be able to choose a correct monetization strategy for your application; for instance, subscription models for service and content applications.

2. Target audience

Another factor that helps in determining how can apps make money is the target audience. If you are making a mobile application for the business people, it is important to go with a monetization strategy that does not waste their time. Likewise, when it comes to building an app for kids, it is good to offer a few solutions and features for free. 

To effectively earn an online income from app monetization strategies, you need to examine your target audience prior to starting any plan. Who is the target audience? What do they require? The amount they will pay? To put it simply, your users should know the genuine worth to make purchases.

3. Competitor analysis

Performing Competitive analysis for your mobile app idea also contributes to making the decision related to how to make money from an app. The insights aid in getting a hint about what strategies similar applications in the market prefer and what all profits they have earned. This eventually helps with decision making.

The cutthroat competition in the market and the competitor analysis isn’t only for highlights, functionalities, and design of an application. With a proper study and knowledge regarding the competitors, you can without much of a problem discover the monetization business plan for your application. All you need to do is ask yourself certain questions like how competitors are earning? How solid are their models? Is there any loophole that can turn into an opportunity for you? Also, a solid marketing plan for your mobile app development can help you accelerate your marketing and sales.

4. Technologies 

The set of technologies you introduce in your application not solely enhances the user experience and makes it stand out from the competition, but also adds to the earning from mobile apps. 

Example: A traditional business mobile app monetization platform model provides developers with only 70% of the amount paid for a mobile application. Whereas, a blockchain-based application model delivers 85% of the total app profit share.

With this covered, let’s jump directly to finding different models to look into how to earn money from apps.

Six Mobile App Monetization Models to Consider

The pricing app strategy you choose for your application also makes a difference to the money making apps.Therefore, it is essential to be familiar with all types of bankable mobile app monetization strategies you can go with. Some of the major ones are discussed below:

1. In-app advertising

While the application is free to download and use, you can still earn money based on the interactions on the advertisements displayed within your application. In-app advertising revenue model is highly considered and found to be profitable. 

This model includes several formats such as Interstitial ads, Banner ads, Video ads, Native ads, Text ads, Native ads, and so on. How much do ads make on apps? The average revenue per ad impression can be as low as $0.10 and as high as $10, depending on the type of ad.

Pros of in-app advertising 

• Generates target audience 
• Faster results 
• Great extension for target audience 

Cons for in-app advertising 

• More shares of competitors 
• Low involvement of audience 

2. In App purchases and freemium model

The foremost monetization strategy that one considers when looking into how to make money of an app without ads is Freemium.

Here, the application is free to use. But, the users would have to pay some amount of money to buy a wide variety of virtual elements from the mobile application. This includes extra lives, blocking ads, premium app content, game currency, and more. 

Example: Clash of Clans earned nearly exceeded $1 million per day on purchases.

Pros of in-app purchase

• Wider user bases since users get to try the app before purchasing 
• If planned well, the app gives maximum profits and higher returns

Cons of in-app purchases

• The app within the in-app purchases has to pay the amount the App Store charges as a fee (i.e. 30%).

3. Subscription (Software-as-a-Service) model

Another strategy that comes forward as the answer to how to monetize an app is the subscription model. 

Here, users are asked for a weekly, monthly, or annual fee in return for a particular service provided by the mobile app development company. This type of business and monetization model is often recommended in the case of cloud-based services, audio and video content based apps such as Spotify, Google Music, and Netflix. 

Note: Only 5% of the successful app developers are using subscriptions to get income from an app.

Pros of subscription model 

•  Attracts many free users 
• You can keep free users in the app with limited features even if they cancel the subscription

Cons of subscription model 

• It requires strategy to determine how much content you can offer for free

4. Sponsorship

Sponsorship is yet another method of making an earning from a mobile app. This model is usually incorporated with those applications that already have regular users, and is suitable when connecting with brands from the same market niche.

When discussing in detail around how apps make money via this monetization strategy, there are two deals to go with –

• Equally divide revenue from the mobile app
• Set a monthly sponsorship fee

Example: Weather Channel apps and similar businesses rely on this monetization model to prevail in the market.

Pros of sponsorship model 

• Builds awareness around your business app idea 
• Consolidates your business as an expert
• Exposes your app to the right audience

Cons of sponsorship model 

• Creates controversies if not done right 
• You need strong networking and marketing skills to gain sponsors

5. Crowdfunding

Crowdfunding, an alternate funding model to consider in 2022, is also one of the profitable ways for mobile app monetization. 

Here, you exchange your app idea or publish an MVP version on platforms like KickStarter, CrowdFunder, Indiegogo, and Fundable to raise funds and do the needful in the field of marketing.

Example: In 2017, the Hello Earth game with a famous cat character earned USD 148k via such app monetization strategies.

Pros of crowdfunding model 

• Easiest way to finance your app with no upfront cost 
• You get to test your audience’s reaction 
• Your investors can become your customers in the process 

Cons of crowdfunding model 

• Not an easy process, requires a lot of effort building and pitching your project
• Failed projects may lead to damage of business reputation 

6. Affiliate links

This is another variation of sponsorship, however, in place of granting advertising rights solely to one organization, you negotiate with a few interested parties and place their reference links in your application. This is a decent method to increase your income from apps if you lack a wealthy player on the market who is ready to cover your costs.

Now that you are familiar with how apps earn money and what all factors to consider while looking into how much an app makes, let’s wrap up by discovering how you can choose the best app monetization strategy for your business and getting insights of the future trends in the mobile app market.

How Can You Choose The Best App Monetization Method For Your App?

Finding the right mix of monetization strategies for your app to make money is a critical piece of the puzzle that decides your business success. But don’t you worry, here’s a perspective to guide you through your decision making process. 

1. Creating a funnel leading audience to your monetization model 

Once you have an identified target audience and user persona, you can create a sales funnel that translates your traffic into revenue for your app. For instance, for a language learning app, gaming features and mini challenges and daily quizzes can be a huge hit. Once your users get hooked, you can enhance the complexity of these features and engage them monetarily. 

2. Choosing platforms that suit your app best 

An experienced mobile app development company will suggest an app domain where your target users work best. Having said that, you must keep android app development cost and iOS app development cost into perspective while choosing the appropriate platform. 

In most cases, businesses develop money making apps for both the platforms to ensure all the target audience is covered. 

3. Using native extensions 

If you can extend your application, for instance, adding levels to your gaming app or adding more audio lessons to your learning app, you can use native strategies. This means the basic version of your app can be free and available to all. Further, you can use the in-app purchase or subscription model to provide advanced features.

4. Considering local factors when pricing 

When you are finalizing your pricing structure via in-app purchase, subscription or funding, consider local factors that create a huge difference in your app revenue. Factors such as cost of living differences, cost of competing apps and local pricing models of your competitors can impact your app’s monetization model big time. 

5. Analyzing statistics to make your model work 

Another huge factor to consider is tracking app metrics and analyzing your user statistics. You need to understand their purchase patterns, average revenue per user, new and returning customers etc. to make strong and sustainable decisions. 

Your app monetization strategy in any form will impact the user experience in some way. Since the app monetization strategy is calculated based on the number of active audience, make sure to keep your app’s user experience at the top level. What else? 

Future of Business Mobile App Development and App Monetization

Now that you know how apps make money, you must have gotten familiar with the future for mobile app development. Over the years business mobile apps have seen good money and this will for sure continue in the coming years as well. The gaming apps are making billions every year, however, the generic apps are still earning millions and doing well in the industry.  Augmented Reality, Artificial Intelligence/Machine Learning, and Virtual Reality are the technology trends that every business must implement to their apps to stand ahead in the market. 

In conclusion, there are endless possibilities related to how much an app earns when you submit it to stores. You only have to rummage through your options and make the best out of it.

How Can Appinventiv Help You With Mobile App Development?

Appinventiv is a leading mobile app development company that assists its customers and clients to leverage the latest technologies optimally and provide better ROI for their business. We put disruption in top gear by helping you create exceptional experiences through your business apps. Having delivered 1000+ business apps for every industry vertical, we can shape your vision to reality. 

Get in touch with our industry experts today to know more on how we can help your business achieve its desired outcomes.

Frequently Asked Questions About Money Making Apps

Q. How do free apps make money?

A.  When talking about how free apps make money, there are three basic ways or monetization strategies, known as in-app advertisements, sponsorship, and referral marketing.

Q. What are the most profitable apps?

A.  If we had to list down three app categories that tend to make the most money for their parent business, it would be – Music app, Gaming app, and Video streaming app. All three of these app categories are such that the engagement level is very high.

Q.How much does the App Store pay per download?

A. Apple takes 30% of the revenue made on the Apple app store and gives the rest 70% to the developers.

Q. How much does Google Play Store pay per download of an Android app?

A. Google takes 30% of the revenue made on the Android app and gives the rest 70% to the developers.

Q. Do apps make a lot of money?

A. It depends. But on a very generic note, until you have an established brand name supporting you or you have a strong community of influencers backing you, you will have to wait for some time before the breakeven would end.

Meanwhile you can also make multiple apps and publish them on stores to expand your earning ability.

Q.How much do app creators make per download?

A. The value of mobile app revenue models depend entirely on the core functionality of your app, like the platform considered, the expectations of the targeted audience, the app monetization models chosen, and more.

Q. Can you make money from an app?

A. Yes, anyone with reliable business ideas and a digital presence can make money from an app.

THE AUTHOR

Prateek Saxena

DIRECTOR & CO-FOUNDER